Your key employees already know your firm's culture, projects, and client relationships intimately. With the Step-Up Legacy Plan™, they can become owners using SBA financing for employee buyout with about 10% down payment, while you receive full cash payment at closing.
This plan offers a streamlined alternative to costly ESOPs, tailored specifically for A/E/LS firms with revenues from $1 million to $8 million.
By starting a disciplined 5 to 7 year succession roadmap focused on leadership grooming, financial transparency, and early bank engagement, you maximize your firm's value and protect your legacy with confidence.
Employee ownership with SBA loans lets you secure 100% cash at closing while preserving your firm's legacy and culture.
Exiting your architecture, engineering, or land surveying firm requires a carefully structured, multi-year approach that blends governance, valuation, and bank financing aligned to your unique business model. The Step-Up Legacy Plan™ leverages SBA 7(a) loans and broader SBA financing for employee buyout programs, allowing employee buyers to finance up to 90% of the purchase price with modest equity injections near 10%, enabling you as the seller to receive nearly 100% cash at closing—eliminating the traditional risk and delay of seller notes or personal guarantees.
Years 1 to 2: Leadership Preparation & Financial Transparency
Identify and nurture senior employees ready to transition into ownership roles. Parallel to this, ensure comprehensive documentation of project backlog, work-in-progress (WIP), client contracts, and recurring revenue streams like retainers. These steps are crucial for increasing lender confidence and maximizing your firm’s valuation multiples, which typically range 4x to 5x EBITDA in current markets.
Years 2 to 3: Strengthening Client Contracts & Risk Mitigation
Formalize enforceable client contracts and retention guarantees to reduce perceived lender risk. SBA lenders place heavy emphasis on stable, contract-backed revenue streams, which enhances the bank's willingness to finance employee buyers while improving deal valuation and financing terms.
Years 4 to 6: Early Bank Engagement & Financing Design
Proactively partner with SBA-approved lenders experienced in A/E/LS acquisitions. SBA 7(a) loans offer financing of up to 90%, with interest rates now generally ranging from 10.25% to 13.75%, and loan amortizations extending up to 25 years, providing manageable payments for employees. Combining this SBA financing for employee buyout with limited seller standby notes and life insurance safeguards reduces lender risk, enabling sellers to be paid in full at closing.
This structure also makes it feasible to sell business to key employees while preserving cash liquidity and minimizing seller risk. In addition to SBA-backed financing, consider deal structures such as equity rollovers or earnouts aligned with retention goals, and staged governance plans that progressively transfer management roles over the 5–7 year timeline. This blend fosters employee commitment and ensures a smooth ownership transition.
Comprehensive preparation is essential—clean financials, documented client contracts, leadership readiness, and early lender engagement collectively enhance your deal’s bankability and support a successful exit free of the “parent loan” trap common in traditional seller financing.
With strong financials, leadership, and SBA financing, employee buyouts can deliver immediate cash to you while securing your firm’s future.
Executing the Step-Up Legacy Plan™ involves close coordination between you, your employee-buyers, lenders, and advisors over the 5 to 7 year timeline. As you approach closing, SBA loan approval and complete diligence ensure readiness to transfer ownership seamlessly.
Implementation tips include:
Across the industry, SBA-backed employee buyouts have shown strong success rates when owners commit to these rigorous preparation and execution steps. This approach mitigates the risks inherent in seller-financed deals and offers clear advantages over costly, complex ESOP transactions.
Despite rising SBA interest rates averaging between 10.25% and 13.75% in 2025, loan guarantee fee reductions and longer amortization terms sustain affordable financing for employee buyers. This financial structure supports manageable payments, enabling internal ownership transitions that benefit all stakeholders.
In today’s competitive A/E/LS market, where private equity interest and consolidations are increasingly common, the Step-Up Legacy Plan™ stands out by preserving your firm’s unique culture and client base while providing you with secure, immediate retirement liquidity.
Your A/E/LS firm’s future and your retirement security deserve a well-structured plan that preserves legacy and delivers nearly full payment at closing. The Step-Up Legacy Plan™, combined with current SBA 7(a) loan programs, offers a low-risk, cost-effective route to employee ownership.
Starting your 5 to 7 year succession roadmap today maximizes your firm’s value, aligns leadership, and unlocks bank financing for trusted employees. Reach out to Allen Business Advisors to learn how this proven framework can secure your firm’s future and retirement goals with confidence.
