April 20264 min read
Cultural Alignment Drives M&A Outcomes in Building Services
The most successful M&A transactions in the MEP and building services space tend to have surprisingly little to do with financial engineering and almost everything to do with cultural alignment.
As Grace Goldberg, Senior Vice President at LVI Associates puts it, this is not a market where deals happen in isolation. It’s a relationship-driven, reputation-based industry where founders understand their businesses are more than backlog and brand. They are people, client trust, institutional knowledge, and decades of established ways of working.
That’s why many transactions, both directly supported and observed across industry networks, don’t begin with a multiple. They start with more fundamental questions:
- How are people treated when things get difficult?
- How are projects actually run, and how is conflict handled?
- What does leadership look like in practice?
- What defines client service and quality?
Grace describes this clearly:
In professional services, culture is the operating system.
When a firm is acquired, that system comes with it, whether it is actively assessed or not.
M&A activity is rising, but succession is the real driver
Right now, M&A activity in MEP is accelerating. Market demand, specialization, and capital all play a role, but underneath that sits a structural issue.
MEP has a succession problem, driven by a missing generation of future owners.
The recession that disrupted the pipeline
The Great Recession didn’t just reduce revenue. It disrupted the entire project pipeline that AEC depends on. Design activity dropped sharply, financing tightened, and projects stalled or disappeared entirely. In building services, work didn’t gradually slow, it stopped.
Because AEC businesses cannot stockpile work, the impact on employment was immediate. Firms reacted quickly as utilization dropped and backlog visibility declined. As in most downturns, cuts disproportionately affected early-career professionals. Entry-level hiring slowed, graduate intake reduced, and fewer active projects meant fewer opportunities to build experience across the full project lifecycle.
That development gap is significant. Competence in this industry is built through repetition, not theory. When those cycles are interrupted, progression slows.
Ownership pathways were also affected. In a project-driven business, succession planning relies on confidence in backlog and financing conditions. When that confidence disappears, leadership delays equity discussions and focuses on stability.
Fifteen-plus years later, the downstream impact is exactly what you’d expect from a missing project cycle:
- Founders and senior principals are approaching retirement.
- The mid-career successor cohort is thinner than expected.
- Many firms never rebuilt the leadership and ownership pipeline that weakened during the downturn.
Why M&A has shifted from growth to continuity
In a healthy MEP firm, succession is gradual. Leadership capability develops alongside technical expertise, and client relationships transition over time. In many cases, that cadence was interrupted and never fully reset.
That shift is one of the main reasons M&A has moved from a growth strategy to a continuity strategy. In people-based, project-driven organizations, outcomes are rarely determined by price alone.
Grace points out that, in building services, owners will often choose the right long-term steward over the highest bidder. That dynamic continues to shape deal outcomes across the market.
How culture shows up in real transactions
Across recent transactions in building services, the impact of cultural alignment is consistent.
In situations where alignment is prioritised early, integration tends to feel like continuity. Teams are retained, leadership remains engaged, and client relationships transfer with minimal disruption.
Grace describes one such case:
I worked closely with a small structural engineering firm that was exploring an acquisition. What stood out immediately was that the first real conversation between both sides had nothing to do with price. It was about how they ran projects, how they treated people when things got difficult, and what quality actually meant in practice. The financials came later. By that point, both sides already understood how the other operated. A few years on, the business is fully integrated and, more importantly, they didn’t lose people in the transition. That wasn’t accidental. Cultural alignment was assessed before anything else.
As Grace notes, when culture leads, integration feels like continuity, not disruption.
There are also repeated cases of firms walking away from stronger financial offers due to misalignment in leadership style or operating approach. In these situations, long-term stability is prioritised over short-term valuation.
In contrast, where culture is treated as secondary, the consequences are immediate. Post-acquisition changes to leadership, benefits, or structure often lead to rapid attrition.
Grace points to a widely discussed case where a well-known MEP firm was acquired by a larger platform, followed by leadership changes and reductions in employee benefits. Within a short period, the business reportedly lost a significant portion of its workforce.
Her takeaway is direct: “When trust disappears, people leave. When people leave, delivery breaks.”
A more aggressive approach seen in some transactions involves retaining the client base while losing key individuals. While this can deliver short-term gains, it often results in a weaker delivery platform over time as institutional knowledge leaves the business.
As she puts it, “in a people-based business, you can’t cut your way to retained relationships.”
Why internal succession is breaking down
Internal succession, if it were straightforward, would reduce the need for many of these transactions. However, internal buy-ins are becoming harder to execute for practical reasons.
The economics of ownership have shifted. Margins are tighter, costs are higher, and many mid-career professionals are more risk-aware after experiencing multiple downturns. Debt-backed equity with long-term upside is less attractive when the risk profile has increased.
At the same time, ownership has become more complex. Leaders are now responsible for a wider range of issues, from compliance and liability to technology, hiring, and evolving client expectations. Long-term ownership requires committing to an environment that is still changing.
In many firms, structured succession planning was never fully developed. Delivery and short-term priorities often took precedence over long-term leadership development. By the time gaps are recognised, there is often limited time to address them internally.
An industry still early in its M&A cycle
The building services sector is still relatively early in its M&A cycle. Historically, firms were founder-led and transitioned internally. Consolidation is a more recent shift, and the industry is still adapting to it.
Timelines are often compressed, with some transactions moving from initial conversation to integration in under six months. In a business where value is tied to people and relationships, that pace increases risk.
MEP firms operate differently. Their value leaves the building every day. Project managers and discipline leads are central to delivery. Cultures tend to be detail-driven and sensitive to change.
Grace highlights that even small operational changes can signal intent. A shift in structure, benefits, or reporting lines is rarely seen as administrative, it’s interpreted as a reflection of priorities.
In some cases, those signals trigger attrition.
COVID accelerated the succession challenge
COVID-19 added another layer by accelerating labour market shifts. Employee mobility increased, expectations around compensation and progression changed, and training and mentorship were disrupted.
For firms already facing a thinner leadership pipeline, this compounds the succession challenge. Development slows, retention becomes harder, and internal ownership pathways become more difficult to maintain.
As a result, more firms are using M&A to address continuity and talent gaps that cannot be solved quickly enough through internal development.
The bottom line
Building services is still early in its M&A cycle. Internal succession is more complex, ownership transitions are compressed, and supporting infrastructure is still developing.
That is why culturally aligned deals tend to outperform financially stronger ones. It is also why firms walk away from higher offers, and why integrations that ignore culture often unravel quickly.
MEP firms are not transactional businesses. They are technical organisations built on trust, relationships, and continuity.
Grace captures it well: “You can’t spreadsheet your way through that.”
Financial structure sets the framework, but culture determines the outcome.
For firms navigating growth, succession, or integration, leadership and talent are now central to deal success. If you’re assessing your next move and need to secure the right people to support it, request a call back from Grace to discuss how the market is shifting and where the risks and opportunities sit.
