Engineering and construction M&A update: H2 2019

Engineering and construction industry overview and indicators

Construction spending in the U.S. economy, although seasonal in nature, has continued a steady upward trend over the past five years. The main driver of this growth has been private sector spending. Although the rate of growth has slowed over the past few years, it should be noted that one of the key leading indicators of construction growth, ABI, trended slightly upward in Q4 2019. Additionally, the expected stability in the low rate environment should help maintain a steady capital spend.

This steady construction activity has translated to the capital markets with a slight upward movement in the EBIDTA multipliers for publicly traded contractors. As expected in the construction industry, there is a wide variance in EBIDTA between contractors in size, type and specialty niche. However, the volume of deals remains much lower over the past couple of years compared to four or five years ago.