Word on the Street: Issue 229

300

300. An awesome, visually stunning (if factually challenged) 2006 movie about the Battle of Thermopylae? Yes! A fault line along which the AE industry is fracturing? Sure! Wait, what? 

For those of us of a certain vintage, it’s hard to believe it was over 18 years ago that we sat in packed movie theaters (no streaming services for us!) to immerse ourselves in the groundbreaking, green-screened, CGI-ed magic that was the torso-filled story of the three-day epic stand of 300 Spartans against the overwhelming forces of the Persian army of Xerxes in 480 B.C.

And in some ways, it’s even harder to believe how much the influence of acquirers with revenues of $300 million or more has grown with respect to industry consolidation over the past five years. It’s almost as if $300 million has become a line of demarcation between those firms that are taking the leading role in consolidating the industry and those that are being consolidated. 

(Editorial note: Dear reader, for ease of navigation of this article, I’m choosing to replace the phrase “acquirers with revenues of $300 million or more” with “the Spartans.” Trust me, it reads easier and is a little more fun. Thank you.)

1. In the blink of an eye: Over the past five years, we’ve seen the Spartans quickly move to become a dominant driver of industry consolidation. Consider this, in 2020, they made 20 acquisitions, accounting for just 6% of all acquisitions. Fast forward to 2024, and the Spartans made 163 acquisitions, well over one-third of all domestic deals. In the space of just five years, their acquisition activity has grown eight-fold.

Spartan Group acquisitions by year (2020 to 2024)

2. Why? Well, one reason is that the number of design firms with more than $300 million in revenue has itself increased over the past five years. Using the ENR 500 as a rough proxy for the industry, the number of firms reporting revenues of $300 million or more increased from 54 in 2020 to 89 last year—a 64% increase. So, it’s not surprising that the population of Spartans has also grown—from just 17 in 2020 to 68 in 2024—a four-fold increase. Effectively, as the population of larger firms in the industry has grown, it has yielded an elite group of highly accomplished acquirers—the Spartans.

3. What makes a Spartan? First, each of these firms has a combination of (a) an ambitious vision, (b) a motivated/competent leadership team, and (c) a successful operation throwing off better-than-average profits. Each firm is driven to, and capable of, pursuing superior returns for their shareholders through organic and inorganic growth. The Spartans have also made significant investments in their corporate development infrastructures. As a result, they are able to source and close more transactions per year than non-Spartans.

4. An industry oracle? The Spartans themselves reflect the evolving capitalization nature of the industry. Diving deeper into the acquisition activity of this group reveals a lot about how the industry has been recapitalizing over the past few years and where it may be headed. Of the 438 transactions completed by the Spartans since 2020, 30.1% involved a publicly traded buyer, 31.7% an employee/partner/ESOP-owned buyer, and 38.1% a private equity (PE)-backed buyer or a PE-recap. However, when you put the microscope on Spartan deals in 2024, the percentages tell a somewhat different story. The share of deals by publicly traded acquirers declined to just 22.7%, while the share by employee/partner-owned or ESOP buyers increased to 35.0%, and that of PE-backed acquirers or PE recaps jumped to 42.3%. The publicly traded backed Spartans have lost ground to their peers over the past five years. 

5. The 10% rule (somewhat) holds: For decades, it’s been an old chestnut that the typical design firm transaction involves a 10-to-1 ratio in size between buyer and seller. In other words, the buyer is around 10 times larger than the seller. And this pretty much holds true for the Spartans, although the ratio skews a tad higher than one would expect. Over the past five years, the average size of firms acquired by the Spartans has been $27 million in revenue. That ranges from a high of $48.5 million for the publicly traded Spartans to $10.7 million for employee-/ESOP/partner-owned ones. 

6. Who? The population of Spartans has morphed over the years as some firms have grown into the “$300 million club” and some have departed from it—by either being acquired themselves (a common occurrence) or shrinking below $300 million (less common). The table below shows the 11 most prolific acquirers in this elite group in 2024.

Looking forward: As the industry recapitalizes and consolidates, we can expect to see an even greater number of acquisitions by these $300 million-plus acquirers as they continue to pursue their visions for growth. As in every endeavor, fortune favors the brave. Επιστρέψον με την ασπίδα σου – ή επάνω της.

Contact Mick at [email protected] or 508-380-1868.

How to Give Feedback That Actually Lands (Instead of Blowing Up in Your Face)

As an AE firm principal, you’ve probably had your fair share of feedback sessions go sideways. You deliver what you think is constructive input, only to see your direct report shut down, get defensive, or worse—walk away without changing a thing. Giving feedback that actually sticks is an art form, and mastering it can be the difference between a team that grows and improves versus one that stagnates or festers with quiet resentment.

Here’s how to deliver feedback so that your people actually hear it, take it the right way, and—most importantly—do something about it.

1. Ditch the “Feedback Sandwich”

Let’s get this one out of the way: The tired old “feedback sandwich” (say something nice, deliver the real feedback, end with something nice) doesn’t work. People see it coming a mile away, and they tune out the compliments because they know the axe is about to drop. Worse, they might dismiss the real feedback as just a formality you had to squeeze between the niceties.

What not to do:

“Jim, I really appreciate how hard you’re working. But your reports keep missing key project details, and clients are getting frustrated. But overall, I think you’re doing a great job.”

Why this approach fails:

Jim hears the first compliment, braces for the criticism, and then latches onto the final praise as the real takeaway. Nothing changes.

What to do instead:

Get straight to the point with clarity and respect. Example:

“Jim, I need to talk about your project reports. I’ve noticed key details are missing, and that’s causing frustration for clients. I want to help you improve this so we avoid issues down the road. Let’s go through an example together.”

No fluff, no soft landing—just direct, constructive conversation.

2. Don’t Make It Personal (Even if It Feels Personal)

When performance issues arise, it’s easy to sound like you’re making a character judgment instead of addressing behavior. The moment feedback feels like a personal attack, walls go up and learning stops.

What not to do:

“Laura, you always seem unprepared in meetings. It’s like you don’t care about the project.”

Why this approach fails:

The phrase “you always” is a surefire way to make someone defensive. And implying a lack of effort or care is an easy way to make someone check out entirely.

What to do instead:

Focus on specific behaviors, not assumptions about intent. Example:

“Laura, in the last few meetings, I’ve noticed you didn’t have the updated project schedules ready. I want to understand what’s getting in the way and figure out how we can fix it.”

Now you’re working with Laura instead of attacking her.

3. Be Clear on the “Why”

If feedback isn’t tied to a bigger impact, it feels arbitrary—like you’re nitpicking. People need to understand why the feedback matters beyond just avoiding your frustration.

What not to do:

“Mike, you need to be more concise in your emails.”

Why this approach fails:

Without a reason, this just sounds like a personal preference. Mike might ignore it or assume you just don’t like reading long emails.

What to do instead:

“Mike, your emails contain great details, but they’re sometimes so long that key information gets lost. That’s leading to confusion in the field. Let’s work on getting the main points upfront so we avoid miscommunication.”

Now, Mike knows this isn’t just about style—it’s about effectiveness.

4. Time It Right

Delivering feedback when emotions are high (yours or theirs) is like lighting a match near gasoline. Give space for emotions to settle, but don’t wait so long that the issue is forgotten.

What not to do:

Giving feedback in the middle of a heated moment:

“Kevin, I can’t believe you missed that deadline again. This is unacceptable.”

Why this approach fails:

Kevin is already feeling bad (or defensive), and in the heat of the moment, he’s unlikely to absorb anything beyond your immediate emotions.

What to do instead:

Wait until you can have a productive conversation. Example:

“Kevin, I want to go over what happened with that missed deadline. Let’s meet tomorrow to talk about what got in the way and how we can prevent it from happening again.”

This response sets up a constructive dialogue instead of a knee-jerk reaction.

5. When It Isn’t Good Enough, Tell Them AND Provide a Path

Despite our protégés’ best efforts, sometimes their performances simply aren’t professional grade. When they fall down giving presentations, for example, it can affect their credibility or ability to engage an audience effectively. This kind of shortcoming can be a delicate issue to address.

What not to do:

“Daniel, your presentations are really awkward. You need to work on your delivery.”

Why this approach fails:

This vague and negative feedback doesn’t offer actionable steps and makes Daniel feel self-conscious without knowing how to improve.

What to do instead:

“Daniel, I noticed that in your last presentation, you were reading directly from the slides and not making eye contact with the audience. That delivery made it harder to keep engagement. Let’s work on making your delivery more natural by practicing speaking points instead of reading verbatim.”

Now Daniel has clear direction and a path to improve.

6. Ask, Don’t Just Tell

When people feel like they’re part of the solution, they’re more likely to engage. Instead of just dictating what needs to change, ask them how they think they can improve.

What not to do:

“Jordan, you need to be more proactive with clients. Start checking in with them weekly.”

Why this approach fails:

Jordan might nod along, but if he doesn’t buy into the solution, he won’t own it.

What to do instead:

“Jordan, I’ve noticed clients often reach out first rather than us being proactive. What do you think would help us stay ahead of their needs?”

Now Jordan is part of the problem-solving process, making them more likely to follow through.

7. Follow Up (But Don’t Micromanage)

Feedback isn’t a one-and-done event. If you never revisit it, people assume it wasn’t that important. But if you hover too much, they’ll feel like you don’t trust them.

What not to do:

Never mentioning it again:

“I told Alan to improve his site reports, but I haven’t checked in on it since. Hopefully, it’s better.”

Why this approach fails:

Without follow-up, accountability fades, and habits don’t change.

What to do instead:

Circle back, but with trust:

“Alan, I appreciate the effort you’ve put into improving your site reports. How’s it going? Any challenges?”

This check-in keeps the feedback alive without making Alan feel policed.

That’s a Wrap

Giving feedback isn’t about making people feel good in the moment—it’s about helping them grow, improve, and contribute more effectively. Be clear, direct, and tied to a bigger purpose. If you get it right, your team won’t just hear you; they’ll actually do something about it. 

Now I’m off to try to get better at what I just preached.

Mark Goodale can be reached at 508.254.3914 or [email protected].

Market Snapshot: Michigan

50 states in 50 weeks – This series leverages our market intelligence database to bring you powerful AE industry insights. Up next is Michigan. Each week, we highlight a new state in green while previously featured states fade to a lighter green. Follow along to see which state is next.

Michigan Economic Performance and Outlook Grade: C-

• Economy: C
• Population: C
• Workforce: D
• Financial/Fiscal Health: B

Michigan ranks fifth in the number of metropolitan statistical areas (MSAs), reflecting its diverse economic hubs. The state had one of the fastest-growing public sector construction markets between 2019 and 2023. As a major player in the automotive sector, Michigan also ranks among the top 10 states in licensed drivers and registered vehicles, underscoring the continued demand for transportation infrastructure and mobility-focused investments. Business-friendly policies contribute to Michigan’s economic outlook. In addition, significant investments from the Inflation Reduction Act have helped to create jobs and diversify the state’s economy. Additional highlights for Michigan include:

• Detroit: Ongoing urban redevelopment, mobility innovation districts, and infrastructure modernization projects
• Grand Rapids: Rapid growth in advanced manufacturing and health care driving commercial and industrial construction
• Ann Arbor: Expanding research and tech sectors fueling demand for lab space and mixed-use developments
• Lansing: Public-sector investments in government facilities and transportation upgrades supporting AE opportunities
• Flint: Water infrastructure and economic revitalization projects addressing long-term development needs

For sector-specific data and insights for Michigan or questions about our market intelligence and research services, call/text Rafael Barbosa at 972-266-4955 or email [email protected].

For a comprehensive outlook for 2025, you can access the 2025 AE Market Intelligence Webinar (recorded on January 28). Click here for details.

Weekly M&A Round Up

Busy week for M&A with a total of 13 domestic deals announced: With three transactions in the Southeast last week, consolidation in the AE and environmental consulting industry is now up 5% over the past 12 months. Last week, domestic deals were announced in FL, SC, AL, OH, MA, IN, PA, OR, CA, and UT. Globally, we reported transactions in the UK, Denmark, South Africa, Australia, Spain, and Canada. You can check all the week’s M&A news here.