In a recent PSMJ webinar featuring M&A Advisor and former GFT-CFO Jon Kessler, we dug into how buyers think about value, risk, and deal structure in today’s AEC M&A market. As always happens when you put real operators and real transactions on the table, the Q&A lit up.
What follows is a straight-shooting set of answers to the most common questions we received during the session. Think of this as the “director’s cut” — less slideware, more practical context, informed by what PSMJ Resources sees every day advising AEC firms as they navigate M&A transactions.
What does “small” vs. “large” EBITDA actually mean?
When Jon referenced “small” and “large” firms:
In broad AEC terms:
- Small EBITDA is often under ~$1M
- Mid-sized EBITDA tends to fall between ~$2M–$8M
- Large EBITDA usually means $8M+
Staff count and revenue matter, but EBITDA is the shorthand buyers use because it captures scale, resilience, and margin in one number. Two firms with the same headcount can land in very different buckets if one has repeat clients, diversified markets, and disciplined project execution.
Can a deal be both an asset sale and a stock sale?
Not technically — but economically, yes.
Most engineering and architecture M&A transactions are either:
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Stock sales, where ownership transfers wholesale, or
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Asset sales, where specific assets and liabilities move to the buyer
That said, many deals are structured to behave like one while legally being the other. For example, a stock sale with carve-outs, escrows, or pre-closing balance sheet adjustments can feel very asset-like from a risk perspective. Typically, these deals involve an “F-reorg" which is a tax-free restructuring enabling buyers and sellers to use the benefits of both types of transaction. Structure is less about labels and more about who owns what risk after closing.
What’s a simple way to get a rough value of my firm?
Start with three steps:
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Normalize EBITDA (adjust for owner comp, owners' expenses, one-time items, anomalies)
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Apply a market-appropriate multiple (not a cocktail-napkin rumor)
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Sanity-check against firm-specific risks: clients, backlog, leadership depth, cyclicality
This won’t replace a formal valuation, but it will quickly tell you whether you’re in the right range.
Once a buyer is identified, how long does a transaction take?
Assuming alignment and momentum:
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LOI to close: ~90 days
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Add time if financing, complexity, or diligence issues arise
Most deals that “drag on” do so because expectations weren’t aligned early. When PSMJ introduces buyers and sellers to each other, we take care to ensure alignment and that key deal points are hammered out before legal and tax bills ever start piling up. Once diligence starts, PSMJ sticks with our buyers and sellers to help them through an experience that might best be compared to white water rafting.
Do valuations vary by geography?
Yes — but not in the way many expect.
Geography is one of many different key valuation variables including:
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End markets served
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Client concentration
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Talent depth
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Growth visibility
A firm in a “hot” metro with weak margins won’t out-trade a well-run firm in a slower market with strong fundamentals. Activity levels in areas like Florida and Texas may help get you noticed, but only a firm with good fundamentals will be of interest to acquirers.
How are accounts receivable and cash handled?
In most engineering and architecture deals:
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AR and WIP are delivered at close at normalized levels as part of net working capital (NWC)
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Cash-free/Debt-free which means that sellers keep cash and cash-like equivalents such as investments and pay down any debt or debt-like items. The purchase price assumes a “clean” operating balance sheet.
Are buyers leaning toward asset or stock deals?
Buyers often prefer asset deals for risk reasons. Sellers often prefer stock deals for simplicity, continuity, and tax reasons.
Where a deal lands depends on leverage, competition, and alignment — not ideology.
Is there such a thing as “too small” to acquire?
Yes — but the floor is lower than many owners think.
We routinely see acquisitions of firms with:
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10–25 staff
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Sub-$1M EBITDA
If the firm fills a strategic gap (geography, client, specialty), size alone is rarely disqualifying.
How are contracts transferred in an asset sale without spooking clients?
Carefully and often quietly.
In practice:
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Many public contracts allow assignment by operation
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Clients are informed after close with continuity messaging
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The real risk is poor communication, not the legal mechanism
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If a contract has a change of control provision, it is identified and addressed in a confidential manner prior to closing with said party.
Clients care about who’s doing the work, not the signature line.
What’s the smallest firm you’ve seen acquired?
Single-digit headcount firms have transacted when:
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The owner was critical talent to a potential buyer
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The firm unlocked a new market or credential
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The backlog was strong and transferrable
Even highly profitable firms at certain size levels become more risky for acquirers. If relationships and value are concentrated in an owner who is leaving, that has the greatest impact on deal value.
Are there differences between PE deals and peer-to-peer acquisitions?
Absolutely.
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Peer buyers focus on integration, culture, and near-term synergies
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PE buyers focus on scalability, leadership depth, and exit optionality
Neither is “better” — but they reward different behaviors and structures reflecting different strategies.
How long do sellers usually stick around?
Most buyers expect:
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12–36 months of post-close involvement
The better the management bench, the more flexible this becomes.
Does firm age affect likelihood of selling?
There’s no hard cutoff, but patterns emerge:
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Firms often sell between 20–40 years old
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Selling probability increases once founders approach retirement
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Firms that reinvest leadership early have more optionality
Age doesn’t drive value; preparedness does.
If EBITDA is volatile (COVID, etc.), how is value determined?
Buyers look beyond raw averages:
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Backlog quality
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Revenue durability
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Forward-looking earnings power
In volatile periods, Buyers will often use averages of multiple years to assess for risk and combine this with the factors above to form valuation.
Do DBE firms sell at a discount?
Typically? Yes.
DBE status can:
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Impact valuation if revenue will be impacted after a transaction.
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If a significant percentage of work is won through the designation, how will the firm perform without that designation?
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If firm owners are confident in their ability, and would like to pursue M&A, decertifying is often a natural step.
As with most things in M&A, risk is what drives valuation, and steps to mitigate risk improve it.
Final Thoughts
Jon Kessler’s multiple decades of experience were available to owners for the full hour and will be again at the upcoming AEC M&A Summit in Palm Beach, FL on February 18-20, 2026, where Jon will be a keynote speaker.
You can view the full webinar here
Are you ready? PSMJ’s M&A Advisory and Ownership Transition practice has helped thousands of AEC firm owners find, structure, and execute their M&A and Ownership strategies with lasting results. Whether you’re looking to expand your firm with an acquisition, plan your exit strategy via internal or external sale, our bespoke approach is built around you and your goals. PSMJ’s award-winning team of experts is here for you every step of the way.
Learn more about PSMJ’s M&A advisory services here.