Most A/E/LS firm owners focus heavily on growing their business value but miss the essential step of planning their exit to convert that value into lasting financial security. Building value alone isn’t a succession plan—it’s the foundation for one.
With the 2025 SBA lending climate evolving and valuation multiples for engineering and architecture firms ranging from 9x to 13x EBITDA, owners can now leverage the Step-Up Legacy Plan™ as a practical alternative to costly ESOPs. This approach enables near 100% cash payment at closing, empowering trusted employees to buy in with as little as 10% down.
In this article, we provide a fresh, actionable 5–7 year roadmap that addresses the gap between value-building and exit readiness—helping you transform your firm’s worth into secure retirement proceeds while preserving your legacy.
Building value creates opportunity; disciplined exit planning turns that value into 100% cash at closing.
Value-building sets the stage, but without a clear exit plan, owners often lose control over timing, price, and legacy preservation. Structuring a bankable, legacy-friendly exit requires a disciplined 5 to 7 year process that groom leadership, optimize financials, and engage SBA lenders effectively.
Year 1-2: Leadership Development & Financial Foundations
Identify and mentor your senior employees who can step into ownership roles. Simultaneously, clean and document financials clearly — project backlog, work-in-progress (WIP), client retention contracts, and recurring revenue streams. In 2025, transparent financial records can significantly increase valuation multiples, now averaging between 9x and 13x EBITDA for A/E firms with strong niches.
Year 2-3: Client Contract Formalization & Risk Mitigation
Secure enforceable contracts and retention guarantees that underline predictable cash flow, vital for SBA loan approval. Banks now emphasize contract-backed earnings, reducing perceived risk and enhancing deal bankability. Streamlined contract structures can boost your firm’s value and lending appeal.
Year 4-6: Early Bank Engagement & Financing Structure Design
Engage SBA-approved lenders experienced with A/E/LS succession early. SBA 7(a) loans offer up to 90% financing with modest 10% down payments. Despite interest rates rising to around 10.5% to 15.5% in 2025, reduced SBA guarantee fees and extended amortization up to 25 years keep debt service manageable.
The Step-Up Legacy Plan™ leverages these loans to deliver near 100% cash payment at closing to sellers, eliminating risky seller notes or personal guarantees.
Owners benefit from a clear path to retirement liquidity while employees gain manageable financing and ownership opportunity. This stepwise roadmap aligns your firm's operations and finances with current SBA criteria, increasing deal certainty.
Supplementing SBA loans, private credit availability and hybrid deal structures (like earnouts or minority rollover equity) provide flexible options to optimize the transition for all parties.
The Step-Up Legacy Plan™ turns your firm's intrinsic value into immediate retirement cash while safeguarding your legacy.
Implementing a successful succession plan isn’t just about following steps—it’s about coordinated execution and adapting to today’s financing environment. Recent SBA policy updates require stronger buyer financial discipline and have raised underwriting standards, but they continue to support well-prepared employee buyouts.
Key practical considerations include:
These elements collectively support an ownership transfer that pays out near full value at closing, reduces transition risk, and keeps the firm thriving under trusted employees.
By focusing on this five to seven year timeframe, you create flexibility to address unforeseen challenges, optimize firm value, and protect the culture you’ve built, all while ensuring your retirement security.
With valuation multiples for specialized A/E firms reaching up to 12.9x EBITDA and SBA financing adapted to new interest rate realities, the Step-Up Legacy Plan™ stands out as a focused and practical path for firms under $8 million in revenue.
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.
