Your key employees know your firm’s culture, clients, and projects intimately. In 2025, updated SBA 7(a) financing options enable them to become owners while you receive 100% cash at closing, preserving your legacy and retirement security.
The Step-Up Legacy Plan™ offers a practical alternative to costly ESOPs by eliminating seller financing risks and reducing deal complexity. With SBA loan rates around 10.25% to 13.75% and flexible down payments near 10%, employee buyouts are more accessible than ever.
This article provides a clear, disciplined 5-7 year roadmap for firm owners to prepare leadership, financials, and bank partnerships—ensuring a successful, legacy-preserving sale.
With updated SBA financing, you can exit with full cash at closing while empowering employees as owners in 2025.
Successfully selling your architectural firm in 2025 requires a focused, multi-year succession strategy that aligns with the latest SBA financing trends and valuation benchmarks. A disciplined 5 to 7 year plan enables you to groom key employees, optimize financial transparency, and structure bankable deals that maximize your payout and preserve your firm’s culture.
Year 1–2: Leadership Development & Financial Cleanup
Identify and mentor senior technical and business leaders ready to step into ownership roles. Simultaneously, strengthen financial reporting by documenting backlog, work-in-progress (WIP), client contracts, and retainer agreements. Transparent, detailed financials increase lender confidence and positively impact valuation, with current EBITDA multiples averaging around 5x for many firms.
Year 2–3: Client Contract Formalization & Risk Mitigation
Formalize enforceable client contracts and retention guarantees. These reduce perceived deal risk for SBA lenders and support employee buyers qualifying for SBA 7(a) loans. Strong contract-backed recurring revenue is crucial under 2025 underwriting standards emphasizing financial discipline and buyer preparedness.
Years 4–6: Early Bank Engagement & Finance Structuring
Collaborate with SBA-approved lenders experienced in A/E sector transactions. SBA 7(a) loans offer up to 90% financing, typically with a 10% down payment. While interest rates have risen to about 10.25%-13.75%, reduced SBA guarantee fees and extended amortization (up to 25 years) keep payments manageable.
Compared to ESOPs, which can impose setup costs over $150,000 and ongoing trustee administration, the Step-Up Legacy Plan™ offers a simpler, lower-cost alternative perfectly suited for firms with $1M–$8M revenue.
By proactively preparing your leadership, financials, and engaging lenders early, you unlock strong valuation multiples, secure favorable financing, and avoid the parent loan trap that burdens many sellers.
Disciplined planning unlocks full cash at closing and preserves the legacy you’ve built with trusted employees.
Understanding current SBA financing and valuation benchmarks is essential to structuring a successful sale. In 2025, SBA 7(a) loans continue to be the primary funding source for employee buyouts, offering up to 90% financing with about 10% down. Despite rising interest rates, these loans remain accessible with reduced guarantee fees and favorable repayment terms.
Valuation multiples vary by location and niche but generally range between 4x to 7x EBITDA for architecture and engineering firms. Firms with detailed financials, low owner dependency, and strong client contracts command premiums that increase seller proceeds.
Modern deal structures incorporate earnouts or minority equity retention to smooth transition risks, but the Step-Up Legacy Plan™ focuses on providing full or near-full cash payment at closing, greatly reducing seller financial exposure and retirement funding uncertainty.
Key implementation tips for firm owners include:
By following these practical, bank-backed steps, you protect your firm’s culture, maximize your financial return, and position your trusted employees to lead into the future with confidence.
Your architectural firm’s legacy and your retirement security deserve a carefully planned succession strategy that delivers near 100% cash at closing in 2025. The Step-Up Legacy Plan™ combined with updated SBA financing offers you a practical, legacy-first exit that empowers your employees and protects your firm’s culture.
Begin your 5 to 7 year roadmap today by grooming leadership, enhancing financial transparency, and engaging specialized lenders experienced with A/E/LS transitions. Contact Allen Business Advisors to explore how this proven strategy can secure your firm’s future and maximize your financial reward.
