2018 Fall issue of Horizons

INDUSTRY UPDATE CONSTRUCTION

Major Consolidation in the Construction Industry by Chris Daues, CPA

T here is no doubt that construction activity in the mergers, acquisition and private equity space is more prevalent throughout most of the country than has been in many years. This prevalence is a positive trend for the industry as it increases opportunities for growth and offers more options with succession planning for construction business owners. As the result of a growing population in metropolitan areas and aging infrastructure, construction spending in the U.S. continues to rise. Per Baker Tilly Capital, LLC’s Engineering and Construction M&A Update: H2-2017 , construction spending totaled $648.8 billion

in the second half of 2017, which is a 12% increase over the first half of 2017 and a 2% increase over the second half of 2016. Overall, since the first quarter of 2012 through 2017, construction spending has steadily increased. Baker Tilly’s report also indicates that the American Institute of Architects (AIA) is estimating 4% growth for non-residential construction spending during both 2018 and 2019. The AIA’s forecast cited natural disasters, tax reform, infrastructure focused legislature and business confidence levels as reasons for growth in the engineering and construction (E&C) arena.

Major Consolidation in the Construction Industry

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