The engineering and construction industry recorded a strong finish to its merger and acquisition (M&A) activity for 2014, according to Engineering growth, a quarterly analysis of the global deal activity in the engineering and construction industry by PwC US. In 2014, there were 218 deals worth more than $50 million and a total deal value of $172 billion – a value that’s more than triple from last year’s total of $55 billion and slightly below the 10-year high set in 2007. In regards to deal volume, the sector saw a 25 percent increase from 2013 with 173 transactions.

“Some of the significant year-over-year growth in M&A activity can be attributed to companies seeking to better position themselves for ‘mega projects’ that not only require a longer commitment of time and capital, but also deeper pools of highly skilled talent,” said H. Kent Goetjen, U.S. engineering and construction leader at PwC. “The lack of available talent, which is being fueled in the U.S. by the retirement of the baby-boomer generation, is driving up the price of acquisitions and will continue to do so for the foreseeable future.”

There were 64 deals worth more than $50 million with a total value of $54 billion in the fourth quarter of 2014, a 250 percent increase in deal value from $15 billion in the fourth quarter of 2013, and an increase of 108 percent from the previous quarter of 2014 recording $26 billion.

Much of this increase can be credited to four megadeals (transactions worth more than $1 billion) which accounted for $40 billion or nearly 74 percent of all deal value for the fourth quarter of 2014, which also included the largest deal of the year, valued at $35 billion. The year rounded out with a total of 21 megadeals with a value of $127 billion.

Among the fourth quarter deals, construction material was the largest segment with 22 transactions worth more than $50 million, followed by construction machinery with 13 deals. "Construction materials and machinery were the most active in the final quarter of 2014, and home building was the anomaly as the U.S. real estate outlook remained relatively uncertain,” added Goetjen.

Regionally, Asia and Oceania had the highest number of deals worth more than $50 million, both on a quarterly (28) and annual (101) basis. However, the majority of these transactions occurred locally as foreign buyers have become wary of oversupply of capacity, materials and debt in the region. Emerging market activity boomed in the fourth quarter, accounting for just shy of 50 percent of total transactions.

“While we expect deal activity to continue at a brisk pace in 2015, it will be difficult to match the size of the 21 megadeals completed in 2014,” said Goetjen. “Regardless of whether engineering and construction companies are looking to make acquisitions or divest non-core assets, they will continue to focus on their long term strategic goals, rather than the short term economic and commodity environment, when making decisions regarding M&A activity in 2015. Instead, these decisions will be driven by the talent gap, the size and complexity of projects, the increasing prevalence of public-private partnerships and the necessity of being a full-service provider to maintain their position within the industry.”

For information on Engineering growth and to access the full Q4 2014 report, visit:

PwC’s engineering & construction M&A analysis is a quarterly report of announced global transactions with value greater than $50 million analyzed by PwC using transaction data from Thomson Reuters.

For more information on PwC’s Deals practice, visit