News & Press Release

    Shirley Che
    May 05, 2021 • Shirley Che

    New Data on AEC Firm Values Released in the 2021 Valuation Survey

    FAYETTEVILLE, Ark. (Wednesday, May 5, 2021) – The impact of 2020 evident in cash positions, equity value/book value, and increase in ownership transition activity.

    Zweig Group recently released the 2021 Valuation Report of AEC Firms, a 30-year legacy publication compiled from Zweig Group’s annual survey of AEC firm values.  

    This report contains six different value ratios (value vs. FTE count, net service revenue (NSR), EBITDA, pre-tax, pre-bonus profit, backlog, and book value), comprising Zweig Group’s Z-Value formulas. Four different values (Z1, Z2, Z3, Z4) are calculated based on the reason for the valuation. 

    Zweig Group looks back on 10-years of valuation data to capture trends, consistency, and variability in these metrics. This most recent report revealed that over the past decade, Value/FTE showed the greatest degree of change from year to year. This metric continues to increase at a steady pace (roughly 4.4 percent per year) as inflation and cost of living increases drive material and labor prices up. For similar reasons, Value/NSR, generally a more stable metric, showed a higher degree of year over year change (2.1 percent increase) than the cash flow metrics; Value/EBITDA and Equity value/pre-tax-pre-bonus profit. Over the 10-year period, Value/EBITDA showed 0 percent change even though it fluctuates the most in certain cycles.

    Valuations conducted for the purpose of gaining a controlling interest in a firm yield higher values than those conducted for minority interest transactions (most internal ownership transfers). This year’s median minority interest discount was 18 percent. Eight percent of the sample also applied additional discounts, on top of the minority interest discount, for key personnel leaving the firm and other non-numerical factors. This year Zweig Group saw an increase in the number of formal valuations submitted with nearly 51 percent of the sample representing valuations done by an appraisal and not a formula. The increase in ownership transition activity across the industry has prompted more firms to request a third-party, independent value appraisal as they prepare for a transaction.

    Zweig Group’s 2021 Valuation Survey is intended to give firm leaders a baseline to explore the value of their firm or another firm during M&A negotiations. For the purpose of internal transition, the Z-Values and corresponding value calculations can be used in periods where a formal appraisal is not conducted. If you would like to learn more about your firm’s value, this report is for you!

    For more information or to purchase a copy of the report, please visit this link or contact



    Zweig Group, three times on the Inc. 500/5000 list, is the leading research, publishing, and consulting resource for the built environment. The firm provides strategy, mergers and acquisitions, business valuation, ownership transition, marketing, business development, market research, financial management, project management, recruiting and executive search services nationwide. Zweig Group also provides a comprehensive suite of products including industry reports and surveys, executive training, and business conferences covering virtually every aspect of AEC firm management. The firm has offices in Dallas, Texas and Fayetteville, Arkansas.