Your trusted employees already know your firm’s culture, clients, and project workflows. With current SBA 7(a) financing and the Step-Up Legacy Plan™, you can enable them to become owners while securing near 100% cash at closing.
Proactive, disciplined planning over 5 to 7 years avoids seller financing risks and complex ESOP costs, empowering you to leave a lasting legacy with financial certainty. Today’s market dynamics, including updated SBA terms and evolving deal structures, offer practical paths to a bankable, legacy-preserving ownership transition.
Waiting for your CPA or advisors to signal it’s time to plan puts your retirement and legacy at risk. This article lays out an actionable framework to take control now and maximize your firm’s value and sale proceeds.
Your employees can own the firm you built—and you get paid 100% at closing with the right plan and financing.
Successful succession in architecture, engineering, and land surveying firms requires a structured 5 to 7 year roadmap that integrates leadership grooming, financial transparency, and early bank engagement.
Year 1-2: Leadership Development & Financial Hygiene
Start identifying senior employees who have the capability and motivation to assume ownership roles. Rigorously document financials, including project backlog, work-in-progress (WIP), client contracts, and retainer agreements. Transparent, clean financial records are critical to gain SBA lender confidence and improve firm valuations, which currently average EBITDA multiples of 4x to 7x for A/E/LS firms.
Year 2-3: Client Contract Formalization & Risk Mitigation
Secure enforceable client retention contracts and guarantees to reduce lender-perceived risk. SBA lenders emphasize stable, contract-backed revenue streams, enabling employee buyers to qualify for loans under SBA 7(a) programs. Reducing perceived risk increases valuation multiples and bankability of the buyout.
Year 4-6: Early Bank Engagement & Deal Structuring
Proactively approach SBA-approved lenders experienced in A/E/LS acquisitions to pre-qualify your employees as buyers. SBA 7(a) loans allow financing up to 90% of the purchase price, typically requiring only a 10% down payment. Despite current interest rates of roughly 10.25% to 13.75%, reduced SBA guarantee fees and extended amortization terms provide manageable financing for employee buyers.
Through disciplined preparation—which includes grooming leadership, cleaning up finances, formalizing client contracts, and engaging banks early—you position your firm for a smooth, bankable employee buyout that maximizes value and supports your retirement goals.
Across 2024-2025, SBA lending remains robust, with approximately 70% approval rates for qualified small business borrowers, making employee buyouts a viable and attractive exit strategy.
Early, disciplined planning unlocks financial certainty and preserves your firm’s culture in today’s evolving SBA financing environment.
It’s critical not to wait for your CPA or advisors to kick off succession discussions. Proactive owner-led planning enhances control and timing, enabling a legacy-preserving transition matched to your retirement goals.
Current SBA 7(a) loan programs provide financing up to $5 million with favorable terms but expect stricter underwriting standards emphasizing clean, transparent financials and well-documented client retention guarantees.
Here’s practical advice for owners approaching succession now:
This thoughtful, multi-year process minimizes the risk of rushed sales, seller financing traps, and legacy dilution from third-party acquisitions. It empowers owners to exit on their terms—fully paid and confident their firm’s culture endures.
Despite some post-pandemic workforce challenges and rising interest rates, current data shows the A/E/LS sector remains resilient with steady valuation multiples and continued SBA loan appetite for well-prepared buyouts.
Starting succession planning now gives you the runway to maximize your firm’s value, preserve your legacy, and secure your financial future with the right banking expertise and deal structure.
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.
