By the end of 2025, M&A activity was surging across the construction industry. Construction firms, consultancies and contech companies were busy during the second half of the year acquiring competitors or complementary firms.
So, where does that leave the construction industry in 2026? Sean Auton, co-managing partner of the Chicago office of law firm Kilpatrick, doesn’t think activity will slow down.
Below, Auton talks about M&A activity over the past year and going forward, big sectors for M&A targets and how construction firms fit into the mix.
Editor’s note: This interview has been edited for brevity and clarity.
CONSTRUCTION DIVE: What did you see for M&A across infrastructure, engineering and construction firms in 2025?
SEAN AUTON: You’re starting to see things come back a little bit.
There was a huge spike, particularly with engineering firms, that occurred after the infrastructure bill passed. Very exciting opportunity, because you had over a trillion dollars coming in from the federal government, and a lot of those dollars are matching dollars, so the states were going to put up another trillion dollars. So it became a very hot area.
It cooled a little bit with the general cooling of the M&A market through the second half of 2024 and beginning of 2025, but since probably June of 2025, it's continuing to build and go up.
So I anticipate we’ll see a lot more, we’ll see multiples get a lot higher and see firms get a lot more aggressive about trying to do acquisitions.
In the second half of the year for the construction industry, we saw a surge. What do you think contributed to that?
Like I said, the surge really started over the summer, where people got comfortable again.
There was an unusual lull. Part of it was just so much activity that occurred between 2021 and 2023 that 2024 was a cooler year.
It may have been an average M&A year, but people were used to very above average activity. I think people finally had confidence in the market space and really started deploying capital.
The M&A world saw it across systems, but certainly in construction, you’re seeing a lot in the engineering firms. You mentioned a couple of large multinationals. We represent a large multinational being very aggressive, wanting to get into the North American and particularly the U.S. market.
If you have engineering firms that are foreign-based, or have a lot of foreign assets, they’re trying to deploy as much money as possible into the U.S. for a wide variety of reasons. So you're seeing very aggressive attempts to acquire buildout within the U.S.
It could be, companies have a portfolio, but want to add to it. It could be, companies need to fill in a service they don't have. Or need to redeploy capital from other markets, or it's going to become much more expensive to do business in the U.S.
Part of that is foreign engineering firms starting to reorganize as independent U.S. divisions with the changes in tariffs and taxes coming down.
What you’re paying in taxes from U.S. sourced income, if you're able to keep it in the U.S., is going to be lower than trying to repatriate the income back to your home country, particularly those in Europe, right now.
Will this trend continue into 2026?
I think as long as you have the current administration, yes.
So with the caveat that the midterm elections could change things, I would anticipate seeing that trend for the next three years.
Depending on how dramatic the shift is in November, it’s possible you may see a little bit of slowing, but most of what you’ve been seeing with regard to tariffs and taxes have been executive actions. These have not been changes in congressional law.
Without these tariff and tax positions, would we see the opposite trends play out?
I think you’d see a continuation of what you were seeing beforehand, across different professional services industries. The U.S. and professional services writ large — not just engineering, but we’ll focus on engineering for a moment — tend to have much more profitability.
So, the Infrastructure Act was certainly going to drive a lot of work here, larger projects, very profitable work. Much more profitable than the work that’s going to be done in Europe.
An area I think is going to be probably the hottest area over the next several years, is going to be nuclear and the engineering around that. The energy demands that are coming out in most countries, particularly the U.S., are going to require us to go back to nuclear. This tremendous demand for energy in the U.S., driven by things like data centers, is the primary example that people are seeing.
Do you see construction firms getting swept up in this M&A activity?
If you have a specialty in being able to build out anything touching data centers, they’re the hot item. These are the new boxes coming up. Everyone’s all over the data centers. So that’s going to continue.
Again, this is energy adjacent, but that’s going to be part of it as well.
And again, while all that’s happening, in the background, you have $2 trillion being spent on U.S. infrastructure. Roads, bridges, airports, terminal facilities, all the rest of that. So we have an explosion with data and energy issues. And by the way, we’re spending a couple of trillion dollars just on very traditional engineering projects as well.
