When planning to sell your architecture, engineering, or land surveying firm, knowing how much cash you’ll realistically receive at closing is crucial. Many owners overestimate immediate proceeds, overlooking earn-outs, seller carrybacks, and financing complexities that dilute upfront payment.
In today’s 2025 landscape—with higher interest rates, updated SBA loan rules, and evolving market multiples—understanding your cash-at-closing target enables smarter succession planning. The Step-Up Legacy Plan™ offers an alternative that maximizes upfront cash while empowering trusted employees.
By aligning your retirement spending goals with practical deal structures and financing realities, you can design an exit strategy that preserves legacy and financial security, avoiding surprises during transition.
Plan your sale to receive near 100% cash at closing—no surprises, no seller notes, just legacy and security.
Many A/E/LS firm owners assume they will receive the full sale price as immediate cash, but the reality often differs. Sellers frequently encounter scenarios involving earn-outs and seller financing (carryback notes) that delay or reduce upfront proceeds.
Earn-outs serve to bridge valuation gaps between buyer and seller by tying part of the purchase price to future performance. In 2024, earn-outs accounted for roughly 22% of deal considerations outside life sciences, often lasting 1 to 3 years post-closing with performance triggers.
Seller carrybacks, or seller notes, expose sellers to risk and liquidity delays, often becoming a “parent loan” trap. The recent SBA 7(a) financing landscape encourages minimal seller financing, with lenders favoring full cash deals when possible. This shift supports the viability of plans like the Step-Up Legacy Plan™, which aims to deliver 90-100% cash at closing.
Market data indicates EBITDA multiples for A/E/LS firms range from approximately 3.2x to 4.3x, and revenue multiples from about 0.6x to 1.1x. Rising interest rates (10.25% to 13.75% SBA 7(a) loans) affect buyer eligibility and financing costs, which in turn impact sale pricing and cash flow requirements.
It’s critical owners understand that realistic cash expectations include deducting potential adjustments for earn-outs, holdbacks, and financing costs, particularly when dealing with outside buyers or seller financing scenarios.
Knowing these factors upfront helps you manage retirement spending and legacy goals sensibly.
Maximizing cash at closing requires proactive planning and smart financing—not just hoping for full payment at sale.
To optimize your cash payout and reduce reliance on seller financing, consider a disciplined 5 to 7 year succession plan structured around achievable financing and legacy objectives.
The Step-Up Legacy Plan™ exemplifies this approach. It enables trusted employees to purchase your firm using SBA 7(a) loans with as little as 10% down, eliminating the need for you to provide seller notes or carry long-term risk.
Key practical steps include:
Compared to traditional ESOPs—often exceeding $150,000 upfront costs and ongoing trustee fees—the Step-Up Legacy Plan™ is cost-effective, simplifies transitions, and preserves culture and continuity in firms with $1M to $8M revenue.
As interest rates have pushed borrowing costs up, this plan’s bank-preferred structures remain competitive by eliminating seller carrybacks and accelerating retirement funding with near-full payment at closing.
Retirement planning should incorporate realistic post-sale return assumptions, recognizing that factors such as earnouts or holdbacks reduce liquidity. By structuring your deal with a focus on cash at closing, you mitigate risks and avoid surprises.
Modern retention incentives, such as stay bonuses funded via life insurance or corporate-owned plans, complement owner exit strategies by retaining key employees through transition.
Incorporating these elements positions your firm for a smooth, value-maximizing ownership transfer aligned with 2025 SBA financing and market realities.
Your A/E/LS firm’s future is valuable, and your legacy deserves protection through a well-structured succession plan. With the Step-Up Legacy Plan™, you can exit on your terms, receive cash at closing, and empower your employees to lead.
Planning 5 to 7 years ahead maximizes your firm’s value and financing options, reducing risk and ensuring continuity. Reach out to Allen Business Advisors to explore how this proven strategy can work for your unique firm and situation.
Secure your legacy while unlocking full payment—your succession journey starts now.
