UK civil engineering sector riding tailwinds of change

A confluence of factors, spanning infrastructure investment and sustainability to low company valuations and persistent distress, are creating the conditions for significant dealmaking within the UK’s civil engineering industry.

Activity in the sector is strong and seems to be growing, driven by both smaller and mid-sized deals and multi-billion-pound acquisitions and by buyers ranging from strategic consolidators to overseas investors and private equity firms.

Looking forwards, the immediate tailwinds that are currently helping to promote M&A activity appear set to sustain throughout at least the remainder of 2025 and into 2026. Furthermore, the sector has considerable exposure to factors that could drive even more dealmaking in the long-term, factors such as sustainability goals, tightening building regulations and major infrastructure spending.

All in all, civil engineering seems primed for strong dealmaking over the medium-term and could also see significant consolidation for years to come as buyers seek to tap into trends that could drive higher profits and stronger valuations in the long-term.

What is the civil engineering sector?
Civil engineering is perhaps the area of engineering that has the most visible impact on daily life, encompassing the design, construction and maintenance of the built and natural environment.

This in itself is a broad definition, spanning things such as roads, bridges, transportation systems, canals and sewage systems, street lighting, municipal waste management and disposal, water supply and even telecoms services.

Simply put, civil engineering designs, builds and maintains the fundamental systems of everyday life. As such, it is a sector that is absolutely critical to, not just our lives, but the proper functioning of the entire country.

M&A in the civil engineering sector
The civil engineering sector plays a major role, not just in building and maintaining the UK’s critical infrastructure, but across the broader economy. As the UK prepares to undertake a significant amount of infrastructure spending, this is only set to grow. According to one projection, the industry is expected to generate approximately £360 billion for the UK economy by 2030.

The sector also sees significant M&A activity, with the industry's strong fundamentals being a major contributor to rising dealmaking in the wider UK construction industry, which saw a 14 per cent rise in dealmaking last year, along with a 77 per cent increase in deal value.

Unsurprisingly, the planned spending on key infrastructure, combined with the fragmentation of the sector and its exposure to key trends such as decarbonisation and green infrastructure, has contributed to a number of big deals recently.

These include the acquisition of telecoms and civil engineering firm Telent by private equity-backed rival M Group in April 2025, Artelia’s acquisition of construction consultancy player Pick Everard and the numerous deals completed by environmental and engineering solutions giant RSK Group, which has established itself as one of the UK’s most acquisitive companies.

Why are buyers attracted to the sector?
Given the central role that civil engineering plays in society, it’s no wonder that strategic buyers and outside investors would seek to conduct M&A activity. There will always be a constant demand for civil engineering services and, as a result of the wide-ranging nature of the industry, there are a wealth of opportunities for buyers to make acquisitions in key verticals and/or expand into adjacent areas.

However, beyond these strong fundamentals, there are also a number of key emerging tailwinds that mean that we may be poised to see a greater degree of activity and investment in the sector than usual.

Housing revolution
It seems quite easy to forget the Labour party’s procession to win the last election and the campaign pledges that brought them into government, given the way that their popularity has fallen so far and so quickly and due to all the proposals that have either been abandoned or fallen by the wayside.

However, one key promise that the government seems intent to deliver on is a housebuilding revolution – summed up by their mantra that they are “backing the builders, not the blockers”. Mass housebuilding is seen as vital to both solving the nation’s deepening housing crisis and boosting its economic growth.

Despite the policy being a central plank of the government’s agenda, the Office for Budget Responsibility (OBR) has said that it will likely fall short of its plan to build 1.5 million new homes across the UK by 2029.

Even so, housebuilding looks set to dramatically increase over the coming years, with significant investment set to drive efforts, and, naturally, this will lead to a surge in demand for key civil engineering services.

Groundworks, drainage, roads and utilities will all be highly in-demand services in order to support housing developments. This will create opportunities for civil firms specialising in site preparation, infrastructure design and enabling works.

Building homes at scale also requires complementary infrastructure, ranging from transportation to utilities and telecoms, creating further demand for suppliers of these services.

As building projects get underway, local and regional firms in areas involving significant developments could become targets for larger national players, with significant strategic consolidation as civil engineering firms seek to build scale and capacity and tap into growing demand more effectively across a number of key verticals.

The growing demand for civil engineering services could also draw more private equity, venture capital and overseas buyers into the sector, attracted by the potential for higher profits and the chance to grow acquisitively during a boom period for the industry.

Critical infrastructure projects ramping up
In addition to a significant increase in housebuilding, the civil engineering sector is also poised to benefit from something that could ultimately prove far bigger and more valuable: a massive investment in infrastructure.

Several major government-backed infrastructure projects have been unfolding in the UK over recent years, including the convoluted, contentious and increasingly unpopular HS2 build, the Project Gigabit effort to deliver ultrafast broadband to the majority of the country and, most recently, the announcement of a £590 million grant to the newly-approved Lower Thames Crossing – a £10bn project to build the UK’s largest road tunnel, connecting Tilbury in Essex to Gravesend in Kent.

Other major projects on the cards include regional transport projects, carbon capture projects, railway build and the Sizewell C nuclear power station, all of which are set to receive billions in funding from the government.

These projects are generating, and will continue to generate, significant demand for civil engineering services, but they may just be the start of what could be a genuine boom time for the industry.

According to reports in June 2025, Chancellor Rachel Reeves is poised to announce details of further funding for critical infrastructure projects across the UK as part of a 10-year infrastructure strategy plan worth as much as £725 billion.

A central planned investment is reported to be the UK’s largest ever flooding programme, with £7.9 billion set to be committed to measures including high-performance flood barriers and nature-based solutions such as wetland restoration.

Another reported project is the £1 billion Structures Fund, which will seek to repair worn-down physical infrastructure such as bridges, flyovers and tunnels, in order to make critical transport infrastructure more resilient to both increasing modern transport demands and extreme weather events.

Should these plans come to fruition and get underway over the coming years (although, as recent experience shows, this is often a tall order), then the civil engineering sector looks set to benefit from a truly transformational increase in infrastructure spending.

This would result in a huge surge in demand, which would simultaneously promote M&A and consolidation within the sector as operators seek to take advantage of the increase in work by building scale and geographic presence, as well as attracting further investment into the sector from overseas companies, private equity firms and other powerful investors.

Increasing safety and environmental regulations
Tightening regulations around safety, security and sustainability are a key consideration for upper management in many industries - particularly construction.This is something that businesses are being required to invest in, meaning it is unlikely to be seen as a tailwind on the one hand, nor a growth driver on the other.

For civil engineering firms, however, these changes are largely positive, because, while they may need to invest in new tools and capabilities, tightening regulations will also mean that a significant amount of work is created. So in this industry, regulations can be part of the value creation continuum.

If we look at the housing sector again, for example, government sustainability and net zero targets mean that there is an additional layer of complexity involved, with newbuilds likely to involve a greater focus on technologies such as heat pumps, solar panels and sustainable drainage systems.

For engineering firms specialising in these areas, demand for their services will increase rapidly and, as a result, they may find themselves acquisition targets, either for private equity investors pursuing ESG-oriented M&A strategies or strategic buyers seeking to bolster their own sustainability credentials.

As we mentioned in our in-depth analysis of M&A in the building products and services sub-sector, the Grenfell Tower tragedy has seen a raft of new measures driven through relating to building safety and fire regulations.

This will mean a significant increase in demand for companies offering compliance-focused services for aspects of building safety such as fire doors, facade safety and fire suppression systems.

An important sideline to mention here (and something that will also relate to sustainability) is that these new safety regulations and environmental measures will not exclusively apply to new-builds – they are also opening up a huge market for civil engineering firms engaging in retrofitting services.

In terms of building safety, unsafe cladding may have to be removed and outdated fire systems replaced. Demand for sustainable retrofitting, meanwhile, could be set to grow amid initiatives such as the £13.2bn Warm Homes plan – which aims to help make homes more effective at retaining heat, thereby reducing energy bills and emissions.

Companies offering services such as heat pump and solar panel installations and other low-carbon infrastructure will benefit from these trends and, like companies involved in building safety, will be natural acquisition targets for both strategic buyers and outside investors.

What will different buyers be targeting?
Strategic buyers
There is likely to be a significant degree of strategic consolidation among civil engineering firms, as well as activity involving more general engineering groups potentially looking to take advantage of the UK’s numerous infrastructure projects by entering the civils market through acquisitions. This will lead to a range of different deal objectives.

In order to build a wider presence and tap into areas seeing a high volume of infrastructure work, some buyers are likely to target geographic expansion, either through mergers with similarly sized firms operating in different parts of the country, or through acquisitions of smaller, regional firms. Some may even seek to build a nationwide presence through a buy-and-build growth strategy - something that may prove increasingly viable should the industry see a greater influx of private equity funding.

Some companies operating in high-growth areas of civil engineering, meanwhile, will capitalise on this by developing a more comprehensive offering through vertical integration deals. Similarly, bigger groups operating in areas of construction such as housebuilding or transport infrastructure may make moves to bring civils capabilities in-house in order to bolster profits as demand rises.

Earlier this year, construction giant VINCI Construction completed the acquisition of infrastructure services firm FM Conway, in a deal that brings in significant expertise in the high-growth transport infrastructure area of civil engineering.

FM Conway delivers essential maintenance and construction across transportation and the build environment and has established itself as a pioneer in sustainable transport infrastructure construction, in particular through its use of recycled asphalt.

VINCI Construction CEO Scott Wardrop said that the acquisition complemented VINCI’s business and that FM Conway would strengthen its capabilities as it seeks to build a “successful and sustainable infrastructure services business” with knowledge of its whole supply chain.[i]

Finally, another key consideration for strategic buyers will be service diversification. Civil engineering firms can use acquisitions to tap into high growth areas of the market such as housebuilding, flood defence infrastructure or telecoms.

Perhaps the most obvious arena for diversification through M&A is in environmental civil engineering, with sustainability now a crucial concern in virtually all areas of civil engineering and the push towards net zero likely to generate extremely strong, lasting demand for environmental services in the sector.

Adler & Allan is a Harrogate-based environmental services firm backed by Goldman & Sachs. The company, which has completed ten acquisitions in the past three years, seeks to join up environmental services in order to enable customers to access solutions to environmental challenges more straightforwardly.

In May 2025, the company completed its latest acquisition with a deal for South West-headquartered drainage and civil engineering company Glanville Environmental.

Headquartered in Devon and operating from five depots across the South West, Glanville Environmental delivers drainage civil engineering, installation and remediation services.

The company specialises in geospatial surveys, high-pressure water jetting, gully cleansing, CCTV surveying, liquid waste movement and septic tank emptying, with clients across industries such as construction, water and rail.
In addition to bolstering Adler & Allan’s geographic footprint, the deal significantly enhances its ability to tackle environmental challenges such as water pollution, while reinforcing its position as a market leading national provider of end-to-end environmental services.

Chief Executive Henrik Pederson called the deal “another tangible step towards realising our plan to scale our operations and further strengthen our market leading package of integrated environmental solutions."

Private equity buyers
In 2025, the UK civil engineering sector displays a wide range of attributes that make it highly attractive to private equity buyers. Fundamentally, the sheer scale of the government-backed infrastructure spending that will take place over the next decade (and most likely way beyond) means that there is a huge demand for services.

Companies with long-term public sector contracts, in particular, could find themselves rapidly becoming targets for private equity investors. For example, companies working on transport infrastructure or major housing projects will have extremely predictable income and stable cash flow, something that is highly attractive to private equity.

Secondly, many areas of the civil engineering sector involve environmental and sustainable services, which has emerged as a major investment target area for private equity companies with ESG-centred investment strategies.

By adding civil engineering companies, such as those involved in flood defence, green infrastructure or sustainable retrofitting, private equity firms can enter high growth markets, while simultaneously bolstering their own ESG credentials.

Another factor is that, while there are a large number of major companies within the civil engineering sector, there are also areas that are highly fragmented. By acquiring strong operators in niche, fragmented markets (such as fire safety retrofitting), private equity firms can rapidly build scale and increase value through a buy-and-build acquisition strategy, or bolster the credentials of portfolio companies through second-tier acquisitions.

In May 2024, EMK Capital acquired a majority stake in Keltbray Infrastructure Services, in a deal that carved the business out of construction group Keltbray Group.

Rebranded as Aureos following the transaction, Keltbray Infrastructure Services was established as the integrated infrastructure engineering services division of construction-focused Keltbray in 2009.

The business is focused on maintaining, upgrading and expanding power, renewable energy and rail networks across the UK and the deal was described as further strengthening the firm’s leading market position in its core segments.

Post-acquisition, EMK Capital has said it will seek to drive Aureos’ buy-and-build strategy within the UK and internationally and expand the business into new service capabilities.

Finally, the tailwinds in the civil engineering sector are long-term. ESG-related infrastructure is only likely to become more prevalent over the coming years, while the UK’s major infrastructure projects are likely to take shape over a decade or more. This means that the sector will remain profitable and valuable for years to come.

As a result, private equity firms investing in civil engineering firms will apply a lower industry risk factor in their forward cash flow projections. This essentially means they are more confident that they will be able to make a profitable exit when they decide to cash in on their investment 4-7 years down the line.

International buyers
International buyers have played a major role across the UK M&A market over recent years and this is a trend that shows little sign of slowing. The engineering sector remains a favourite, with numerous acquisitions involving overseas buyers.

In civil engineering, international buyers - like private equity firms - will be keen to tap into the UK’s huge pipeline of infrastructure projects and spending, likely targeting acquisitions in areas such as housing, rail, roads, and clean energy.

There have already been several illustrations of this in recent deals. For example, the acquisition of Pick Everard, a multi-disciplinary consultancy with a focus on civils and infrastructure, by French firm Artelia and US company Atlas Holdings’ £35 million takeover of the construction business of Lendlease.

Highway Care is a road safety services firm based in Dartford. The company provides a wide range of services and products for the UK highways industry that are designed to enhance operative safety across UK roads.

The firm’s products and services include permanent and temporary road barriers, mobile traffic products, automation systems, security services and hostile vehicle mitigation (HVM) systems - protection systems designed to protect against malicious or accidental vehicle incursions.

In 2025, the company was sold to Swedish infrastructure safety services provider Ramudden Global in a deal that further expanded the buyer’s significant international reach and bolstered its standing as a leader in traffic management.

For Highway Care, the deal was described as a “milestone transaction” that strengthens its market position and ensures continued investment in its product development.

A crucial factor that will aid international buyers, especially those from the US, is the low valuations of UK companies, which means that civil engineering assets are relatively cheap and gives overseas buyers a competitive edge over potential UK-based rivals.

This is a trend that is currently playing out in quite dramatic style, with numerous London-listed companies being acquired by overseas investors (particularly US firms), who are attracted by the chance to acquire good value, high-quality assets in high-growth industries and in a country with relative political and economic stability.

This has even been seen in the wider engineering sector, with Renold, a Manchester-headquartered manufacturer of premium, high specification industrial chain and torque transmission products being taken private by US-based MPE Bid Co.

Given the growth drivers currently shaping the UK civil engineering sector, it seems likely that we will see even more acquisitions from powerful overseas buyers seeking to capitalise on the opportunity to enter this rapidly growing market via relatively cheap acquisitions.

Possibility for distressed deals
Despite the undeniable tailwinds boosting the civil engineering industry, it also must be noted that many firms in or adjacent to the sector are struggling. As in the construction industry, delays to infrastructure investment and construction projects, supply chain issues and stubborn debt piles have all contributed to many firms being in a tricky financial position.

In some cases, this has resulted in well-established civil engineering firms falling into insolvency, recently illustrated by the collapse of £20 million-turnover groundworks specialist LF Solutions Limited.

Despite reporting a profit in its most recent accounts, administrators said the company had struggled to pay creditor liabilities, citing factors including “difficulties encountered in obtaining payment from customers on contracts, the economic climate generally, together with increased trading costs".

The upside of this, however, is that it offers savvy buyers the chance to tap into the emerging tailwinds in the civil engineering sector by buying distressed, but high-quality, businesses and assets at bargain prices. As infrastructure spending begins to ramp up, such acquisitions could begin to deliver major value.

Linbrooke Services was a Sheffield-based engineering business comprised of three divisions: a railway construction operation, a power business and an optical division.

Founded in 2002 and employing around 200 staff, the company serves as Principal Contractor for National Rail and reported turnover of £70.6 million in the year ending March 31 2023.

However, despite this, the company had become loss-making amid the increasing budget constraints of public sector clients in the railway and power sectors, which had impacted infrastructure investments and led to project delays.

As a result, the company fell into administration in October 2024, with Richard Easterby and Chris Newell of Quantuma appointed as joint administrators.

Following their appointment, the joint administrators secured a pre-pack sale of the railway construction division to Keltbray Infrastructure Services in a deal that saved 140 jobs. Keltbray said that the acquisition would “expand our digital capability to a new level, building on our existing specialisms in rail electrification and general rail-orientated civil engineering, with signalling, telemetry and telecom design and installation capabilities."

Despite the challenges faced by the UK construction sector and the ongoing economic uncertainty that continues to make its impact felt on public expenditure, there appears to be little doubt that the UK is poised for a boom in infrastructure spending.

Amid this forthcoming wave of major projects, it is highly likely that there will be a surge of consolidation as bigger players seek to build scale and geographic coverage in order to solidify their market position in a more competitive landscape.

Smaller and medium-sized firms, meanwhile, may seek to do likewise, potentially using acquisitions (and perhaps private equity backing) to expand their business and capitalise on the increase in work.

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