M&A activity in the Engineering & Construction industry has remained strong into Q4 2016, with the total number of industry transactions for the last twelve months ("LTM") through November 9th, 2016 at 261. This is slightly higher than the 258 transactions seen during the LTM period at this point in 2015.

Total transaction value is down 58.3 percent compared to LTM 2015. However, if the $5.7 billion Industry Super Holdings Pty Ltd. acquisition of ITR Concession Co. LLC is removed, the decrease in reported transaction value is only down 7.6 percent. The vast majority of transactions take place between private entities that choose to keep the terms of their transaction private and transaction values were not disclosed on 87 percent of transactions in LTM 2016 and 81 percent in LTM 2015. However, 8.6 percent growth in undisclosed transactions is a signal of strength for middle market M&A activity in the Engineering and Construction space.

Highlights include:

  • Construction related M&A is up modestly whereas the market as a whole has seen a significant decline.
  • Public Engineering and Construction companies have significantly outperformed the Dow Jones Industrial Average and S&P 500 in 2016.
  • M&A in the middle market is expected to have a strong finish to 2016 and remain healthy into 2017.
  • Private equity continues to increase its share of total M&A activity.
  • Dodge Data & Analytics believes the current construction cycle still has legs and the eventual decline will not be severe.