When it comes time to exit your architecture, engineering, or land surveying firm, your bank’s role can be the difference between a successful legacy-preserving transition and a complicated, uncertain sale.
In 2025, SBA lending remains a critical tool, with evolving programs like the 7(a) loan adapting to higher interest rates, modest down payment requirements, and more disciplined underwriting. Whether selling to third-party buyers or facilitating an employee buyout, understanding current bank behaviors and financing structures is essential.
By leveraging structured SBA financing, the Step-Up Legacy Plan™, and strategic bank relationships, you can design your deal to maximize cash at closing, avoid seller financing pitfalls, and preserve your firm’s culture for trusted employees or new owners.
With the right bank partner and deal structure, you can exit with full cash upfront while safeguarding your firm’s legacy.
Bank lending landscapes for A/E/LS firm exits have shifted significantly in 2025. SBA loan volumes continue to grow by around 10–12%, with average loans near $663,000 supporting small professional services.
Yet, banks remain cautious, focusing on credit quality and reducing risk exposure. SBA 7(a) loans now often require approximately 10% down from employee buyers and favor clean, transparent financials and strong client contract backing. Interest rates have risen to a range between roughly 10.25% and 13.75%, but reduced SBA guarantee fees help maintain financing accessibility.
Understanding how banks value your firm is key. Lenders prioritize documented project backlog, work-in-progress (WIP), retainer agreements, and enforceable client contracts with retention guarantees. The firm’s leadership strength and lower owner dependency further enhance bank willingness to approve financing.
Valuation multiples for A/E/LS firms in employee buyouts typically range between 4x and 6x EBITDA in 2025, with higher multiples achievable for niche, recurring-revenue models and strong management teams.
Third-party sales often require more extensive buyer qualification and may involve earnouts or contingent payments. In contrast, insider transfers—especially with SBA-backed financing and plans like the Step-Up Legacy Plan™—enable sellers to receive up to 100% cash at closing, avoiding seller financing risks.
This strategic approach mitigates common exit pitfalls like carrying seller notes, cash flow uncertainties, and legacy dilution from external third parties.
Employee buyouts backed by SBA loans empower trusted leaders and deliver immediate cash liquidity for retiring owners.
Let’s break down two key exit scenarios to illustrate practical financing strategies in today’s lending environment.
Scenario 1: Third-Party Sale
When selling to an outside buyer, banks scrutinize buyer financials, firm valuation, and risk exposure. Seller-financing or earnouts may bridge valuation gaps but increase post-sale risk and delay retirement proceeds. The buyer’s bank financing typically involves SBA 7(a) loans combined with commercial term loans or mezzanine debt. Strong contracts and backlog enhance bank appetite, but sellers often receive partial cash upfront, with the remainder contingent on performance and earnout terms.
Scenario 2: Employee Buyout
Key employees are increasingly viable purchasers thanks to SBA loan appetite for A/E/LS firms. Leveraging the Step-Up Legacy Plan™ with SBA 7(a) loans, employees can finance up to 90% of the purchase price with 10% or less equity. Sellers receive nearly 100% cash at closing, avoiding seller notes. Banks favor this structure when accompanied by solid leadership readiness, transparent financials, and risk-mitigating client contracts. This strategy preserves firm culture, supports retention, and offers owners financial certainty.
Additional deal structures like seller standby notes, mezzanine financing, and discounted cash flow holdbacks may enhance bank approvals or adjust risk allocation but should be employed cautiously to maintain upfront liquidity and minimize complexity.
In all cases, assembling a seasoned advisory team including SBA-savvy lenders, specialized brokers, and legal counsel is vital to navigate underwriting nuances, valuation gaps, and regulatory requirements.
This methodical, bank-aligned approach opens doors to competitive financing, maximizes immediate payout, and fosters a sustainable owner transition.
Your A/E/LS firm’s future—and your retirement security—depend on bank-friendly financing and a clear succession strategy.
By focusing on updated SBA lending trends, early bank engagement, and structured deal frameworks like the Step-Up Legacy Plan™, you can receive near 100% cash at closing while empowering trusted employees or navigating third-party sales with confidence.
Connect with Allen Business Advisors today to explore practical financing solutions that protect your legacy, maximize value, and secure your financial future in 2025 and beyond.
