The Step-Up Legacy Plan
Sell to your employees without becoming their bank
The Step-Up Legacy Plan is a bank-financed employee buyout for A/E and surveying firms up to roughly $10M in revenue. Your key employees buy in with as little as 5 percent down, and you receive 95 to 100 percent of your proceeds in cash at closing.
It is the ESOP alternative built for firms that ESOPs were never designed to serve.
If your key employees only have 5 percent to put down, you receive roughly 95 percent of your proceeds in cash at closing, with the balance structured through a seller note.
The Outcome
You get paid at closing, not over the next decade
The whole point of the Step-Up Legacy Plan is liquidity. A bank funds the purchase, so you receive 95 to 100 percent of your proceeds in cash the day the deal closes. No seller note to chase, no installment plan, no becoming your employees' bank.
Your employees step into ownership and repay the bank over time. You move on, paid at closing, with the firm you built carried forward by people who already know it.
Step-Up Legacy Plan vs ESOP
An ESOP alternative that actually works
Traditional ESOPs cost $150,000 or more to set up and generally only make sense for larger firms above roughly $15 million in revenue. Most A/E firms never qualify.
The Step-Up Legacy Plan works for firms with as few as 10 employees, at a fraction of the cost.
Firm size it fits
- Step-Up Legacy Plan
- A/E and surveying firms up to roughly $10M in revenue, with as few as 10 employees.
- Traditional ESOP
- Generally only makes sense above roughly $15M in revenue.
When the seller is paid
- Step-Up Legacy Plan
- 95 to 100 percent of proceeds in cash at closing.
- Traditional ESOP
- Mostly deferred and paid out over years as shares are repurchased.
Employee capital required
- Step-Up Legacy Plan
- Yes. Key employees invest 5 to 10 percent down.
- Traditional ESOP
- None. The trust acquires shares on the employees' behalf.
Setup cost and complexity
- Step-Up Legacy Plan
- A streamlined business sale, no six-figure setup bill.
- Traditional ESOP
- Typically $150,000 or more to establish, plus annual administration.
Ongoing compliance
- Step-Up Legacy Plan
- None. No plan to administer once the deal closes.
- Traditional ESOP
- Ongoing fiduciary oversight and annual valuations.
How It Works
How the Step-Up Legacy Plan works
A straightforward business sale with professional bank financing. No years of regulatory compliance, no six-figure setup.
We structure the deal
Professional valuation, SBA financing setup, and legal documentation, prepared the way banks expect to see it.
Your employees bring as little as 5%
SBA loans call for a 10 percent equity injection. It is often split 5 percent buyer and 5 percent seller, with personal guarantees, so the new owners have real skin in the game.
Banks fund the rest
The bank provides the acquisition financing. You receive the substantial majority of proceeds at closing while your employees repay the bank over time.
Why This Works for A/E Firms
Liquidity for you, continuity for everyone else
You get paid at closing
Receive 95 to 100 percent of your proceeds in cash. No becoming your employees' bank, no waiting years for installment payments.
Your legacy lives on
Your employees already know your clients, processes, and values. They preserve what you built rather than rewriting it.
A simple process
This is a straightforward sale, not a retirement plan or trust structure. No ESOP complexity and no ongoing administrative obligations.
Real Success Story
Paid at closing, with the firm intact
An A/E firm owner wanted out but refused to finance the sale himself or hand the business to a stranger. The Step-Up Legacy Plan secured SBA financing that paid the seller in full at closing while providing working capital for the new owners.
His employees became owners with a manageable investment. The seller got a complete payout. Business continuity was preserved, and the clients never noticed a change in the people they trust.
Common Questions
Questions A/E owners ask before they start
Straight answers on payout, timing, financing, and valuation. If your situation is not covered here, a confidential consultation will sort it out fast.
- How much money do I actually receive at closing?
The substantial majority of your proceeds are paid at closing.
With 10 percent employee equity, owners typically receive all proceeds at closing. With 5 percent employee equity, owners typically receive approximately 95 percent at closing, with the balance structured through a seller note or negotiated consideration. The exact structure depends on cash flow, deal size, and lender underwriting.
- Do my employees really have the money to buy me out?
Most of the time, yes. Buyers typically access the down payment through a home equity loan, and there can be multiple buyers, which reduces the amount each one contributes.
We also have other solutions to help the buyers with the down payment. Remember, we are arranging SBA financing with 5 to 10 percent down. Our banking partners specialize in these transactions, so you get your money up front while your employees step into ownership.
- How is this different from an ESOP?
It is simpler, faster, and less expensive.
ESOPs are a specialized retirement plan that costs hundreds of thousands to set up and maintain, making them primarily viable for large firms. The Step-Up Legacy Plan enables employees to purchase using SBA financing, eliminating that complexity and ongoing cost. You still achieve continuity, culture preservation, and liquidity, without the headaches.
- What role does SBA financing play in all this?
It is the financial engine that makes employee buyouts possible.
SBA financing can provide up to $10,000,000 of the purchase price. Any portion that exceeds SBA limits is typically addressed through a seller note or other negotiated consideration, structured to meet bank requirements and protect the seller.
- Will I still need to stay involved after the sale?
Yes. The employees know their jobs, but they need someone to teach them your responsibilities in insurance, budgeting, and administration. We recommend planning to stay for a year after the sale, with your hours decreasing over time until you are only on call.
- What if my firm is too small for this to work?
You may be surprised. It often works better than you think.
The Step-Up Legacy Plan works best for firms with $1M to $8M in revenue and 10 to 50 employees. If you are smaller, it may still be possible depending on your profitability, client base, and staff experience.
- How long does the process take?
Typically 3 to 6 months from start to finish if you are selling to key employees. Selling to an outside third party normally takes 6 to 12 months.
Timing depends on how quickly your financials are prepared, how ready your employees are to move forward, and lender processing. We manage the process to keep strong momentum.
- How do you value my firm?
Value is based on the cash flow your business generates for the owner, the size of your firm, and the type of work you perform. A rule of thumb is 2 to 3 times Seller's Discretionary Earnings or 5 to 6 times EBITDA.
Note that banks will not accept the discounted cash flow method, because it is based on projections. Banks always look at historical cash flow. It is highly recommended that you have a professional value your business.
Ready to Explore Your Options
See what a Step-Up Legacy Plan looks like for your firm
The plan is not right for every situation, but when it fits, it solves the employee-ownership challenge cleanly. Schedule a confidential consultation to find out.