Your key employees already understand your firm's core values, clients, and projects. With updated 2025 SBA financing rules and evolving lender preferences, they can step up to ownership while you receive near 100% cash at closing, creating a secure retirement and preserving your firm's legacy.
The Step-Up Legacy Plan™ offers a streamlined, cost-effective alternative to traditional ESOPs, designed specifically for architecture, engineering, and land surveying firms with $1M to $8M in revenue. It removes seller financing risks and complex administrative hurdles while aligning deal structures with current SBA 7(a) loan policies.
In a market shaped by rising interest rates, tighter underwriting standards, and a growing hybrid workforce, this plan empowers you to build a disciplined 5–7 year transition roadmap that safeguards your legacy and maximizes your financial return.
Your employees can own the firm you built—while you get paid nearly 100% in cash at closing with SBA-backed financing.
Planning a succession for architecture, engineering, and land surveying firms demands a proven, multi-year approach tailored to your firm's unique project-based revenue model and culture. The Step-Up Legacy Plan™ relies on updated SBA 7(a) loan programs, which now emphasize stricter underwriting and equity requirements effective June 1, 2025, with SBA small loans capped at $350,000 and higher credit score thresholds for streamlined approvals.
Year 1–2: Leadership Grooming & Financial Clarity
Begin by identifying and mentoring your senior technical and business leaders who are ready to assume ownership roles. Clean and document comprehensive financials—project backlog, work-in-progress (WIP), client retention contracts, and retainer agreements. This transparency boosts lender confidence and elevates valuation multiples, which for A/E/LS firms currently range between 4x and 8x EBITDA depending on niche and size, with consulting firms reaching even higher multiples.
Year 2–3: Contract Strengthening & Risk Mitigation
Secure enforceable client contracts and retention guarantees to reduce perceived lender risk. SBA lenders prioritize stable, contract-backed revenue streams, which improves the bankability of employee buyouts. These steps also support higher valuation by reinforcing predictable cash flows crucial in project-centric professional firms.
Year 4–6: Early Bank Engagement & SBA Financing Design
Engage SBA-approved lenders experienced with A/E/LS firm acquisitions early. SBA 7(a) loans typically offer up to 90% financing with a 10% buyer equity injection. Although 2025 interest rates for these loans range between 10.25% and 13.75%, reduced SBA guarantee fees and favorable repayment terms (up to 25 years including real estate) maintain manageable buyer payments.
Importantly, SBA lenders are showing sustained appetite for professional services buyouts, particularly those with strong financial transparency and client retention. Management and key employees benefit from clear, practical financing options, empowering ownership without excessive upfront capital.
This approach contrasts with traditional ESOPs by focusing on actionable, bankable deal structures that preserve firm independence amid rising consolidation and private equity interests in the A/E/LS sector.
Strong leadership, clean finances, and early lender engagement are the pillars of a bankable, legacy-preserving employee buyout.
Adapting to New Market Realities: The post-2020 workforce shift towards hybrid and remote models is reshaping firm valuations and operational dynamics. Firms embracing flexible work enjoy cost savings, enhanced talent access, and higher employee retention, all of which contribute positively to EBITDA multiples and strategic positioning for succession deals.
Modern valuation methodologies increasingly account for intangible assets such as talent depth, client relationships, and technological adaptability—qualities internal employee owners deeply understand and are motivated to protect.
Implementing the Step-Up Legacy Plan™ requires disciplined execution over 5 to 7 years, balancing leadership development, financial hygiene, and client contract formalization. Early and constant communication with SBA lenders knowledgeable about A/E/LS industry nuances ensures financing aligns with evolving SBA rules, including the new 50% seller financing cap and personal guarantee waivers where possible.
Consider these practical steps to accelerate your succession readiness:
By following this roadmap, you position your firm to navigate 2025’s financing landscape confidently, achieve a full or near-full cash exit, and protect what you've built—your firm’s culture, client relationships, and enduring legacy.
Your architecture, engineering, or land surveying firm’s future and your retirement security depend on actionable, bankable succession strategies. The Step-Up Legacy Plan™ offers a practical, SBA-backed alternative to costly ESOPs, delivering near 100% cash at closing while empowering your trusted employees to take full ownership.
Starting your disciplined 5 to 7 year succession process today—focused on leadership development, financial transparency, and early lender partnerships—maximizes your firm’s value and protects your legacy.
Contact Allen Business Advisors now to explore how this updated, proven framework can secure your financial future and the continuity of your firm.
