Private Equity’s Power Play in the Engineering Sector

As private equity (PE) continues to flood the engineering industry, firms are becoming more strategic and business-oriented—but not without encountering potential risks.

A recent Engineering Inc. article, “Private Equity’s Power Play,” dives into the factors driving this surge in PE investment and how it’s reshaping the industry. With valuations rising and consolidation accelerating, engineering firms now face both opportunities for growth and challenges like succession planning and the evolving nature of professional services.

Nick Belitz, Principal of Advisory Services here at Morrissey Goodale, shares in the article, “Nothing gets the attention of investors like a multiyear, multibillion-dollar spending program by the federal government, because you can plan and execute long-term strategy around it.” This federal commitment, driven by initiatives such as the Infrastructure Investment and Jobs Act, has captured the attention of investors eager to capitalize on long-term opportunities.

Brendon Cussio, Principal of Mergers and Acquisitions Advisory here at Morrissey Goodale, highlights another key aspect: “PE firms are looking for alternative investments,” he says, noting that the people within engineering firms—not physical assets—are their greatest resource. This shift requires proper alignment of incentives but has proven to be a successful model.

The article also explores how PE firms view engineering businesses as a unique asset class. Unlike traditional investments in physical assets, these firms are finding success in aligning incentives within professional services—where people, not equipment, are the primary assets.

According to our data, U.S. acquisitions made by PE firms have jumped significantly, increasing from 12% in 2016 to 39% in 2023. This unprecedented growth illustrates the expanding role of private equity in reshaping the engineering industry’s future.

Curious about what this means for your firm? Read the full article in Engineering Inc. here.

For more insights or to discuss how private equity could impact your business, feel free to reach out to Nick Belitz directly via email [email protected] or give him a call directly at (303) 656-6151.

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