Deciding whether to buy an existing A/E/LS firm or start one from scratch is a pivotal choice that shapes your professional journey and financial future. For most owners planning succession, buying an established firm with strong operations, client base, and reputation can provide faster growth and greater legacy preservation than starting anew. When paired with SBA 7(a) loans for business acquisition and alternatives like the Step-Up Legacy Plan™, employee buyouts become practical options that enable sellers to receive near 100% cash at closing.
This article unpacks key considerations including strategic fit, leadership transition, capital needs, and deal structures to help you navigate your buy vs. start decision with confidence.
Buying an existing firm with the right financing secures your future and pays sellers at closing—preserving legacy and accelerating success.
Choosing between buying an existing architecture, engineering, or land surveying firm versus starting your own involves several critical factors beyond passion and capabilities. Success hinges on understanding the strategic fit, financial realities, and long-term succession planning implications.
Assess Your Passions and Strategic Fit
Starting a firm aligns with entrepreneurial drive but involves building reputation, client relationships, and operational stability from the ground up. Buying an established firm offers immediate access to project backlog, experienced employees, and bank-friendly financial histories. Decide what suits your risk tolerance and timeline.
Leadership Transition and Owner Responsibilities
Buyer readiness to assume ownership requires leadership skills and commitment to cultural preservation. Many existing firms have groomed key employees familiar with firm culture—a significant advantage for buyer success and lender confidence.
Capital Needs and Financing Options
Leveraging SBA 7(a) loans for business acquisition, which currently allow up to 90% financing with roughly 10% down, makes buying feasible without substantial personal capital. Recent 2024-2025 SBA updates, combined with innovative deal structures like the Step-Up Legacy Plan™, eliminate seller financing risk by enabling buyers to secure independent bank financing, allowing sellers to receive near 100% cash at closing.
When starting a firm, you must finance initial working capital, ramp-up costs, and marketing with often limited cash flow, increasing financial stress in early years.
Firm Structure, Reputation, and Employee Retention
Acquiring a firm with a strong brand, documented operational systems, and loyal employees reduces transition risks. The buyer can build upon existing client contracts, backlog, and staff expertise. Starting from scratch requires developing all these elements organically, delaying profitability and succession readiness.
Employee Buyouts and ESOP Alternatives
For owners considering exit, employee buyouts structured under the Step-Up Legacy Plan™ offer an SBA-friendly, cost-effective alternative to traditional ESOPs. This approach simplifies administration, reduces setup costs, and aligns seller payout timing with closing—key in today’s market where SBA loan rates hover between 10.25% and 13.75%.
Deal Timing and Structuring a Win-Win
Plan a 5 to 7 year transition roadmap aligning leadership development, financial transparency, and early lender engagement. This preparation maximizes valuation multiples—often ranging 4x to 7x EBITDA—and enables bank-based SBA financing that secures cash upfront for sellers, preserving legacy and offering buyers manageable financing terms over long amortizations.
The right financing and deal structures transform employee ownership into a legacy-preserving, financially secure reality for sellers and buyers alike.
Modern SBA loan appetite for A/E/LS firms combined with the Step-Up Legacy Plan™ provides a practical framework ensuring sellers receive near 100% payment at closing without the risks of seller notes or personal guarantees. This structure enhances seller confidence and accelerates retirement readiness while empowering trusted employees to become owners.
Additional considerations include:
Whether you decide to buy or start, understanding these succession and financing dynamics empowers you to create a sustainable, rewarding ownership path. The interplay of strategic fit, financing availability, and legacy priorities guides the best choice for your professional and personal goals.
Allen Business Advisors stands ready to provide specialized guidance tailored to your firm’s size, niche, and transition timeline—helping you unlock the full value of your career and achieve a legacy that lasts.
Your decision to buy or start your A/E/LS firm shapes your legacy and financial future. By leveraging modern SBA financing, comprehensive succession planning, and innovative structures like the Step-Up Legacy Plan™, you can receive near 100% cash at closing while empowering trusted employees or building your own practice.
Start your 5 to 7 year roadmap now—develop leadership, align financials, and engage SBA-savvy lenders early—to maximize value and secure your retirement on your terms. Reach out to Allen Business Advisors to explore proven strategies uniquely tailored for your A/E/LS firm’s success.
