Leonard Green Buys Cumming Group in Bet on Construction Squeeze

Leonard Green & Partners is buying Cumming Group, a project and cost management firm that's become the construction industry's answer to runaway budgets and missed deadlines. The Los Angeles-based private equity shop is acquiring Cumming from New Mountain Capital, which bought the business in 2018 and expanded it from a regional player to a platform doing work on some of the largest infrastructure and commercial real estate projects in North America.

The deal — financial terms weren't disclosed — represents a straight-up bet that construction is getting more complicated, not less. As projects balloon in cost and owners lose faith in general contractors to manage their own budgets, firms like Cumming are positioning themselves as the independent referee. They don't swing hammers or pour concrete. They sit between the owner and the builder, watching every invoice and change order with the skepticism of someone who's seen it all before.

New Mountain held Cumming for eight years, a longer-than-average hold even by today's standards. That duration signals either patience or difficulty finding an exit — or both. But it also gave the firm time to stitch together a national footprint through acquisitions and organic growth. Cumming now operates across multiple geographies and sectors, from healthcare and aviation to data centers and higher education. The company claims pure-play status in project and cost management, meaning it doesn't have the conflict of interest that comes with also being a contractor or architect.

Leonard Green, known for consumer and services bets — think Whole Foods before Amazon and Petco — is making a less obvious play here. Construction services don't have the brand recognition or margin profile of retail chains. But they do have something Leonard Green clearly values: recurring revenue from clients who can't afford to go it alone on billion-dollar builds.

Project management as an independent service exists because trust broke down. Decades ago, owners and contractors had closer relationships — often working together across multiple projects. But as construction became more specialized and projects grew larger and more complex, owners started hiring third parties to keep an eye on the money.

The model makes sense when you're spending $500 million on a hospital or $2 billion on a transit hub. General contractors have an incentive to maximize billings. Architects want their vision built, regardless of cost. The owner — often a public agency, university, or corporate real estate team — needs someone in the room who's only there to ask: Is this necessary? Is this price fair? Can we get this done faster?

Cumming's pitch is that it doesn't design, doesn't build, and doesn't have a dog in the fight beyond delivering the project on time and under budget. The firm estimates costs before construction starts, reviews contractor bids, manages schedules, and tracks change orders. When a contractor says a delay will cost an extra $3 million, Cumming is the one who asks for receipts.

The demand for that service has grown as construction costs have spiraled. Material prices spiked during the pandemic and haven't fully retreated. Labor shortages persist across trades. Projects that were budgeted in 2022 are coming in 20-30% over estimate in 2024 and 2025. Owners who might have skipped hiring a project manager a decade ago now see it as essential insurance.

New Mountain Capital bought Cumming in 2018, back when the firm was smaller and more regionally concentrated. The acquisition thesis was consolidation — roll up boutique project management firms into a national platform that could serve clients across geographies and sectors. New Mountain executed that playbook, making several add-on acquisitions during its hold period and expanding Cumming's presence in key markets.

But eight years is a long time in private equity. The typical hold period for a buyout is four to six years. New Mountain's extended ownership suggests either that the firm saw continued growth potential and wasn't in a hurry to sell, or that finding the right buyer took longer than expected. The construction services market isn't as liquid as software or healthcare, and strategic buyers — other project management firms or large engineering consultancies — might not have offered the valuation New Mountain wanted.

Leonard Green's entry suggests the firm sees something New Mountain built that's now ready for the next phase. Whether that's further geographic expansion, entry into adjacent services like owner's representation or commissioning, or simply running the business for cash flow at scale, the thesis will become clear in the next 18-24 months.

New Mountain, for its part, has had a mixed track record with long holds. The firm has generated strong returns on some portfolio companies by staying patient and reinvesting, but it's also faced criticism for holding assets through market cycles that would have been better exit windows. The Cumming sale gives New Mountain a liquidity event after nearly a decade, but whether it maximized value is a question only time — and the fund's LPs — will answer.

The lack of disclosed financial terms is standard for private company transactions, but it also means we don't know if New Mountain hit its return target or if Leonard Green paid a premium to get the deal done. What's clear is that both firms believe the construction oversight market has room to run.

During its ownership, New Mountain focused on turning Cumming into a platform that could operate at scale. That meant standardizing service delivery, investing in technology for cost tracking and project reporting, and building out leadership teams in key regions. The firm also pushed Cumming to diversify its client base beyond any single sector or geography, reducing concentration risk that might spook a buyer.

Leonard Green isn't known as a construction investor. The firm's historical wins have come from consumer brands, retail, and healthcare services. But in recent years, LGP has quietly built exposure to B2B services businesses that have recurring revenue, high switching costs, and defensible market positions. Cumming checks those boxes.

Project management contracts are often multi-year engagements. Once a firm like Cumming is embedded in a major capital program — say, a five-year hospital expansion or a multi-phase transit project — the owner isn't going to swap them out mid-stream. That creates revenue visibility and reduces churn, two things private equity firms love.

Leonard Green also has a track record of scaling service businesses through add-on acquisitions. If Cumming's strategy under New Mountain was geographic expansion, Leonard Green's playbook will likely be more of the same — but faster. The firm has the capital and deal team to pursue aggressive roll-up strategies, and the project management space remains fragmented enough to support that approach.

There's also a macro tailwind. Infrastructure spending in the U.S. is accelerating, driven by federal legislation like the Infrastructure Investment and Jobs Act and the CHIPS and Science Act. Both are pumping billions into projects that require third-party oversight. Data center construction is booming as AI compute demand surges. Healthcare systems are building and renovating at scale. All of those verticals are core markets for Cumming.

Leonard Green is betting that as construction budgets grow, so does the demand for independent cost management. The math is simple: if you're spending $1 billion on a project, paying a few million for someone to prevent a $50 million overrun is an easy call.

The project management and cost consulting market is still highly fragmented. Major players include firms like Rider Levett Bucknall, Faithful+Gould, and Currie & Brown, but dozens of regional boutiques continue to operate independently. Leonard Green could use Cumming as a platform to acquire those firms, rolling them into a national — or even global — leader in the space.

The challenge is culture. Project management firms are built on relationships and reputation. Integrating acquired firms without losing key client relationships or senior staff is harder than it looks. Leonard Green will need to balance growth ambitions with the reality that this is still a people business, and people leave when they don't like the new ownership.

Cumming operates in a market that's expanding, but it's not without risk. Construction cycles are volatile. When the economy slows, owners delay or cancel projects. That directly impacts firms like Cumming, which get paid as a percentage of project cost or through fixed-fee engagements tied to active builds.

The other risk is commoditization. As more firms enter the project management space, the differentiation between them narrows. If Cumming's value proposition is just "we watch the budget," that's replicable. The firms that will win long-term are the ones that bring proprietary data, better technology, or deeper expertise in specific verticals.

Cumming's advantage — if it holds — is its pure-play model. Unlike large engineering firms that also offer construction management, Cumming doesn't have a conflict of interest. It's not trying to sell you design services or push you toward a particular contractor. That independence is valuable, but only if clients continue to see it as worth paying for separately.

There's also the question of technology. Construction tech startups are raising billions to build software that automates cost tracking, schedule management, and procurement oversight. If those tools become good enough, do owners still need a firm like Cumming? Or does Cumming need to become a technology company itself?

The construction industry is notoriously slow to adopt technology, but that's changing. Platforms like Procore, Autodesk Construction Cloud, and newer entrants are digitizing workflows that used to live in spreadsheets and email chains. If those platforms can provide real-time cost tracking and schedule monitoring, the need for human project managers diminishes — at least for routine oversight.

But technology doesn't replace judgment. When a contractor submits a $5 million change order, software can flag it, but it can't negotiate it. That's where firms like Cumming still add value. The question is whether Leonard Green will invest in building or acquiring technology that complements Cumming's human expertise, or whether the firm will remain primarily a consulting business.

Leonard Green's immediate priority will be stabilizing the business post-acquisition. That means retaining key executives, reassuring major clients that nothing is changing, and making sure revenue doesn't dip during the transition. In professional services deals, client and employee retention in the first 90 days is everything.

After that, expect Leonard Green to push for growth — likely through a combination of organic expansion and add-on acquisitions. The firm will want to increase Cumming's geographic footprint, enter new verticals, and potentially expand into adjacent services like owner's representation, commissioning, or even light advisory work for developers.

Leonard Green will also likely bring operational discipline. Private equity firms excel at squeezing efficiency out of service businesses — standardizing delivery models, centralizing back-office functions, and using data to identify high-margin clients and projects. Cumming will get the full treatment.

The exit timeline is harder to predict. If Leonard Green follows its typical playbook, it'll look to sell or take Cumming public within five to seven years. But that assumes the construction market holds up, the firm executes its growth plan, and a buyer emerges who's willing to pay a premium. The last condition is the hardest to guarantee.

The construction services market has seen steady private equity activity over the past decade, as firms recognize the defensive characteristics and recurring revenue potential of the sector. Recent deals provide context for where Cumming fits in the broader landscape.

In 2022, ArcBest acquired MoLo Solutions, a supply chain and logistics consulting firm, for $245 million. The deal was smaller than what Cumming likely commanded, but it reflected similar themes: buyers willing to pay for specialized expertise and client relationships in complex, high-stakes industries.

What stands out is the absence of mega-deals. Construction services don't command the valuations that software or healthcare assets do, and the market remains fragmented enough that no single firm dominates. That fragmentation is what makes Cumming an attractive platform for Leonard Green — there's still room to consolidate and build something larger.

The other pattern is patient capital. Firms like CPPIB and CDPQ — large institutional investors — have taken minority stakes in construction services businesses rather than buying them outright. That suggests these businesses are valued for steady cash flow and long-term growth, not explosive short-term returns.

Leonard Green's acquisition of Cumming is ultimately a bet that construction isn't getting simpler. Projects are larger, timelines are longer, and the stakes — financial and reputational — are higher. Owners can't afford to wing it anymore, and they're willing to pay for professional oversight.

The infrastructure boom underway in the U.S. supports that thesis. Federal funding is flowing into transportation, broadband, water systems, and energy infrastructure. States and municipalities are launching capital programs that will take decades to complete. All of that work needs project managers.

But the boom also creates competition. More firms are entering the project management space, and owners have more options. Cumming's challenge — and Leonard Green's — is to stay differentiated in a market that's becoming more crowded.

If Cumming can continue to deliver projects on time and under budget, and if Leonard Green can scale the business without breaking what makes it valuable, this deal will look smart in hindsight. If not, it'll be another case of private equity overestimating its ability to improve a perfectly fine services business.