Construction & Engineering M&A:
2025 year in review.

A record year, led by the trades

2025 was the strongest year for construction and engineering private equity activity on record. According to PitchBook, the vertical saw roughly 1,602 estimated deals totaling about $103.7 billion, with the fourth quarter alone producing an estimated 458 deals, the highest quarterly count in their dataset going back to 2018. The drivers look structural rather than cyclical: infrastructure spending, grid modernization, electrification, and the datacenter build-out all require enormous volumes of design, engineering, site work, and specialty trade activity. For Cleveland and the broader Great Lakes region, this matters because our economy is dense with exactly the businesses buyers want, namely family-owned and founder-led specialty contractors, engineering services firms, and building products manufacturers. Many of these categories are highly fragmented, which is precisely what attracts platform investors looking to build scale through add-on acquisitions.

Specialty trades and the electrical premium

Within the vertical, specialty construction took the largest share of activity. Plumbing, electrical, interiors, metal fabrication, concrete, and roofing all sit in fragmented markets full of strong regional operators, which is the classic setup for a roll-up. Electrical contracting in particular drew sustained interest, supported by the same electrification and datacenter demand driving the broader cycle. We saw this dynamic up close. In October 2025 we advised on the sale of McClintock Electric, a multi-generational Northern Ohio electrical and technology contractor, to Kelso Industries. The buyer interest in that process reflected exactly what the national data shows: well-run electrical contractors with diversified end markets and clean financials are commanding strong attention. A word on multiples is worth adding here, because the headline numbers can mislead an owner. National coverage featured large strategic deals such as Lowe’s acquisition of Foundation Building Materials at roughly 13.4x EBITDA and WSP’s purchase of TRC at about 14.5x. Those are national, public-scale transactions. For middle-market private construction and engineering businesses, the realistic range we observed held closer to 5x to 8x EBITDA. That gap is not a penalty for being smaller. It reflects the risk profile a buyer assigns to a single-region contractor versus a national platform. The encouraging part for owners is that the levers which move you toward the top of your range are largely within your control.

Backlog quality decides the number

If there was one differentiator between sellers who cleared the market at firm prices and those who struggled, it was backlog quality. Buyers paid up for businesses with diversified customers, documented processes, repeatable revenue, and a backlog they could underwrite with confidence. Customer concentration remained the most common reason a process stalled or a price came down at the table.

The financing backdrop is turning in sellers’ favor. The Federal Reserve cut its benchmark rate three times late in 2025 before holding steady in January 2026, and cheaper, more available debt supports buyer appetite and underwrites higher valuations. Public indicators remain mixed, with the Architectural Billings Index still below the expansion line at year-end, housing starts soft, and construction employment near record levels, so the strength is selective and concentrated in power, grid, and infrastructure-tied work. For an owner considering a sale or recapitalization in the next 12 to 18 months, the practical takeaway is to start preparation now. The work done before a process begins, namely cleaning up the backlog schedule, reducing customer concentration where possible, documenting the management structure, and getting the financials ready for diligence, is consistently where the final number is decided.