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Moderate deal activity continued throughout the first half of 2025 in the engineering & construction (E&C) sector. While macroeconomic pressures persist — including labor shortages, tariffs and interest rates — underlying demand in residential housing and infrastructure investment sustained deal activity. However, the full impact of the tariffs has yet to be realized. Buyers continue to target platforms that offer scale, labor efficiency and exposure to more resilient end-markets. Key trends include:
Note: The source used in the 2025 midyear outlook is S&P Global Market Intelligence.
The second half of 2025 will challenge companies to navigate ongoing cost pressures, policy shifts and the need for scalable growth — all while working to sustain bottom-line performance. Tariff-related cost pressures appear to be stabilizing as negotiations progress with key trade partners.
Infrastructure and institutional construction continue to be supported by federal programs, though evolving trade policy may influence the mix of energy-related and public-project pipelines. Labor constraints and material tariffs could weigh on margins, pushing the focus toward businesses with prefabrication, modular capabilities or greater delivery efficiency. Buyers are adapting to elevated interest rates, though the full impact on dealmaking remains uncertain. More time is needed to assess how tariff, immigration and regulatory changes may influence Fed monetary policy.
Larger players in the industry should remain strategic and flexible with deal selections. Strong balance sheets and the ability to utilize pricing power provides leverage for potential acquirers in this environment.
E&C-related deal activity is expected to remain steady but selective, with buyers focused on assets that offer operational resilience, mission-critical products and services, and exposure to more stable end markets centered on critical infrastructure.
“As the sector adjusts to evolving cost dynamics and policy uncertainty, acquirers are prioritizing operational resilience, scalable delivery models and exposure to mission-critical and stable end markets. Disciplined dealmaking will continue through 2025 as buyers focus on long-term value creation.”
Danny Bitar,US Engineering and Construction Deals LeaderE&C deal activity remains steady in 2025, with buyers continuing to target scalable platforms tied to residential and institutional demand. Labor constraints and cost pressures persist across the board. Early signs of tariff stabilization may offer greater certainty for buyers and sellers alike. However, the full impact of evolving policy changes on M&A dynamics has yet to be realized.