What does consolidation in the civil engineering market mean for your company?

A replacement challenge of historic proportions

A large part of Dutch civil infrastructure dates back to the 1960s and 1970s. Roads, sewers, foundations and cables are nearing the end of their technical lifespan, and the cost of repairs is enormous. TNO estimates the total renewal challenge for provinces, municipalities, Rijkswaterstaat and water boards up to the year 2100 at approximately €260 billion. This amount will rise from €1.1 billion per year in 2021 to €3.4 billion per year in 2041-2050.

The sewer system illustrates how urgent this is. More than half of the sewer pipes in the Netherlands are over 35 years old. Stichting RIONED estimates that the current replacement rate will eventually need to double in order to renew all sewer systems in time. These are not abstract forecasts, but tenders that will come onto the market in the coming years. The question is who will win these contracts.

Tendering is becoming a profession in its own right

In 2025, more than 1,900 construction tenders took place. Between a quarter and thirty per cent of these concerned civil engineering projects, with road construction and sewerage being the largest categories. Growth is almost entirely driven by municipalities: compared to 2017, the number of municipal civil engineering tenders increased by 36%.

At the same time, tender procedures are becoming more demanding. Plans of approach, sustainability scores, risk profiles, reference projects and multiple rounds of questions require administrative and substantive capacity that many independent mid-sized contractors do not have. Projects are increasingly less likely to be awarded privately. And approximately one third of civil engineering tenders consist of framework agreements for long-term maintenance, precisely the type of stable, recurring income that financial investors find attractive.

Emission-free construction requires capital that not everyone has

Clean and Emission-Free Construction is no longer a trend: it is becoming policy. Rijkswaterstaat, the Central Government Real Estate Agency and ProRail are working together to accelerate the transition to zero-emission equipment and construction transport. Four out of ten contractors carried out partly or fully emission-free projects in 2024. More than half of infrastructure contractors have at least one zero-emission machine.

But the distribution is far from equal. Larger companies almost all have emission-free equipment. Among smaller contractors, willingness to invest declines sharply, driven by high purchase costs, insufficient compensation from clients and the lack of charging infrastructure. This gap increases strategic pressure: those who cannot bear the investments independently may be able to do so as part of a larger organisation.

Workforce: the bottleneck that will not resolve itself

The construction sector is ageing faster than the rest of the labour market. The 55-to-60 age group is overrepresented, while the influx of younger employees is lagging behind. Based on the current retirement age, approximately a quarter of construction sector employees will retire over the next twelve years. Physically demanding work and night shifts on the main road network will lead to early retirement, meaning the actual outflow will be even higher.

Larger organisations are in a stronger position in this market. They can offer better prospects, invest in training and attract employees who see fewer opportunities for career progression at smaller companies. An acquisition is therefore also a way to expand the workforce in one step, something that would take years to achieve organically in the current labour market.

Three strategic routes for civil engineering entrepreneurs

All these forces combined lead to a concrete strategic question. What position do you want to occupy in five years’ time and what does that position require of you now? There are three routes, each with its own logic.

1.  Growing independently
Those who wish to remain independent continue to build their own organisation: more staff, a new location, a broader range of services. This path offers maximum autonomy and is the most familiar route for many entrepreneurs. The downside is that organic growth is slower and that all investments in equipment, tendering capacity and staff must be borne entirely under their own steam. In a market where the barriers to tendering are rising and the costs of emission-free equipment are increasing, this is becoming an increasingly difficult battle.

2.  Growing through acquisitions
An acquisition offers what organic growth cannot: speed. Acquiring a customer portfolio, entering a new geographical area, adding specific expertise or a strong workforce. For civil engineering companies looking to scale up in order to participate in larger tender procedures or framework agreements, this is a logical step.

What I see in practice is that the challenge rarely lies in the desire to grow. The civil engineering market is transparent enough for parties to know each other personally, but opaque enough that many potential targets are never actively for sale. This requires a network and the patience to hold discussions before there is a concrete transaction. An adviser with sector knowledge can help with this, but also with structuring the transaction and any financing, and safeguarding your interests throughout the process.

3.  A (partial) sale or investment
This is the route that entrepreneurs sometimes consider too late. A sale does not have to mean a farewell. A strategic buyer brings scale, a network and synergies that can take the company further than would be possible independently. A private equity investor can offer financial security to the existing shareholder, while the management team retains day-to-day control. This also offers opportunities for a partial transfer to the next generation, possibly in combination with private equity. And a partial transaction makes it possible to realise part of the value built up without jeopardising the continuity of the company or its staff.

You only transfer a business once. The choice of the right route and the right timing largely determines the outcome.

The consolidation wave in civil engineering offers opportunities, but also requires you to consider in good time what position you want to occupy in a few years’ time. We speak daily with entrepreneurs facing this consideration and know the market from the inside: as adviser on more than ten transactions in infrastructure and civil engineering in recent years and a hundred deals in the wider construction and infrastructure sector.

About the author

Pjotr van Deursen is Director at Rembrandt M&A and a specialist in the construction and real estate sector. He advised on, among others, the acquisition of HT Infra by JARO Group and the management buy-out at Bouwbedrijf Gelens. Drawing on his knowledge of the civil engineering market, he combines sector insight with personal guidance for entrepreneurs considering growth or transfer. “Particularly in the construction and real estate sector, with its high level of M&A activity, I find it rewarding and inspiring to assist and guide entrepreneurs through these processes, which are so important for the future of both the entrepreneur and the company.”