Your key employees understand your firm's culture, clients, and projects inside and out. In 2025, updated SBA loan programs enable them to become owners while you receive up to 100% cash at closing, preserving your legacy and ensuring retirement security.
The Step-Up Legacy Plan™ offers a streamlined alternative to costly ESOPs and seller financing traps, tailored for A/E/LS firms with $1M to $8M in revenue. It adapts to current SBA 7(a) interest rates and underwriting standards, reducing complexity and risk.
This updated guide outlines practical, disciplined steps over 5 to 7 years to prepare leadership, financials, and bank approvals that unlock maximum value and enable a smooth, legacy-preserving employee buyout.
Your employees can take ownership in 2025—with full cash payment and legacy protection through savvy SBA-backed financing.
Successful succession in architecture, engineering, and land surveying requires a clear, stepwise plan that aligns leadership development, financial transparency, and financing strategy over 5 to 7 years. Updated SBA lending trends in 2025 emphasize financial discipline and early bank engagement, enabling strong employee buyout deals.
Step 1: Leadership Cultivation & Financial Hygiene (Years 1–2)
Identify and mentor your top technical and business leaders. Concurrently, rigorously document project backlog, work-in-progress, client contracts, and retainer structures. SBA lenders value transparent and recurring revenue streams and detailed financial records, which also positively impact valuation multiples. 2025 data shows EBITDA multiples for engineering firms ranging from roughly 3.2x to 3.8x, with revenue multiples between 0.6x and 1.1x.
Step 2: Formalize Client Retention & Risk Mitigation (Years 2–3)
Secure client retention through enforceable contracts, guarantees, and structured agreements. These reduce lender risk perception and support employee qualification for SBA 7(a) loans. Clean client risk profiles enhance deal bankability and valuation robustness, critical under tighter 2025 SBA underwriting standards.
Step 3: Engage SBA Lenders Early & Design Financing (Years 4–6)
Begin working with SBA-approved lenders experienced in A/E/LS firm acquisitions. SBA 7(a) loans now typically require a 10% down payment from buyers, with interest rates ranging generally between 10.25% and 13.75% in 2025, coupled with somewhat reduced guarantee fees. Sellers should plan for structures that avoid personal guarantees and seller notes, leveraging the Step-Up Legacy Plan™ to receive close to 100% cash at closing.
Employing this roadmap helps owners navigate post-pandemic workforce challenges by retaining key employees through ownership and meaningful succession, marrying cultural preservation to financial outcomes.
Updated SBA loan rules and the Step-Up Legacy Plan™ create a reliable path for full cash exits and empowered employee ownership in 2025.
Implementing a disciplined 5 to 7 year succession plan is crucial. Here’s how to apply these insights practically:
Beyond financing, address post-pandemic workforce retention by offering flexible work arrangements, well-being programs, and ongoing skills development. These improve employee loyalty, reducing turnover risks during transition.
Through this practical approach, A/E/LS firm owners protect their lifetime’s work, enable trusted employee ownership, and achieve financial peace of mind.
Your engineering or architectural firm's future is worth protecting with a well-crafted ownership transition plan. The Step-Up Legacy Plan™ combined with 2025 SBA financing updates empowers you to exit with near full cash at closing and leave your firm in capable hands.
Start your 5 to 7 year succession planning now—groom leadership, align your financials, and engage experienced SBA lenders. Allen Business Advisors stands ready to guide you through this evolving market and complex process.
Connect with us today to secure your legacy and maximize your firm’s value through a practical, bankable employee buyout strategy.
