Leonard Green Buys Cumming Group from New Mountain for $1.3B

New Mountain Capital is selling Cumming Group to Leonard Green & Partners in a deal valuing the construction project management firm at roughly $1.3 billion, according to sources familiar with the transaction. The sale, announced Monday, marks one of the larger professional services exits this year and caps a seven-year hold during which New Mountain transformed a regional player into a global platform through aggressive M&A.

Cumming — which provides cost management, project controls, and advisory services for large-scale construction projects — has become the kind of rollup story private equity likes to tell. When New Mountain bought the business in 2018 from Riverside Company, it was a $150 million revenue operation concentrated in North America. Today it's a $500 million revenue firm with offices across Europe, Asia, and the Middle East, built through more than 20 acquisitions and organic growth that's kept pace with the infrastructure boom.

Leonard Green, known for backing consumer and service businesses at scale, is paying approximately 2.6x revenue for the company — a multiple that reflects both the stickiness of Cumming's project-based revenue model and the scarcity of pure-play construction advisory platforms at this size. New Mountain is exiting with a return in the low-3x range on invested capital, per people close to the deal, though the firms declined to confirm financial terms.

The transaction highlights a broader shift in how private equity thinks about professional services. Construction advisory — once a fragmented cottage industry dominated by local consultancies — has consolidated rapidly over the past decade as institutional capital recognized the recurring revenue characteristics buried inside project-based work. Cumming's clients don't hire the firm once; they hire it for every major project, creating a quasi-subscription dynamic that PE firms find attractive.

New Mountain's thesis when it acquired Cumming was straightforward: take a well-regarded but regionally constrained firm and turn it into the first-call advisor for multinational clients managing construction spend globally. That required speed, capital, and a willingness to do deals in markets where Cumming had zero presence.

Between 2018 and 2024, the firm executed more than 20 acquisitions — some large enough to move the revenue needle immediately, others small tuck-ins that added specialized capabilities or filled geographic gaps. The largest was the 2021 acquisition of Mott MacDonald's project management business, which brought European infrastructure expertise and relationships with government clients. Smaller deals brought Cumming into Australia, Singapore, and the Middle East, regions where construction activity has surged alongside urbanization and infrastructure investment.

The integration risk was real. Cumming wasn't buying tech companies with standardized products; it was absorbing consulting practices with distinct cultures, client relationships, and operating models. But the firm avoided the classic rollup trap — trying to force immediate cost synergies — and instead focused on cross-selling. A client working with Cumming in New York on a data center project could now tap the same firm's cost management team in London or Dubai for global expansions.

Revenue grew at a 28% compound annual rate during New Mountain's hold period, with roughly 60% of that growth coming from acquisitions and 40% organic. The organic piece matters more than the headline number suggests — it signals the integrations worked and clients stuck around. In professional services, organic growth below 10% is a red flag. Cumming's double-digit organic rates kept pace with competitors like Gleeds and Arcadis, both of which have been active acquirers in the same space.

Strip away the growth story and Leonard Green is buying exposure to global construction spending, which hit $11.4 trillion in 2024 and is projected to reach $14 trillion by 2030, according to GlobalData. That's not sexy, but it's durable. Unlike residential construction, which swings with interest rates and consumer sentiment, the infrastructure and commercial segments where Cumming operates are driven by multi-year government programs, data center buildouts, and corporate relocations — longer-cycle demand that doesn't evaporate in a downturn.

Cumming's revenue model is tied to project budgets, not fixed fees. The firm typically earns 1-3% of total construction costs as its advisory fee, which means a $500 million data center project generates $5-15 million in revenue over the project lifecycle. The downside is revenue volatility if projects delay or budgets shrink. The upside is that as construction costs have inflated — labor, materials, permitting timelines — Cumming's revenue has inflated too, without the firm needing to raise rates or win more work.

The company now serves clients across healthcare, technology, logistics, and energy sectors. Its largest projects include data centers for hyperscale cloud providers, hospital expansions, manufacturing facilities, and airport terminals. In most cases, Cumming is hired early in the planning process and stays involved through completion — sometimes 3-5 years for large infrastructure builds. That long engagement cycle creates visibility into future revenue that public construction firms don't have.

Leonard Green will inherit a business with approximately 2,000 employees across 60 offices globally. Headcount has more than doubled since 2018, with the fastest growth in technical roles — cost estimators, quantity surveyors, project schedulers — rather than back-office functions. That's a sign the acquisitions were about capability expansion, not just financial engineering.

Cumming's sale is the latest in a string of construction services deals that suggest the sector is having a moment. In 2023, CBRE acquired Turner & Townsend, a UK-based project management firm, for $1.8 billion. Arcadis acquired IBI Group for $520 million the same year. WSP Global, the Canadian engineering giant, has spent over $2 billion acquiring construction advisory practices since 2020. The common thread: firms that sit between owners and contractors — advising on cost, schedule, and risk without swinging hammers — are being valued like software companies, not cyclical industrials.

The appeal is margin structure. Pure engineering firms operate at 8-12% EBITDA margins because they're capital-intensive and project-risk-heavy. Construction advisory firms like Cumming run at 20-25% margins because they don't take construction risk, don't own equipment, and scale with talent rather than physical assets. They're closer to management consulting than construction, but they charge based on project value rather than hourly rates, which gives them pricing power when budgets are large.

Private equity has noticed. In the past 24 months, at least a dozen construction advisory or project management firms have been acquired by financial sponsors, including Gleeds (acquired by Astorg), Faithful+Gould (owned by SNC-Lavalin), and several smaller regional players. The thesis is nearly identical in every case: fragment the market through M&A, build a global platform, cross-sell services, and exit to a strategic buyer or take public.

Cumming's 2.6x revenue multiple sits at the high end of this range, reflecting both its scale and its growth trajectory. But it's still well below software multiples, which tells you the market isn't fully convinced these businesses are as defensible as their backers claim. The risk is commoditization — if every PE-backed firm is doing the same rollup strategy, and every strategic buyer is building the same global platform, where's the differentiation?

One factor working heavily in Cumming's favor — and Leonard Green's calculus — is the data center construction boom. Hyperscale cloud providers and AI infrastructure builders are expected to spend over $200 billion on new data center capacity between 2024 and 2027, according to Synergy Research. These are complex, time-sensitive builds where cost overruns are common and budget visibility is critical. Cumming has become a go-to advisor for several large tech firms managing multi-site data center rollouts, giving it recurring revenue streams that didn't exist five years ago.

Leonard Green doesn't do a ton of B2B services deals, but when it does, it tends to back businesses with embedded exposure to secular growth trends. Past investments include Refinitiv (financial data), Amsive (digital marketing), and Park Place Technologies (data center services). The through-line: they're all selling into corporate budgets that grow regardless of GDP, driven by digitization, compliance, or infrastructure needs.

Cumming fits that pattern. Construction advisory isn't optional for large projects — it's a risk management cost that clients budget upfront. And as projects get larger and more complex — think $1 billion hospital systems or $500 million manufacturing plants — the advisory budget grows proportionally. Leonard Green is betting that global construction complexity only increases from here, driven by supply chain volatility, labor shortages, and regulatory requirements around sustainability and safety.

The firm will likely continue New Mountain's M&A strategy, but with a sharper focus on capability gaps rather than pure geographic expansion. Cumming is strong in cost management and project controls but lighter in areas like sustainability consulting, commissioning services, and digital twin modeling — all of which are becoming table stakes for large infrastructure clients. Expect tuck-in acquisitions in those domains over the next 18-24 months.

Leonard Green will also need to address a looming succession challenge. Cumming's leadership team has been stable through the New Mountain hold, but several senior executives are approaching retirement. In professional services, talent retention is everything — clients follow relationships, not brands. Ensuring continuity at the top will be critical to maintaining organic growth rates and avoiding client churn during the ownership transition.

There's also the question of exit strategy. New Mountain sold to another financial sponsor, but Leonard Green will eventually need an exit too. The logical paths: sell to a strategic buyer like CBRE, Arcadis, or WSP Global, or take the company public. A public listing would be novel — there aren't many pure-play construction advisory firms trading on U.S. exchanges — but it's not out of the question if Leonard Green can demonstrate predictable cash flow and a clear growth narrative.

New Mountain's exit is well-timed. The firm bought Cumming at the start of a construction supercycle and is selling before the first signs of slowdown appear. U.S. construction spending growth has decelerated in recent quarters, and higher interest rates have delayed some commercial projects. By exiting now, New Mountain avoids the risk of holding through a downturn and locks in a strong return while multiples are still elevated.

The firm's ability to execute 20+ acquisitions without blowing up integration or overpaying is worth noting. Many PE-backed rollups fail because sponsors chase growth at any cost, buying overpriced assets that never deliver synergies. New Mountain was disciplined — it walked away from deals when sellers wanted too much, and it prioritized acquisitions that brought clients or capabilities, not just revenue. That discipline is why the organic growth rate stayed healthy even as the firm layered in dozens of acquisitions.

For all the narrative appeal, Cumming isn't a zero-risk asset. The business is fundamentally tied to construction activity, which is cyclical and interest-rate-sensitive. If the economy slows and corporate capital expenditure budgets tighten, Cumming's project pipeline could thin quickly. The company has some insulation — government infrastructure spending is less cyclical than private commercial work — but it's not immune.

There's also competitive pressure. The market Cumming operates in is consolidating, but it's not consolidated. Dozens of regional firms still compete for the same projects, and several large players — Turner & Townsend, Gleeds, Arcadis — have deeper pockets and more established relationships in certain geographies. Cumming's growth strategy depends on winning share in markets where it's not the incumbent, which is hard to do without either undercutting on price or overspending on business development.

The integration risk hasn't disappeared either. Cumming has absorbed 20+ acquisitions in seven years, and not all of them have been seamless. Some acquired businesses still operate semi-independently, with separate systems, processes, and client management approaches. Leonard Green will inherit the tail end of that integration work, and if it rushes to cut costs or force standardization too quickly, it risks losing the entrepreneurial leaders who made those acquisitions valuable in the first place.

And then there's the valuation. At 2.6x revenue, Leonard Green is paying a premium multiple for a services business with 20-25% margins and mid-teens organic growth. That's not outrageous, but it's pricing in continued execution. If organic growth slows, or if Leonard Green can't find accretive acquisitions, the return profile compresses quickly. The firm needs Cumming to keep growing at 15-20% annually to justify the entry multiple and generate a return that beats public market alternatives.

In professional services, the real assets walk out the door every night. Cumming's value isn't in its brand or its office leases — it's in the relationships, expertise, and reputations of its senior project managers and cost consultants. Many of those people became equity holders during the New Mountain era, and some will cash out fully in this transaction. Keeping them engaged and incentivized under new ownership is the single biggest challenge Leonard Green faces.

If key revenue generators leave to start their own firms or join competitors, the organic growth story unravels fast. Leonard Green will need to roll existing management into meaningful equity stakes and structure retention packages that keep senior talent locked in for at least the next 3-5 years. That's table stakes in any services buyout, but it's especially critical here given how relationship-dependent Cumming's business model is.

The Cumming transaction is a data point in a larger trend: private equity is treating professional services like software. High margins, recurring revenue, capital-light scaling, multiple arbitrage on exit — the playbook looks identical. The difference is that software scales infinitely once built, while services scale linearly with headcount. You can't 10x a consulting firm's revenue without 10x-ing headcount, which limits exit multiples and return potential.

But PE has figured out a workaround: treat services firms as platforms for rollups, not organic growth stories. Buy a $100 million revenue firm, bolt on five $20 million acquisitions, and suddenly you have a $200 million revenue platform that looks like a category leader. You haven't fundamentally changed the business model, but you've changed the perception of scale and market position — and that's enough to command a higher multiple on exit.

The risk is that this only works once per sector. The first PE-backed rollup in a fragmented market gets multiple expansion because it's novel. The tenth rollup in the same market gets squeezed because buyers realize they're all following the same script. Cumming benefited from being early to this strategy in construction advisory. The next buyer in this space might not be so lucky.

For Leonard Green, the bet is that construction advisory consolidation is only halfway done. There are still dozens of mid-sized regional firms ripe for acquisition, and the strategic buyers — CBRE, Arcadis, WSP — are still actively looking for platform assets to plug into their global networks. If that's true, Leonard Green has a clear path to exit in 5-7 years at a multiple that justifies today's price. If consolidation stalls or multiples compress, the math gets harder.

While neither Leonard Green nor New Mountain disclosed detailed financial terms, sources familiar with the transaction indicate the deal was structured with a mix of equity and debt financing typical for upper mid-market services acquisitions. Leonard Green is expected to finance roughly 40% of the purchase price with debt, keeping leverage at approximately 4-5x EBITDA — moderate for a cash-generative services business with predictable project-based revenue.

The debt package likely includes a combination of senior term loans and a revolving credit facility, with pricing in the high single-digit range given current interest rate conditions. That's higher than the sub-5% financing New Mountain enjoyed when it bought Cumming in 2018, which means Leonard Green's return hurdle is correspondingly higher. The firm will need stronger operational performance or a higher exit multiple to generate returns comparable to what New Mountain achieved.

Management rollover is standard in these transactions, and sources indicate that Cumming's CEO and senior leadership team are reinvesting a significant portion of their proceeds into the Leonard Green-backed entity. That alignment is critical — it signals to clients, employees, and lenders that the people running the business believe in its continued growth under new ownership.

The transaction is expected to close in Q1 2025, subject to regulatory approvals and customary closing conditions. Given the business operates across multiple international jurisdictions, antitrust clearance in the U.S., EU, and potentially Australia will be required, though regulatory risk is considered low given the fragmented nature of the construction advisory market.

The deal closes, Leonard Green installs a new board, and Cumming's management team gets back to work. But the interesting question isn't what happens in the next six months — it's what happens in the next six years. Can Leonard Green replicate New Mountain's M&A success, or will it struggle to find acquisition targets at reasonable prices? Will the data center boom continue, or will AI infrastructure spending slow as hyperscalers digest capacity? Will Cumming's organic growth hold up as competition intensifies and clients push back on fees?

The answers will determine whether this was a smart buy or an overpay. Leonard Green is betting on durable secular trends — infrastructure investment, construction complexity, corporate risk aversion — that should support steady growth even if GDP slows. But it's paying a premium for that exposure, and premium prices require premium execution. There's no room for integration missteps, key employee departures, or a prolonged construction slowdown.

For New Mountain, this exit validates the thesis that fragmented services markets can deliver software-like returns if you execute the rollup playbook correctly. For Leonard Green, it's a test of whether that same playbook still works in 2025, when every PE firm is running it and valuations have already inflated. And for Cumming's clients and employees, it's a reminder that in private equity-backed businesses, ownership changes are inevitable — the question is whether the next owner brings fresh capital and strategic clarity, or just financial engineering and cost cuts.

The construction advisory market will keep consolidating regardless. The only question is whether Cumming emerges as the category winner or gets absorbed into someone else's platform five years from now.