October 27, 2026 Construction M&A: Why Private Equity Is Suddenly All In

Why is construction attracting more private equity, and what are today’s buyers looking for in the companies they acquire?

By Mike Reynolds, Partner, Financial Reporting and Assurance, and Connor Gibson, Director, Transaction Advisory Services, at national accounting and advisory firm Bennett Thrasher

Key Takeaways

• Construction M&A is entering a period of increased institutional interest, driven by an aging ownership base, persistent labor challenges, demand for capital and technology, and attractive growth in parts of the construction ecosystem.
• As more private equity and strategic buyers enter the space, they’re bringing a more institutional approach to evaluating construction businesses – putting greater emphasis on predictable performance, operational infrastructure, management depth and construction-specific risk.

Construction executives are navigating a business environment that is making ownership and growth decisions increasingly complex. For years, private equity firms were cautious about the industry, shying away due to the industry’s historical complexity and difficulty to underwrite.

That dynamic is changing as more investors become comfortable with the risks associated with the industry’s long-term projects, shifting margins and capital requirements. Private equity firms may also be in need of new opportunities to deploy capital, prompting them to consider industries and business models they previously overlooked. But private equity alone isn’t driving the increase in transaction activity, as changes within the construction industry itself are giving owners more reasons to consider a deal.

Many established owners are reaching an inflection point, facing rising costs, labor shortages and the question of what comes next. The result is a growing alignment between what construction companies need and what institutional capital can provide.

Labor and Succession Challenges: Creating a Natural Wave of Transaction Activity

Many construction businesses were built over decades by owner-operators who are now approaching retirement, often without a clear internal or family successor. Part of this challenge is due to labor shortages following the Great Recession and recent immigration enforcement, leaving fewer experienced people available to step into leadership roles.

For some owners, selling to an outside buyer is a way to monetize what they’ve built rather than simply closing shop. But not every owner considering outside capital wants to retire. Some businesses have simply reached a point where they need additional resources or technology to reach their next stage of growth, making today’s construction M&A market a mix of growth-oriented owners and those pursuing an exit.

Why Private Equity is Looking at Construction Now

Several forces are converging to make construction a hot investment target. As health care and data center construction continue to be major areas of activity, investors are expanding their focus beyond project contractors to adjacent companies across the construction ecosystem, including product manufacturers and suppliers, installers and specialized service providers.

This is creating consolidation opportunities for fragmented, construction-adjacent businesses as strategic buyers combine complementary services at scale. We saw this happen with HVAC businesses in recent years, with buyers attracted to their predictable, recurring revenue and diversified customer base.

At the same time, potential buyers are becoming increasingly comfortable with evaluating the financial uncertainties traditionally associated with construction companies’ progress billings, project backlogs and shifting margin projections.

What Today’s Buyers Are Looking For

Beyond earnings, buyers want to know whether a construction business can deliver long-term performance after the deal closes. Several factors stand out:

• Financial and Operational Controls – Buyers want reliable financial reporting, accurate WIP schedules and job-cost accounting that tracks labor and materials and flags cost overages early. Perfect estimates aren’t the goal. What matters is whether a company can explain why a project performed differently than expected and apply those lessons going forward.
• Management Depth – If the owner remains the primary salesperson, estimator or keeper of key customer relationships, buyers have to consider how much of the business’s value depends on that individual. More than one leader managing those responsibilities, supported by processes that don’t live entirely in the owner’s head, signals continuity and scalability.
• Backlog Quality – A large backlog may look attractive, but buyers want to know how much of it is expected to be profitable, how accurate the underlying estimates have been and whether recent results are repeatable. A concentrated customer base or an unusually large project can change how a buyer views future performance.
• Industry-specific Risk – Safety and workers’ compensation history offer insight into risk-management discipline, while strong surety relationships and sufficient bonding capacity are critical for a buyer planning to grow the business.
• Financial History – Multiple years of audited or reviewed financials help establish credibility and surface issues before they reach the negotiating table. We typically see value in at least two years, though transaction timing doesn’t always allow for that runway. Progress matters more than perfection, and transparency reduces due-diligence surprises and the potential for purchase-price adjustments.

How Sellers Are Evaluating Their Options – And What’s Next for Construction M&A

What defines a successful transaction varies by owner. Some prioritize maximum sale value, while others care deeply about preserving their company’s culture, leadership team and legacy. Many want to stay involved while bringing in outside capital to support the company’s next era.

That is why the buyer is being evaluated, too. Owners want a buyer who will carry forward their vision, and who can explain how they plan to grow the business while preserving what made it successful and supporting employees through the transition.

Importantly, a merger or acquisition doesn’t always mean a complete exit. Owners can consider a minority investment, an Employee Stock Ownership Plan (ESOP), or family succession. That’s why transaction interest can often help determine what’s next and what’s truly best for an organization.

Looking ahead, construction M&A is likely to remain shaped by the same forces driving activity today: an evolving labor market, an aging ownership base, demand for growth capital and increasing interest from institutional buyers. As that interest grows, buyers will continue to place a premium on construction companies with predictable performance, strong financial visibility, experienced management teams and the operational infrastructure to support growth. For owners, that means the range of potential paths forward is expanding – from a full exit to outside investment, succession or continued independent growth. Ultimately, the changing M&A landscape is giving construction executives more opportunities to determine what the next chapter of their business looks like.

About the Authors:

Mike Reynolds is a Partner in Bennett Thrasher’s Financial Reporting & Assurance practice, where he supports construction clients with audits, reviews and compilations as well as consulting, due diligence and internal audit engagements. 

Connor Gibson is a Director in Bennett Thrasher’s Transaction Advisory Services practice, where he advises both strategic and private equity investors on buy-side and sell-side transactions.

Read more from the authors:

Accountants help construction companies field PE offers | Accounting Today, October 1, 2026

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