"Your employees can own the firm you built—and you get paid 100% at closing, preserving legacy and retirement security."

For decades, the entrepreneur’s story focused on founders starting from zero. Today a quieter, powerful trend has taken hold: acquisition entrepreneurship, where buyers acquire existing, profitable firms rather than founding new ones.

As a result, your next owner may already be down the hall. These internal buyers bring familiarity with projects, clients, and systems—meaning lower transition risk and a higher probability of continuity. That familiarity matters when banks underwrite a loan: it reduces the perceived execution risk and strengthens a lender’s willingness to finance the purchase.

Codie Sanchez, in her Entrepreneur Magazine feature, called this the “new playbook for entrepreneurs.” Financially disciplined advisors and SBA lenders now make it possible for employees to become owners while paying sellers upfront.

Why this is bankable: when an SBA-approved lender underwrites a buyout, they validate the business with years of financials, assess cash flow, and confirm repayment capacity. That third-party validation turns hope into objective evidence that a deal will perform.

Real numbers matter: the Contrarian Thinking SMB Report 2025 found that 87% of aspiring buyers are comfortable with risk, yet 34% cite cash flow constraints as their top fear. The SBA 7(a) program addresses that funding gap, enabling buyers to acquire businesses with relatively low equity injections.

Consider this practical structure used in many successful Step-Up deals: employees provide 5–10% down (often via home equity or personal savings), the seller provides a limited standby note for a matching 5% (held on standby), and the SBA lender finances the remaining ~90%. The result? Sellers can receive 95% or more of proceeds at closing, while employees step into ownership with manageable debt service.

We’ve seen this work in real firms. In one case, an engineering firm in New Jersey had two banks decline financing until we restructured the package for SBA 7(a) underwriting: 5% buyer equity, 5% seller standby note, and 90% SBA financing. The seller received 95% of sale proceeds at closing, employees became owners, and the firm’s culture and client relationships were preserved.

Bank engagement is the keystone. Lenders prepare formal credit analyses—often 20–40 pages—covering annual and quarterly cash flow, backlog, customer concentration, and receivables turnover. That documentation transforms subjective promises into verifiable performance metrics that support loan approval.

For A/E/LS firms, valuation and lender comfort often hinge on backlog, licensed staff depth, and bonding capacity. Preparing these elements in advance improves multiples and financing terms, making an internal buyout a realistic exit path.

The Step-Up Legacy Plan™ is an ESOP alternative tailored for A/E/LS firms with $1M–$8M in revenue. Rather than lengthy trustee administration or six‑figure setup fees, this approach uses SBA acquisition financing and practical deal design to deliver immediate seller liquidity.

Here’s how we prepare a bankable employee buyout:

• Leadership & Financial Cleanup — Identify high-potential employees and rigorously document project backlog, work-in-progress (WIP), and client contracts to build lender confidence.
• Contract Strength & Risk Reduction — Formalize client commitments and retainer structures so recurring revenue is visible and verifiable for underwriting.
• Early Bank Engagement — Work with SBA-approved lenders experienced in A/E/LS deals to test assumptions and design financing that supports a seller-paid-at-closing outcome.

Over a disciplined 5–7 year roadmap, these steps increase bankability and reduce the chance of last-minute surprises. SBA 7(a) loans typically permit up to 90% financing with 10% or less buyer equity, amortizations up to 25 years (when real estate is included), and underwriting that focuses on sustainable cash flow rather than optimistic projections.

Emotionally, employee ownership is meaningful. It rewards the people who built the firm with you and keeps client relationships and institutional knowledge intact. As Codie Sanchez observed, “More than 70% of small business owners have no formal exit strategy, even though 43% say preserving their company’s legacy matters more than maximizing the sale price.” — Codie Sanchez, Entrepreneur.com

That sentiment drives demand for bankable, legacy-preserving solutions. The Step-Up model aligns the seller’s desire for liquidity with employees’ desire for ownership and the bank’s need for repayment certainty.

If you’re comparing alternatives, note that traditional third-party sales often require 20–30% buyer equity and can erode culture. The Step-Up approach lowers the down payment burden, preserves culture, and avoids long-term seller exposure to default risk.

To start, assess leadership readiness, clean financial records, and open early conversations with SBA lenders. With the right preparation, the next owner of your firm may already be part of your team.