Your A/E/LS firm’s culture and client relationships are your greatest assets. With a clear, disciplined 5 to 7 year exit roadmap, you can preserve that legacy while securing near full cash at closing.
Many owners delay action—procrastinating until retirement looms, risking rushed deals that don’t maximize value or protect their firm’s future. The Step-Up Legacy Plan™ offers a practical, SBA-backed alternative to costly ESOPs that enables trusted employees to become owners, removing seller financing risks.
In today’s evolving SBA lending landscape and rising interest rates, early preparation focusing on leadership development, financial transparency, and bank engagement unlocks a smooth, legacy-preserving succession that maximizes your financial payoff.
Your employees can own the firm you built—and you get paid 100% cash at closing with the right plan.
Succession planning for A/E/LS firms is a multi-year process that requires deliberate, strategic steps to ensure both legacy preservation and maximum seller payout. Waiting too long reduces your options and often forces seller financing or low offers. A 5 to 7 year horizon is ideal for grooming leadership, cleaning financials, and structuring a bankable deal.
Year 1-2: Leadership Grooming & Financial Clarity
Identify and develop senior employees who are capable and motivated to become owners. Parallelly, rigorously document your firm’s financials—project backlog, work-in-progress (WIP), client contracts, and any recurring revenue streams. Transparent, detailed financial records are critical to SBA lenders and directly impact valuation multiples, which for A/E firms currently range from 4x to 7x EBITDA.
Year 2-3: Client Contract Formalization & Mitigating Risk
Strengthen client contracts and secure retention guarantees to reduce lender-perceived risk. SBA lenders increasingly focus on contract-backed, stable cash flows, which boost employee buyers’ loan approval chances. This step also enhances valuation by stabilizing expected future revenue.
Years 4-6: Early Bank Engagement & Financing Design
Engage SBA-approved lenders experienced with A/E/LS employee buyouts to pre-qualify buyers and structure financing. SBA 7(a) loans typically finance up to 90% of the purchase price with down payments as low as 5-10%. Despite rising 2025 interest rates ranging approximately 10.25%-13.75%, reduced guarantee fees and long amortization (up to 25 years) result in manageable payments.
By following this roadmap, A/E/LS owners position themselves for a seamless succession supported by bank financing that respects the unique project-based revenue and culture of their firms.
It’s also important to note the evolving market environment: growing PE interest and consolidation pressures make internal employee buyouts a culturally aligned alternative that safeguards firm independence.
Disciplined multi-year planning turns your leadership and financials into bankable assets that unlock full seller payout at closing.
Successfully preparing for your firm’s exit also involves mitigating common challenges:
Implementing repeatable systems and leveraging marketing to grow predictable revenue streams also enhance valuation multiples. Documented processes reduce owner dependency risk, increasing lender confidence and buyer appeal.
Leveraging specialized advisory teams familiar with A/E/LS firms and SBA financing is critical. These experts navigate underwriting nuances, avoid traditional seller financing traps, and align deal structures with the Step-Up Legacy Plan™, providing accelerated seller liquidity and preserving firm culture.
The path forward requires action now to create a customized 5–7 year roadmap balancing your legacy, financial goals, and firm values—turning employee buyout aspirations into a bankable, legacy-preserving reality.
Your A/E/LS firm’s future is valuable, and your legacy deserves protection through a well-structured succession plan. With the Step-Up Legacy Plan™, you can exit on your terms, receive cash at closing, and empower your employees to lead.
Planning 5 to 7 years ahead maximizes your firm’s value and financing options, reducing risk and ensuring continuity. Reach out to Allen Business Advisors to explore how this proven strategy can work for your unique firm and situation.
Secure your legacy while unlocking full payment—your succession journey starts now.
