Your key employees understand your firm’s culture, clients, and projects better than anyone. With new SBA financing dynamics in 2025, they can become firm owners while you receive full cash payment at closing, preserving your legacy and retirement security.
The Step-Up Legacy Plan™ remains a streamlined alternative to costly ESOPs, optimized for architecture, engineering, and land surveying firms with $1M to $8M revenue. It removes seller financing risk and complex paperwork.
As lending landscapes shift and valuation benchmarks evolve, this updated guide outlines practical steps to maximize your sale proceeds and ensure a successful, legacy-aligned ownership transition.
With 2025 SBA updates, your employees can buy your firm—and you get paid 100% cash at closing.
Succession planning for A/E/LS firms in 2025 requires a disciplined, multi-year approach that aligns with current financing climates and valuation realities. A focused 5 to 7 year roadmap helps owners groom future leaders, optimize financial disclosures, and position the firm for maximum value.
Step 1: Early Leadership Grooming & Financial Transparency (Years 1–2)
Identify your firm’s senior technical and business leaders ready to assume greater ownership roles. Simultaneously, ensure your financials clearly document project pipeline, WIP, retainer structures, and client contract strength. Transparent and detailed records make SBA lenders comfortable and boost firm valuation multiples—2024 data shows A/E industry revenue multiples averaging around 5.25x.
Step 2: Strengthen Client Contracts and Risk Mitigation (Years 2–3)
Formalize client agreements and retention guarantees to reduce lender-perceived risks. These contracts support employees qualifying for SBA 7(a) or 504 loans, which remain strong financing tools for employee buyouts. While exact 7(a) approval rates by engineering sector aren’t public, lenders prioritize clean financials and stable revenue streams.
Step 3: Engage Banks Early and Leverage SBA Financing (Years 4–6)
2025 updates keep SBA 7(a) loans capped at $5 million, with guarantee fees significantly reduced, and interest rates ranging broadly but often anchored around prime + 3-6.5%. Early bank engagement helps your key employees qualify with modest down payments (~10%), enabling full seller payment at closing without needing the owner to provide financing or personal guarantees.
Valuation multiples and financing environments vary, but disciplined preparation and SBA-aligned deal structuring unlock significant seller proceeds while mitigating post-sale risk.
Effective succession reflects banking realities—full payment at closing with no seller risk is now achievable.
Implementation begins with candid assessment: do your key employees have the commitment and qualifications to lead ownership? Grooming technical leaders without business mentoring reduces financing viability.
Steps to implement include:
By integrating these tactical moves within a 5-to-7-year horizon, you avoid rushed sales, minimize seller financing risk, and safeguard the legacy you've built.
Owners facing this transition report that aligned financing and strong internal leadership are the twin pillars of a successful employee-led sale in 2025. Updated SBA loan terms and streamlined alternatives to ESOPs have made these transitions more accessible than ever.
Your engineering, architectural, or surveying firm’s legacy deserves a successor who values it as much as you do. With the Step-Up Legacy Plan™ and 2025 financing options, you can achieve a full cash exit while empowering your employees.
Start your 5–7 year succession roadmap now by assessing leadership readiness and engaging specialized SBA lenders. Allen Business Advisors offers the proven guidance to navigate these evolving markets and structure deals that protect your value and vision.
Secure your legacy—reach out today to explore how this updated strategy fits your firm’s unique future.
