A First Look at Industry Performance in 2024
This March, the Southeast M&A and Business Symposium will provide a first real opportunity for CEOs and investors to take the pulse of this year’s AE and environmental industry. We’ll be kicking things off in Miami with our “State of the Industry” presentation, which includes up-to-the-minute hard data on industry financial performance (profits, utilization, revenues per employee, etc.), financial condition (current ratios, debt-to-equity levels), anticipated raises and bonuses, backlogs, and hot and cold markets (courtesy of the Deltek Clarity study and our proprietary databases).
However, we can get an even earlier read on how the industry is faring and where it’s headed from the CEOs and investors who will be in attendance this March in Miami. And based on what they’re telling us, all in all, 2024 is shaping up to be yet another blow-out year of growth and innovation for (most) of the industry.
1. First, a word on who’s coming to Miami: Three-quarters of the attendees are CEOs and C-suite, 16% are M&A executives (mostly from larger firms), and the balance are industry investors. Four in ten are from firms with over $100 million in revenue (generally with a national or global footprint). The balance is less than $100 million, generally from the Southeast. These are the folks giving us a first read on how things are shaping up.
2. “Ain’t No Stoppin’ Us Now”: Seventy-eight percent of symposium attendees expect 2024 to be an even better year for their firms than 2023 was. The balance of attendees expect this year to be the same as last year. For the first time ever, not one attendee is forecasting the year ahead to be weaker. This in and of itself is a remarkable statement about the strength of our industry.
3. It’s all about the people: The success of our industry, and of each individual firm, is driven by employees. But finding and keeping them is—once again—a huge challenge this year. Three-quarters of attendees cite finding and keeping the talent necessary to meet demand as their number-one challenge headed into 2024. Making acquisitions in this super-frothy consolidating industry is a distant second at 6%. The perennial talent challenge is not going away any time soon. And even in those industry sectors that are experiencing some regional softness (e.g., corporate interiors), employees are quickly being snapped up into adjacent sectors. It’s a great time to be a designer, planner, or scientist—maybe the greatest time.
4. Driven to expand and innovate: Forty-one percent of attendees see growth—either geographically, or into new market sectors, or through additional services—as the greatest unmet or untapped opportunity for their firms this year. Another 26% view unlocking the potential of new technologies as being their number-one untapped opportunity. Demand continues to outstrip supply, and firms are eager to make hay while the sun is shining.
5. Continuing consolidation: Eight in ten attendees have M&A of some kind on their minds and are either planning an acquisition in 2024 or they are considering a sale or recapitalization. This is not necessarily a surprise given the theme of the symposium. However, it’s also reflective of the current M&A environment where every CEO is receiving inquiries to sell or recapitalize almost daily.
6. A quickly maturing digital business model: Over 70% of the attendees either will or will possibly generate revenues through digital services and/or products in 2024. This is a significant jump from last year when just 52% indicated the same. Firms have rapidly incorporated digitization initiatives to meet client demands, improve service offerings, and increase profits.
7. A similar timeline for AI? Almost half of the attendees are using artificial intelligence in their businesses. Pretty remarkable seeing as ChatGPT was only launched at the end of 2022. Over 40% of those firms are using it for marketing, with another 20% deploying it to gain efficiency in operations.
8. Another big year for raises/bonuses: Eight in ten attendees are forecasting raises in the 1% to 5% range, with the balance in the 6% to 9% range. One-third of attendees are anticipating higher bonuses than last year. (It’s all about the people…)
So, the earliest look that we have is that 2024 is going to be yet another year of expansion and consolidation with a lot more digitization and artificial intelligence thrown in. (And still not enough people to do all the work.)
The Southeast M&A and Business Symposium—now in its 10th year—is the destination for AE industry executives and investors to get a first read on industry performance, get the latest on trends and best practices, and network with decision-makers from the Southeast and around the nation. Register today to reserve your place.
To connect with Mick Morrissey, email him at [email protected] or text him at 508.380.1868.