Your trusted employees already understand your firm’s culture, clients, and workflow. With tailored SBA financing and the Step-Up Legacy Plan™, they can become owners while you receive 100% cash at closing, safeguarding your legacy and retirement security.
This practical alternative to costly ESOPs suits A/E/LS firms with $1M to $8M revenue, enabling employee buyouts with about 10% down and financing backed by SBA’s 75-85% guarantees. It delivers a faster, less complex exit without lengthy seller notes or parent loans.
Starting a disciplined 5-7 year succession roadmap today aligns valuation, client retention, leadership development, and financing strategy to maximize payout and ensure smooth ownership transition.
Your employees can buy your firm with SBA financing, while you get paid 100% cash at closing without seller notes.
Successfully exiting your architecture, engineering, or land surveying firm demands a disciplined, multi-year approach focused on leadership, financial transparency, and bank engagement. The Step-Up Legacy Plan™ harnesses SBA 7(a) loan programs that allow employee buyers to finance up to 90% with about 10% down, enabling sellers to receive near 100% cash upfront without carrying seller notes or personal guarantees.
Years 1-2: Leadership Development & Financial Hygiene
Identify and nurture senior employees capable of ownership. Clean and document financials rigorously—track project backlog, work-in-progress, client contracts, and retainer agreements. Transparent records increase lender confidence and drive firm valuation multiples, currently averaging around 4x to 5x EBITDA for A/E/LS firms.
Years 2-3: Strengthen Client Contracts & Mitigate Risk
Formalize client retention mechanisms—contracts and guarantees—to reduce perceived lender risk. SBA lenders prioritize contract-backed recurring revenue, improving employee buyers’ financing eligibility and enhancing valuation benchmarks.
Years 4-6: Bank Engagement & SBA Financing Design
Early engagement with SBA-approved lenders familiar with A/E/LS firm dynamics is critical. SBA 7(a) loans offer up to 90% financing, with interest rates typically between 10.25% and 13.75%. The SBA guarantee reduces lender risk, while long amortization terms (up to 25 years) maintain manageable buyer payments.
The Step-Up Legacy Plan™ structures deals so sellers receive 100% cash at closing, eliminating dependency on seller financing or personal guarantees. Unlike ESOPs, which require expensive setup fees often exceeding $150,000 and ongoing trustee costs, this plan offers a streamlined, cost-effective, and bank-friendly exit for mid-market firms.
This model suits A/E/LS firms seeking control over their succession process amid rising private equity interest and market consolidation. It aligns buyer capabilities with bank underwriting criteria through disciplined financial preparation and leadership grooming.
Step 7: In the final phase, coordinate closing, SBA loan approval, and transition logistics to ensure a smooth handoff that protects client relationships and firm culture.
Legacy and liquidity go hand in hand when SBA-backed employee buyouts are carefully structured over 5 to 7 years.
To operationalize this plan, firm owners should:
By following this meticulous, bank-oriented approach, owners can avoid common pitfalls such as valuation gaps between buyers and sellers, limited employee capital, and the complexity and costs of ESOPs.
This roadmap maximizes the odds of client retention, cultural continuity, and financial security for all parties, even in markets with elevated interest rates and tighter lender scrutiny.
Allen Business Advisors specializes in this tailored approach, leveraging deep banking knowledge and sector-specific expertise to guide A/E/LS firms through successful succession transactions that honor legacy while ensuring full seller liquidity.
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.
