Many architecture, engineering, and land surveying (A/E/LS) firm owners who have sold their businesses cite the decision as the best they ever made. Through disciplined exit planning and leveraging SBA-backed employee buyouts, they secured full or near-full payment at closing, preserving both legacy and financial security.
The Step-Up Legacy Plan™ has become a practical alternative to costly ESOPs—helping owners exit within a 5-7 year timeline while empowering trusted employees. Coupled with evolving SBA loan programs in 2025, this approach mitigates common risks like seller financing and personal guarantees.
In this article, we share exit-planning insights, financing trends, and legacy strategies drawn from recent successful transitions, providing actionable guidance for owners contemplating their next step.
Former owners consistently highlight that disciplined planning plus SBA-backed employee buyouts deliver full payment and preserve firm legacy.
Owners who successfully exited their A/E/LS firms in recent years often credit a disciplined, multi-year approach focusing on leadership grooming, financial transparency, and early bank engagement. This preparation facilitates a bankable sale to employee buyers under current SBA loan programs.
Step 1: Leadership Development & Financial Cleanup (Years 1–2)
Key employees primed for ownership roles are identified and mentored, while firm financials are rigorously cleaned. Transparency around project backlog, work-in-progress, client contracts, and retainer agreements builds lender confidence and increases firm valuation multiples, now ranging broadly from 4x to 7x EBITDA.
Step 2: Client Contract Strengthening & Risk Mitigation (Years 2–3)
Formalizing client retention contracts and guarantees reduces perceived risk for SBA lenders. Stable recurring revenue streams backed by enforceable contracts improve employee buyers’ eligibility for loans and support higher valuations.
Step 3: Early Bank Engagement & SBA Financing Design (Years 4–6)
Engaging SBA-approved lenders experienced with A/E/LS firms allows employees to secure financing through SBA 7(a) loans. With typical loan-to-value ratios around 90% and buyer equity injections near 10%, sellers can receive 90–100% cash at closing, eliminating the need for seller financing or personal guarantees.
Former owners who embraced this staged approach report a smoother transition, greater peace of mind, and fewer unexpected hurdles than those pursuing third-party sales or seller-financed deals. The ability to exit on their own terms, receive timely cash proceeds, and entrust the firm to loyal employees enables both financial success and legacy preservation.
Early preparation and SBA-backed employee buyouts empower owners to exit fully paid while preserving the firm’s culture and client trust.
In 2025, SBA 7(a) loans remain the cornerstone for financing employee buyouts within the A/E/LS sector. Despite interest rates now ranging between 10.25% and 13.75%, reduced guarantee fees and longer amortization periods support manageable buyer payments, fostering deal feasibility.
The Step-Up Legacy Plan™ leverages these terms to enable sellers to receive cash at closing without carrying seller notes. Employee buyers typically need only 5-10% equity down, with the remainder financed through SBA-backed loans.
Former owners emphasize the importance of starting a 5 to 7 year succession roadmap that includes:
This well-orchestrated approach not only maximizes seller proceeds but also preserves firm culture, mitigates transition risk, and supports long-term success under employee ownership.
For owners wary of ESOP complexity or reluctant to sell to third parties, these lessons and the Step-Up Legacy Plan™ present a tangible path to maximize ROI while safeguarding the legacy they built.
Your decision to sell marks a pivotal moment for your A/E/LS firm’s future and your retirement security. Former owners repeatedly affirm that disciplined, multi-year planning combined with SBA-backed employee buyouts and the Step-Up Legacy Plan™ delivers full or near-full cash at closing and preserves continuity.
To ensure you realize these benefits, start your 5 to 7 year succession roadmap now—focused on leadership development, transparent financials, client contract strength, and early bank engagement.
Contact Allen Business Advisors today to explore how this proven, practical strategy can secure your legacy and maximize your financial outcome in 2025 and beyond.
