Dear Insider,
In the architecture, engineering, and construction (AEC) industries, the succession question looms large. Thousands of firm owners across the industry are approaching retirement, and many are looking for ways to secure their legacy, protect their people, and transition ownership. At the same time, a new generation of emerging leaders is stepping up—often without a clear path to the top.
We have spoken at length about some of the challenges with succession currently. PSMJ supports owners selling to their next generation regularly and teaches programs on this matter. For many firms, M&A is the single best source of great leadership candidates or of opportunities for their team.
For many next-generation partners, mergers and acquisitions (M&A) offer them a life-changing opportunity to join and potentially lead a new partnership. In today’s industry, M&A is increasingly becoming the strategic lever that propels them into leadership—sometimes even faster than they imagined. Many are being brought to the table as partners, and considering questions around making investments at the deal table to further their partnership.
There Are New Pathways to Ownership
Historically, ownership transitions have been more linear. A group of senior partners would gradually step back, and a new class of principals would buy in over time. But rising firm valuations, wider margins, and longer career spans have made that model harder to sustain. While internal ownership transitions continue to be the most popular approach in this industry, many younger leaders either can’t afford or choose not to buy their way in, and many outgoing owners have found themselves having waited too long, they can’t afford to wait 10 years to get their payout.
That’s where M&A comes into play.
A Strategic Shortcut to the Top
When a larger firm acquires a smaller or mid-sized AEC firm, it doesn’t just absorb talent, projects, and geography—it also opens up a whole new set of leadership opportunities for emerging leaders.
Here's how:
- Leadership Vacuums in Acquiring Firms
Many large firms are grappling with their own succession gaps. They need future leaders to step into regional director roles, service line leads, or even C-suite seats. When they acquire a smaller firm with strong up-and-coming talent, they often look to that group to fill key leadership needs. Suddenly, a principal or project manager from the acquired firm finds themselves running an entire region or business unit within the larger organization.
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Access to Resources and Scale
Emerging leaders often have bold visions for growth—but lack the capital, systems, or brand strength to scale on their own. Joining forces with a larger firm can give them the platform they need to lead more effectively. With access to deeper resources, stronger back-office support, and broader client relationships, they can step into larger roles and lead with confidence.
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Equity and Ownership Opportunities
M&A doesn’t just shift titles—it can also shift equity. Many acquirers offer next-generation leaders in the acquired firm meaningful ownership stakes, retention bonuses, or long-term incentive plans. For someone who may not have had a clear path to equity in their current firm, this can be a game-changer.
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Fast-Track Succession Planning
In some cases, sellers actively structure deals to give their next-gen talent a better future. If an owner knows a rising leader within their firm won’t be able to buy them out—but wants to see that person thrive—they may choose to merge with a larger firm that can provide a runway for that individual to rise. It's a way of handing off the baton without setting them up to fail financially.
Real-World Scenario: The Unexpected CEO
Consider a hypothetical example: A 40-year-old partner at a 50-person civil engineering firm has been groomed for leadership but isn't yet in a position to buy majority control. The founder is 68 and ready to step back. Rather than forcing an internal buyout that stretches everyone thin, the firm merges with a 500-person national firm looking to expand in the region.
Within two years, the 40-year-old is leading the entire regional office of the acquiring firm—with more staff, more resources, and a clearer career path than before. Their influence has grown, their compensation is better, and their leadership impact has multiplied.
That’s the power of strategic M&A.
A Win-Win-Win Strategy
M&A can be a triple win:
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For senior owners looking to exit gracefully and preserve their legacy.
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For acquiring firms hungry for fresh leadership and local expertise.
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For next-gen leaders eager to lead, grow, and leave their mark—without being trapped by outdated transition models.
Final Thoughts
In a time when many AEC firms are navigating succession challenges and generational handoffs, M&A isn’t just a way to sell—it’s a way to evolve. It’s a strategic tool that, when used thoughtfully, can launch the next generation of leaders into positions of real influence and responsibility.
If you're a rising leader wondering how you’ll ever lead the firm—or if you’re a senior partner wondering how to reward and retain your best people, or give them the best opportunity you can—it may be time to look at M&A not just as an exit, but as a pathway to the future.
Are you curious about the future of your team? Do you have incredible talent with your next generation? Are you an acquirer looking to fill that gap in your leadership team? Let us know with a comment below. All comments are reviewed by PSMJ's Growth and Transition Advisory, and are not shared publicly unless you request them to be.