The First Conversation
How to approach your boss about buying the firm
Raise it privately, frame it around the owner's future rather than a price, and ask a question instead of making an offer. Most owners of architecture, engineering, and surveying firms with $1 million to $10 million in sales have no succession plan, and the conversation you are afraid to start is one they have been avoiding for years.
This page covers when to raise it, what to actually say, what to have straight in your own head first, and what happens after the owner says yes.
Bring us in before or after the first conversation. Either works.
Where This Advice Comes From
John has been making this case in the industry press for years
These are the associations your owner reads. Every placement is organic, not paid.
See the credibility record- STRUCTURE Magazine
- Engineering Georgia
- MALSCE
- ACEC Georgia
- ACEC Minnesota
- NSPS
Why the Owner Will Probably Welcome It
You are solving a problem they have been avoiding
Employees assume the question will land as disloyalty. In practice it lands as relief. The owner is getting older, they do not have a written plan, and the two options they can see are selling to a stranger who may fold the firm into something else, or working until they cannot.
Every letter we send to junior partners and key employees says the same thing, because it is true: the owner is getting older, they almost certainly do not have a plan, go and ask them. The firms that transition well are the ones where somebody inside was willing to start the conversation.
The best planning window is 3 to 4 years before the owner wants to retire. Owners who wait past that point often end up taking the first outside offer that arrives, because they have run out of runway to do anything else.
Timing
When to raise it
There is no perfect moment, and waiting for one is how these conversations never happen. There are, however, better and worse ones.
01
Pick a private, unhurried moment
Not in a meeting, not in the office where people walk past, not at the holiday party. A scheduled coffee, a drive back from a site visit, or an hour blocked on the calendar with no agenda item attached to it.
02
Use the opening the owner already gave you
Most owners in this size range have said something about slowing down, about their knees, about the grandkids, about how long they plan to keep doing this. That comment is your door. Go back to it a few days later and pick it up.
03
Raise it before someone else does
Owners who get tired of waiting call a broker and sell to a stranger. Once a firm is under a letter of intent with an outside buyer, the employee path is usually gone. Earlier is always better than perfect.
What to Say
The words that work the first time
Keep the first conversation short and low stakes. You are not negotiating. You are finding out whether the door opens.
Opening
Name the future, not the price
Try this: "You built this place, and at some point you are going to want to step back from it. When that time comes, I would like to be in the conversation about who takes it over. I am not asking you to decide anything today. I want to know whether that is something you would consider." That is the whole first conversation.
If asked
Be honest that you do not have the number yet
If the owner asks what you would pay, do not invent a figure. Say: "I do not know what the firm is worth and I would not want to guess. If you are open to the idea, the next step is an independent valuation based on the firm's cash flow, and a bank looks at the same numbers."
If it stalls
Ask for permission to bring in a specialist
Try: "There is an advisor who does nothing but architecture, engineering, and surveying firm transitions. Would you be willing to sit on a call with him so we both hear how it would actually work?" That moves the conversation off the two of you and onto a structure.
Closing
Leave with a date, not a feeling
End with something concrete: "Can we talk about this again in two weeks?" The single most common failure in this conversation is not rejection, it is drift.
Before You Open Your Mouth
Three things to have straight in your own head
You do not need financing approved before you talk to the owner. You do need to understand how it works, because the owner will ask. The fourth thing, and the one that matters most, is covered below.
The bank lends against the firm, not your savings
An SBA acquisition loan is underwritten on the firm's historical cash flow, usually three years of it. You are not expected to have the purchase price. The business income repays the debt.
You bring an equity injection
SBA loans call for a 10 percent equity injection on an acquisition, and the deal is structured so key employees come in with as little as 5 percent down. Most buyers fund their share with a home equity loan or line of credit.
You will sign personal guarantees
Every owner with 20 percent or more of the new company personally guarantees the SBA loan. That is not a reason to walk away, it is part of why banks lend on these deals, but you should know it before you raise the subject.
The Point That Changes the Answer
The owner is paid at closing, not by you over time
When most owners picture selling to their own people, they picture carrying the note themselves and collecting payments for years while the people they handed the firm to run it. That is why so many of them say no before they have really heard the question.
A bank-financed buyout is a different transaction. The bank funds the purchase, the owner is paid at closing, and the new owners repay the loan out of the firm's cash flow. That is the whole Step-Up Legacy Plan, and it is the single fact most likely to turn a no into a maybe.
If the owner wants to know exactly what counts toward the equity injection before they say yes, that is a reasonable question and it has a precise answer. Our equity injection entry in the glossary covers the mechanics in full.
What Not to Do
Four ways this conversation goes wrong
Do not spring it on them in front of staff
An owner who feels ambushed in front of the team will say no to protect their authority, and you rarely get a second first conversation. This is a closed-door subject until the owner decides otherwise.
Do not name a price you cannot support
A number pulled out of the air either insults the owner or commits you to something you cannot finance. Valuations in this industry run roughly 5 to 7 times EBITDA, or 2 to 4 times SDE for smaller owner-operated firms, but the real number comes from an independent valuation.
Do not go quiet for six months
The most common way this dies is silence after a warm first conversation. The owner reads the silence as you losing interest and starts thinking about a third-party sale instead. Come back in two weeks.
Do not promise what happens to everyone else
You do not yet know who is buying with you or what the structure looks like. Do not tell colleagues, and do not make commitments about roles or ownership before there is a deal to commit to.
After the First Conversation
What actually happens next
Once the owner is open to it, the deal follows the same path as any bank-financed sale to employees.
01
An independent valuation
The firm is valued on historical cash flow, the same basis a bank underwrites on. This takes the price out of the space between you and your boss and puts it on paper.
02
The bank conversation
We package the deal the way SBA lenders expect to see it and take it to banks that already finance architecture, engineering, and surveying firms. See how SBA financing to buy a business works.
03
The structure
Who is buying, how many of you there are, what each person brings, and what the owner's role looks like after closing. Owners typically stay involved for about a year with hours winding down.
04
Closing
The bank funds the purchase, the owner is paid at closing, and you own the firm you helped build. From the point everyone is ready to move, this usually runs 3 to 6 months.
First Conversation FAQ
What employees ask before they raise it
- How do I tell my boss I want to buy the business?
Raise it privately, frame it around their future rather than a price, and ask a question instead of making an offer. Something as simple as "when you are ready to step back, I would like to be part of the conversation about who takes this over" is enough for a first conversation. You do not need a number, a bank, or a plan in hand to open the door.
- Will my boss be offended if I ask about buying the firm?
Far less often than employees expect. Most owners of firms with $1 million to $10 million in sales have no written succession plan, and the alternative they are quietly facing is selling to a stranger or winding the firm down. An employee raising their hand solves a problem the owner has been avoiding.
- When is the right time to bring it up?
The best planning window is 3 to 4 years before the owner wants to retire, so the earlier you raise it the more options exist. Practically, use the opening the owner has already given you, a comment about slowing down or about how long they plan to keep going, and come back to it privately a few days later.
- Should I have financing lined up before I talk to my boss?
You do not need financing approved, but you should understand how it works. Know that the bank lends against the firm's cash flow, that an SBA acquisition loan calls for a 10 percent equity injection with key employees coming in with as little as 5 percent down, that you will sign personal guarantees, and that the owner is paid at closing rather than carrying you for years.
- What if my boss asks what I would pay?
Say you do not know yet and that you would not want to guess. Firms in this industry generally trade at 5 to 7 times EBITDA, or 2 to 4 times SDE for smaller owner-operated firms, but the number that matters comes from an independent valuation built on historical cash flow. That is the same basis the bank will use.
- Should I bring an advisor into the first conversation?
Either works. Some buyers call us first to confirm privately whether a buyout is financeable before they say a word. Others have the conversation, get a warm response, and bring us in to show both sides how it would be structured. What matters is that somebody puts a real structure in front of the owner before the idea goes cold.
- What if my boss says no?
A first no is usually a no to the timing or to a version of the deal the owner has in their head, which is often the owner carrying the note themselves for years. When they learn a bank funds the purchase and they are paid at closing, the answer frequently changes. Ask if you can revisit it, and leave the door open.
Something To Leave Behind
Give them the two-page version
Owners think it over after you leave the room. This handout makes the case in their language, with a line for your name at the top. Print it, or email it the same day.
Download the Owner Handout (PDF)
Before or After, Either Works
Have the conversation with something real behind it
Call us before you raise it and we will confirm privately whether a buyout is financeable. Call us after and we will show both of you how it would be structured. Nothing gets back to anyone at your firm.