Your trusted employees know your firm’s culture, projects, and client relationships intimately. Leveraging SBA-backed financing and the Step-Up Legacy Plan™, they can become owners with as little as 10% down payment, while you receive near 100% cash at closing.
This streamlined alternative to costly ESOPs suits A/E/LS firms with revenues between $1 million and $8 million, eliminating seller financing risk and administrative burdens. A disciplined 5 to 7 year roadmap aligns leadership grooming, financial transparency, and early lender engagement to maximize firm value and ensure a smooth ownership transition.
With SBA financing and the Step-Up Legacy Plan™, your employees can own the firm you built—and you get paid 100% at closing.
Exiting your architecture, engineering, or land surveying firm within a 5 to 7 year horizon demands a carefully structured, multi-phase approach that balances legacy preservation with financial certainty. The Step-Up Legacy Plan™ harnesses SBA 7(a) and 504 loans, enabling employee buyers to finance typically up to 90% of the purchase price with only about 10% equity, while you receive nearly 100% cash at closing. This eliminates the need for risky seller carrybacks or personal guarantees common in traditional buyouts.
Years 1 to 2: Leadership Grooming and Financial Transparency
Start by identifying and developing senior employees with ownership potential. At the same time, rigorously document your firm’s financials: project backlog, work-in-progress (WIP), client contracts, and recurring fees such as retainers. Transparent and detailed records build lender trust and can improve valuation multiples, which often range from 4x to 5x EBITDA.
Years 2 to 3: Strengthen Client Contracts and Reduce Risk
Formalize client retention through enforceable contracts and guarantees, stabilizing recurring revenue. SBA lenders heavily weigh contract-backed revenue streams, reducing perceived risk and improving employee buyers’ financing eligibility.
Years 4 to 6: Early Bank Engagement and Financing Design
Engage SBA-approved lenders with experience in A/E/LS firm acquisitions. SBA 7(a) loans typically finance up to 90% with 10% down, offering amortization terms up to 25 years, and interest rates in the 10.25% to 13.75% range as of 2025. The Step-Up Legacy Plan™ structures the deal so sellers receive full payment at closing, often combining SBA loans with limited seller standby notes and life insurance safeguards to mitigate lender risk.
Each phase builds on the prior, enhancing the firm’s bankability and supporting a seamless ownership transfer with minimal surprises. This approach also allows integration of retention incentives such as equity rollovers and staged governance plans to promote employee commitment and leadership continuity.
Importantly, understanding A/E/LS valuation drivers—backlog strength, licensed staff depth, bonding capacity, and client concentration—is critical. Aligning these factors with lender expectations empowers your firm to command competitive SBA loan terms that support seller-paid-at-closing transactions.
The Step-Up Legacy Plan™ lets your trusted employees buy your firm with SBA financing, while you walk away fully paid at closing.
Beyond SBA financing, successful deals often leverage deal structures designed for retention and risk mitigation. Limited seller standby notes, held fully on standby without principal or interest payments during the SBA loan term, combined with life insurance on large loans, reduce lender exposure and accelerate SBA approvals.
Setting realistic expectations for your employees as buyers is crucial. They must understand SBA loan underwriting requires strong financial transparency, documented client contracts, and demonstrated leadership capability. Starting early allows time to groom leadership, validate financials, and formalize contracts that support bank underwriting.
Additionally, coordinating with specialized SBA lenders who understand A/E/LS industry nuances significantly improves loan approval odds and terms. Not all SBA lenders have equal appetite for project-based firms with bonding and licensure requirements, so targeted lender selection and relationship-building is essential.
Finally, securing your financial future begins with comprehensive succession planning. A 5 to 7 year approach maximizes valuation, mitigates transition risk, and avoids forced sales or distress pricing that frequently accompany rushed exits. This disciplined roadmap empowers you to preserve your firm’s legacy while enjoying a full cash retirement payout without seller note exposure.
These steps align with updated SBA loan policies, support realistic buyer financing, and provide owners confidence that legacy, culture, and financial goals are simultaneously achieved.
Your A/E/LS firm’s future and your retirement security deserve a well-structured plan that preserves your legacy and delivers nearly full payment at closing. The Step-Up Legacy Plan™, combined with current SBA 7(a) loan programs, offers a low-risk, cost-effective route to employee ownership.
Starting your 5 to 7 year succession roadmap today maximizes your firm’s value, aligns leadership, and unlocks bank financing for trusted employees. Reach out to Allen Business Advisors to learn how this proven framework can secure your firm’s future and retirement goals with confidence.
