Good or bad, you certainly can’t say 2016 was dull. In a year that produced memorable comebacks, upsets and surprises across a spectrum of institutions, whether geopolitical (Trump, Brexit), financial (Dow 19,000), sports (Cubs’ and Cavaliers’ wins, Villanova’s buzzer-beater) or cultural (alas, Brad and Angelina), the country is due for a much-needed breather after these wild 365 days.

Given this setting, A/E executives pulled back and took a measured “wait and see” approach to deal making this year. By our tabulations, the number of 2016 North American A/E and environmental consulting transactions will be down about 8 percent from 2015 levels.

Overall, we’re impressed at the resiliency and interest of buyers and sellers in an otherwise turbulent period. Considering the nonstop melodrama and uncertainty of the election, depressed oil prices, growing number of CEO successions, and a “stop and start” A/E industry defined by persistent unevenness, the fact that so many exciting combinations still came together is a testament to the core M&A motivations of an ever-consolidating industry.

Notable A/E M&A takeaways include the following:

1. A solid year for mid-sized deals. With the exception of the Stantec-MWH Global merger, 2016 failed to produce other large-scale, transformational combinations. But underneath that level, there were a number of intriguing deals among ENR 500 mid-sized firms, most notably in architecture and facility engineering. And although publicly traded firms were somewhat quiet—with the active exceptions of Stantec, NV5 and KBR—private-equity backed A/E and environmental firms continued to recapitalize, acquire new platforms, and add niche targets to existing portfolio companies (e.g., ATC, Jensen Hughes, Trinity Consultants, Cumming, RES, Surveying & Mapping, Environments for Health Architecture, etc.).

2. The Sunbelt is where it’s at. Although a sizable number of industry transactions are motivated by fortifying local or regional footprints, M&A goals for geographic diversification continue to be dominated by pursuits in the southern United States. Admittedly, this has been going on for many years and not a huge surprise given national trends in population migration, immigration, household formations, new industry clusters (energy, industrial, manufacturing, tourism), and their direct correlations in design and building activity. However, the Sunbelt deal trend is accelerating. Active engagements as well as talks with presidents and principals on desired target criteria profess a continued appetite for firms from Virginia through Florida, across the Gulf Coast into Texas, and westward through Southern California.

3. A tough hiring climate tilts the “buy vs. build” calculus. The one clear takeaway from our recent Growth & Ownership Strategies Conference in Naples, Fla., as well as conversations with industry recruiters and human resources managers is that quality architecture, engineering and environmental professionals are in high demand. There’s a consensus lament of being unable to consistently find (let alone hire) people at practically all levels and disciplines (this also is problematic with construction firms). As a result, signing bonuses, bidding wars and escalating offers are back in vogue as candidates ponder their career options compared to the uneasy environment of just five years ago. Given that tighter labor pools are a constrictor to growth and project delivery, the economics and efficiencies of acquiring talent through M&A as opposed to incremental organic methods is increasingly appealing.

4. Future infrastructure spending looks bright. It’s increasingly likely that U.S. infrastructure spending could be a major policy, economic and jobs driver for the Trump administration. In fact, E&C stocks have rallied since the election in anticipation that their companies will be direct beneficiaries of major investments in new roads, bridges, pipelines, dams, ports and tunnels. Obviously, the amount, timing and composition of such a massive legislative package will have to be negotiated as well as how it ultimately will be funded. At state levels, voters approved major transportation and education construction-related initiatives in Colorado, Texas, California and North Carolina, with a combined value in excess of $135 billion. Engineering firms with dedicated expertise in civil and transportation/transit are well positioned and promising acquisition targets.

5. But are we reaching the top of the industry cycle? Although the macroeconomic and A/E recoveries have been relatively slow and sluggish since 2010, they haven’t been outright recessionary. The U.S. will enter 2017 in its third-longest recovery without a recession since the Great Depression, so an argument can be made (as some prominent banks and economists have done) that the likelihood of a recession will rise. Interest rates are heading higher, inflationary forces may accelerate, and there’s always the possibility of a systematic or event-driven risk that policymakers can’t predict. We saw this in 2007.

We’ve spoken with A/E executives who privately express that their firm’s growth and profitability levels are topping out, and we question if the A/E industry can truly re-accelerate its growth. In the long run, M&A is a confidence game on outlook and convictions, so time will tell