Peter McManus is an Associate at Rusk O’Brien Gido + Partners, where he provides clients with a range of financial consulting services, including business valuation, ownership transition planning, and merger & acquisition assistance. He also serves as the primary editor of the A/E Business Valuation and Merger & Acquisition Study. Peter is a graduate of Bentley University and holds a Bachelor of Arts degree in Finance with a minor in Psychology. More recently, has completed professional training in business valuation with the American Society of Appraisers.
Inside The Latest A/E Business Valuation and M&A Transaction Study
February 11, 2026
The Architecture and Engineering (“A/E”) industry has experienced significant change in recent years. In particular, the impact of the Infrastructure Investment and Jobs Act (“IIJA”) and the resulting increase in industry investment from private equity firms has driven growth and higher valuation multiples, particularly for engineering firms and firms focused on public infrastructure.
Our newly released 13th Edition, A/E Business Valuation and M&A Transaction Study details key industry benchmarking metrics and valuation multiples derived from 252 distinct transactions and data points. Our analysis shows that firms in the engineering industry continue to perform very well, while architecture firm growth has slowed. This trend is reinforced by the most recent Architecture Billings Index (“ABI”), released by the American Institute of Architects (“AIA”), on January 21st, 2026. Below is an excerpt from the article.
“The AIA/Deltek Architecture Billings Index® (ABI) remained below the 50 threshold with a score of 48.5 for December (a score below 50 indicates declining firm billings). Architecture firm billings declined every month of 2025 and have declined every month except for three since October 2022. This month, 90% of responding firm leaders reported that they have had projects that have been significantly delayed over the past six months, 84% have had projects that have gone on hold or indefinitely stalled, and 71% have had projects that were canceled. When asked about the factors that have contributed to projects at their firm being delayed recently, the top reasons cited by responding firm leaders were client delays & indecision on key issues (55%), construction budget insufficient for project as currently conceived (49%), changing market conditions making clients nervous about proceeding (45%), financing problems (42%), and contractor bids coming in too high or schedules too long (41%).”
Findings from our study reflect the financial impact of these conditions. The median compounded annual growth rate of net service revenue for architecture firms declined year over year from 10.1% to 2.6% over three years. This decline underscores the cumulative effect of sustained weakness in monthly billings since the latter half of 2022.
Project delays and uncertainty have also weighed on architectural firms’ profitability. On a median basis, total bonus and profit-sharing payouts as a percentage of net service revenue, total labor costs, and operating profit all declined. Additionally, firms facing uncertain project pipelines may retain staff in anticipation of work resuming, leading to excess capacity and putting further pressure on margins and discretionary compensation.
Slower growth and weakening profitability have impacted the value of architecture firms. On a minority-interest enterprise basis, architecture firms traded at a median pre-owner-bonus EBITDA multiple of 2.94x, down from 3.24x in the prior year. In controlling-interest (external) transactions, the median EBITDA multiple across all A/E firms was 5.40x. Architecture firms again trailed the broader market, with median multiples of 4.92x.
Taken together, the ABI data, financial benchmarks, and transaction activity underscore a widening performance gap between architecture firms and their engineering counterparts. Sustained billing declines, project delays, and heightened uncertainty have led to slower revenue growth, reduced discretionary compensation, and lower valuation multiples for architecture firms in both internal and external transactions.
While broader infrastructure investment, private capital and a relatively strong economy continue to support the A/E industry overall, architecture firms face a more challenging operating environment. Architecture firms are often seen as bellwethers of the overall economy, as design and planning are upstream of engineering and construction. Whether the current softness in the architecture sector is a harbinger of a broader decline remains to be seen.
For more details on valuation multiples for both internal minority interest transactions, controlling interest merger & acquisition transactions, deal structures and forms of consideration, and financial performance statistics, the latest edition of the A/E Business Valuation and M&A Transactions Study is available at https://www.rog-partners.com/aestudy.
1 Architectural Billings Index, The American Institute of Architects (Washington, DC), http://www.aia.org (January 21st, 2026).
