For A/E/LS firm owners facing the choice between selling to an external buyer or keeping ownership within the family or trusted employees, the scales now tip in favor of legacy preservation without sacrificing financial security.
Thanks to evolving SBA 7(a) financing programs and the streamlined Step-Up Legacy Plan™, key employees or family members can acquire ownership with as little as 10% down, enabling owners to receive near 100% cash at closing.
This practical, bank-friendly approach eliminates the seller financing traps and costly ESOP complexities that historically forced many owners to sell to third parties.
The Step-Up Legacy Plan™ lets you preserve your firm’s legacy while walking away fully paid at closing.
When a third-party buyer presents an offer, it often comes with the promise of immediate liquidity. However, selling outside your trusted circle can disrupt your firm’s culture, client relationships, and long-term stability. For many A/E/LS owners, preserving legacy is as important as financial outcomes.
The dilemma is real: third-party sales may pay cash but risk losing the essence of what makes the firm unique. Alternatively, passing ownership to family or employees has been complicated by financing challenges and the risk of seller carrybacks.
Fortunately, advances in SBA 7(a) loan programs and innovative deal structures offer a new path. The Step-Up Legacy Plan™ leverages SBA-backed financing with down payments as low as 10%, enabling owners to receive close to 100% of proceeds at closing while trusted insiders become owners.
This plan addresses the common pitfalls of insider succession:
Owners should begin a disciplined 5 to 7 year roadmap that includes:
Compared with third-party sales, this approach preserves:
While the market values for A/E firms remain robust, with EBITDA multiples in the 4x to 7x range, the structure of the deal largely determines how much of that value is realized at closing versus tied up in notes or earnouts. The Step-Up Legacy Plan™ maximizes upfront liquidity while enabling a smooth, bankable transition.
With disciplined planning, you can achieve full payment at closing and empower trusted insiders to lead your firm’s future.
Adding complexity to this decision are evolving SBA 7(a) loan conditions. Interest rates currently range between 10.25% and 13.75%, with loan caps up to $5 million, and guarantee fee reductions that enhance affordability.
Employee or family buyers typically need 5% to 10% equity injection, often financed through home equity or seller standby notes managed within prudent limits. These factors make internal succession feasible for firms between $1 million and $8 million in revenue.
Estate planning and deferred compensation can complement the Step-Up Legacy Plan™, offering hybrid solutions where owners gift portions of equity over time or realize tax-efficient income streams through structured payouts.
Owners benefit from working closely with specialized advisors and SBA-savvy lenders who understand A/E/LS deal nuances. Early engagement—3 to 5 years ahead—ensures proper succession timing and maximizes value.
Practical advice for owners considering this path:
Compared to third-party sales, this pathway leads to a higher degree of owner satisfaction, legacy preservation, and financial security without incurring ESOP costs or seller financing risks.
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.
