M&A transaction activity in the U.S. Construction & Engineering (“C&E”) sector over the last eight quarters has been relatively steady, as shown in Figure 1 below.
But what attributes of the target companies influence their valuations the most in these deals? Specific value drivers vary from company to company, but a common theme for C&E firms tends to be the ability to successfully bid and perform on contracts, which significantly impacts a firm’s capacity for generating profits. Examples of other, more generalized, C&E value drivers include things like revenue visibility, diversification (operational and geographic), personnel/management depth, and financial management.
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