Industrial and Infrastructure Services Industry Report 2H 2026

• The U.S. is in the midst of an electrical revolution with a surge in power demand from AI data center development and reshoring of manufacturing. AI has flipped from a tech story to a labor story.
  
• As demand for technical services encounters a shortage of skilled labor and an aging workforce, we’re seeing investors, both strategic scalers and private equity, looking for an entry in the sector. It can be easier to acquire a ready-made workforce than to grow organically, putting established industrial service businesses in the spotlight.
  
• Valuations across the sector appear to be on the rise, approaching in some cases the higher valuations typically seen in tech and professional services sectors. Buyers appear to be feeling pressure to move quickly to beat competitors to a limited supply, while successful sellers are documenting operations to assure maximum return.

The emerging era of artificial intelligence (AI) and massive leaps in computing power are being seen by many as gold rush times for tech investment or real estate. By one estimate, nearly 3,000 data centers were under construction or in the planning stages at the end of 2025, leading to battles over land, rising home electrical rates, and a computing power arms race. One report cited $560 billion in AI-related venture investment has flowed into all 50 states across nearly 27,000 deals since 2019. ¹ ² ³ ⁴ ⁵ ⁶

But step back. While Microsoft, Alphabet, Meta, Amazon, and Apple seem to appear in every headline about AI and data centers, these data centers don’t build themselves. Electricity doesn’t simply spring from a transformer. From an industrial and infrastructure services viewpoint, someone is pouring the concrete pads for the gargantuan new centers (one, approved in Utah, would span 40,000 acres, that’s 62 square miles, bigger than Manhattan). Someone is installing the wiring, the cooling systems, and maintaining the buildings. Someone is finding ways around wait times of up to five years for new centers to connect to power sources by providing off-grid solutions, from nuclear to gas turbines to smaller on-site conventional generation. The oceans of money being poured into what is hailed as a tech boom is creating opportunities for the pick-and-shovel crowd, the engineering firms, electrical contractors, distribution companies, and HVAC providers. ³ ⁷

From private equity to strategic rollups, M&A activity in industrial services and support appears poised to surge, driven by AI, electrical supply and support, and a renewed rush to reshore manufacturing and restock defense-related supplies. Whether AI ventures will ever return profits that justify their expenditures remains up to debate. Microsoft, spending tens of billions on its AI aspirations, started 2H26 laying off thousands in its Xbox gaming division, perhaps to funnel even more cash into AI ambitions. But just like the old lessons about speculative gold miners and the merchants profiting by selling the pick and shovel supplies, the lunch pail crew building the infrastructure are cashing paychecks today. The dependable, reliable teams that build the foundations and run the operations are finding themselves in demand. ⁸ ⁹ ¹⁰ ¹¹

The numbers don’t lie. Electrical, construction, and specialty contracting providers are in demand. Average deal value in 1H26 surged compared to prior periods, built on a seemingly insatiable demand for hard hat labor in the sectors of AI infrastructure, power supply alternatives and grid modernization, and manufacturing reshoring. It’s a good time to be driving a panel van. Analysts are signaling a coming “next wave” in M&A across the sector as skilled, domestic service providers operate largely free of tariff instability concerns and supply chain snarls plaguing other sectors. ¹²

Amid the growth of AI, U.S. data supply power demands are racing ahead. While estimates vary, predictions for a continued upward slope in demand appear unanimous, some anticipating demand doubling in the coming years. With up to half of all data center construction expected to miss online target dates due to power supply issues – facilities otherwise ready to go but sitting dark – creative solutions are generating interest and investment. Necessity, invention, all that. In a sign of the times, heavy equipment maker Caterpillar in January saw share prices soar year-over-year in part due to demand for its huge, dependable engines, not to power excavators but to help generate electricity for data centers. Hydrogen powered data centers are attracting interest. Renewables are providing real-world alternatives. Small modular reactors (SMRs), yes, mini, on-site nuclear plants, are part of the conversation. All of these take skilled, hands-on labor and specialty contractors to take them from design to operation. ¹³ ¹⁴ ¹⁵ ¹⁶ ¹⁷

And amid the scramble for teams for the construction, electrification, and operation of data centers, the centers themselves are creating a new “data center adjacent” workforce. Often built in remote areas and employing an army of workers, the new question is where to house those workers. Some areas are experiencing a rise in “man camps,” temporary communities of modular housing and RV locations. In rural Wyoming, a developer is proposing housing for 5,600 laborers and tradespeople. The complex would be larger than 84 of Wyoming’s incorporated cities and towns and would include pickleball courts, gyms, and dining areas. Someone will have to build that camp, contractors providing plumbing, installing and maintaining a power grid, cutting the grass, and removing the trash. Another skilled workforce to serve a skilled workforce. Demand breeding demand. ¹⁸

With booming demand for specialty contractors and their skilled labor forces, more than 82% of employers say they’re having trouble finding enough trained hands. Industry studies find more than half of construction workers today are over 55. Nearly 40% of electricians are over 45. And there’s no adequate pipeline to replace them. The looming retirement wave in the blue collar sector has white collar tech executives worried. Their own firms can invent brilliant technical solutions, but they can’t pour the concrete or fabricate pipes. ¹⁹ ²⁰

Contractors with a robust workforce of skilled, trained, and certified specialists are looking mighty desirable for investors looking to expand or enter a sector that seems destined for growth and steady, repeatable returns. Globally, the specialty trade contractors market was valued at 5.3 trillion in 2025. Less than 10 years from now, one study estimates it could top $9 trillion, a compound annual growth rate (CAGR) topping 6%. And demand for skilled services stretches beyond data centers to include an EV charging station network, grid hardening, office building modernization, and alternative energy. The sector remains highly fragmented, potentially creating pressure on investors and bigger operations to strike fast and creating opportunities for others to exit at a premium. Traditionally attracting EBITDA multiples in the 5x to 7x range, today’s demand for specialty contracting and industrial service providers is pushing valuations up to and over 10x. There are some industry watchers who see even higher valuations, especially for well-run, highly skilled operations in industries such as electrical, plumbing, and HVAC. Exciting times for founders indeed. ²¹ ²²

• To start the year, Legence Corp. – a publicly traded provider of engineering, consulting, installation, and maintenance service – completed a massive investment in data center construction and services, buying up Bowers Group in a deal valued at $375 million, including deferred compensation. Bowers is a major player in Northern Virginia, an area of data center concentration, providing mechanical, plumbing, and process system solutions. Jeff Sprau, Legence CEO, said in a news release, “With the addition of Bowers, we are unlocking new opportunities to deliver value for our clients and shareholders in ‘Data Center Alley,’ where they are one of the leading mechanical contractors for data center clients.” Bowers sits on $1.3 billion in documented backlog and awarded contracts and is expected to generate up to $875 million in 2026 revenue. ²³ ²⁴
  
  
• In February, private equity and asset manager Blackstone announced a major move in the trades with the acquisition of home HVAC service provider Champion’s Group and its roughly 20 companies. The purchase, from the portfolio of the Odyssey Group, is estimated at $2.5 billion, more than 18 times EBITDA, a multiple paid for a trades business that is closer to the level we’ve seen in the software and tech sector. Making the investment through its perpetual capital wing, BXPE, may signal a potential preference for holding the acquisition long term, rather than a typical private equity five- to seven-year turnover. The acquisition of the major residential service provider represents an interest in recurring, non-discretionary revenue (when the furnace goes out in January, calling the repair guys isn’t an option, it’s a must). ²⁵ ²⁶
  
  Earlier in the year, Blackstone bought out Madison Dearborn’s remaining stake in Virginia-based Air Control Concepts to become the only institutional investor in what is one of the – possibly the – biggest provider of commercial HVAC, electrical, and controls in North America with operations in 35 states and Canada in more than 38 companies with nearly 2,000 employees.
  
  
• With U.S. data center power demand expected to rise from 31 GW in 2025 to 66 GW in 2027, power is currency, and those who can manage it or provide the juice at a time when centers are waiting up to five or more years for a grid connection are in demand. Capital investment is available. Grid power isn’t. In May, DigitalBridge, a global alternative asset manager dedicated to investing in digital infrastructure, moved to acquire ArcLight in a billion-dollar deal. ArcLight is a major investor in electrification infrastructure, owning, running, or controlling more than 70 GW of assets and 48,000 miles of electric and gas transmission and storage infrastructure. DigitalBridge CEO Marc Ganzi said, “AI is rewiring the global power equation, accelerating investment across generation, transmission, and behind-the-meter infrastructure.“ He cited ArcLight’s “deep expertise across power, renewables, batteries, transmission, and midstream infrastructure” as key to the deal. ²⁷ ²⁸ ²⁹

• Tired of waiting, hyperscalers are looking to those “behind the grid” power generation capabilities, whether that’s large gas turbine generators or smaller, reciprocating engine generation. These alternative generation operations create a lucrative, recurring revenue stream through their frequent need for maintenance and repair. ³⁰

The rising tide of AI, infrastructure, and manufacturing has put skilled, blue collar industrial and infrastructure services in the spotlight. Larger companies are looking for bolt-on scale, private equity is eying the recurring, dependable revenue. Even financial monsters such as Blackstone see the possibilities and are willing to spend.

With the table set, all that’s missing are the guests of honor: business owners. And what guest shows up at a dinner party without preparing? That’s where smart owners get to work months, maybe years, before they actively look to exit. Preparation drives valuation. Smart operators are prepared to demonstrate, with records to back them, an active, workforce retention and development program and a loyal, stable (and hopefully happy) workforce with the nationally and state recognized certifications and credentials that ensure their capabilities. Data centers and infrastructure projects demand skilled, certified technicians. Successful providers aggressively promote their workforce and proudly display lists of held certifications from recognized training and safety programs. ³¹ ³² ³³

Buyers know demand for service is high and the talent pool is limited. Now it’s up to sellers to demonstrate a backlog of guaranteed work, client diversity, and multidisciplinary capabilities. Be prepared or be left out. ⁸ ³⁴

Right now, these are the most active buyers we are seeing in the manufacturing industry.

Additional highlights in the manufacturing industry.

Year over year data

Recent lower to middle market transactions by SDR Ventures in the Industrial and Infrastructure Services sector, including:

Our robust experience in the Industrial & Infrastructure Services Industry makes us an ideal fit to help identify and execute the right M&A options for your business.

Through buy-side analysis, sell-side execution, or private capital formation, we can help you maximize the potential of your company and take advantage of the many opportunities that this industry has to offer.

Our Industrial & Infrastructure Services investment banking expertise includes the following segments:

• Facility & Building Services
• Residential Services
• Public Infrastructure Services
• Environmental Services
• Architectural & Engineering