Evaluate licensure continuity, backlog quality, and key-man risk before buying a $1M–$5M architecture practice.
Find Architecture Firm Acquisition TargetsAcquiring an architecture firm requires scrutiny beyond standard financials. Buyers must assess state licensure transferability, project backlog conversion probability, E&O liability exposure, and whether client relationships extend beyond the founding principal before committing capital.
Confirm the firm can legally operate post-close with a licensed principal in place and no unresolved regulatory or liability issues.
Confirm all principals hold active architectural licenses in relevant states. Identify whether the firm's certificate of authorization transfers with an asset or stock purchase.
Request a full 5-year claims history from the current E&O carrier. Outstanding or unresolved claims can represent significant post-close financial exposure.
Review existing agreements for licensed architects and project managers. Confirm non-solicitation clauses are enforceable in the firm's operating states.
Validate the sustainability and predictability of revenue, margins, and backlog across project types and client segments.
Analyze the 6–12 month signed contract backlog by project type, stage, and client. Assess realistic conversion rates for LOI-stage pipeline opportunities.
Identify whether any single client exceeds 20% of revenue. Flag developer, municipal, or institutional relationships that are personally tied to the founding principal.
Recast financials to remove owner perks, above-market principal compensation, and personal expenses. Verify accrual-basis accounting and CPA-reviewed statements.
Evaluate whether the firm can operate independently post-close and identify risks that could impair client retention or staff continuity.
Map which client relationships, design decisions, and project sign-offs depend solely on the founder. Confirm at least one licensed architect can independently lead projects.
Review licensure, ARE exam status, and billable hour rates for senior designers and project managers. High 1099 reliance without non-solicitation agreements is a red flag.
Assess whether workflows, software platforms, and documentation standards are formalized. Undocumented processes create post-close operational risk and integration friction.
Verify the Architecture Firm acquisition qualifies for SBA financing, the purchase price is supportable by the verified cash flow, and the deal structure protects the buyer's downside.
Confirm the Architecture Firm meets SBA 7(a) eligibility requirements: the business is for-profit, U.S.-based, within SBA size standards, and the buyer meets personal financial requirements. Some industries have specific SBA restrictions — verify before LOI.
Model verified normalized EBITDA against projected SBA loan payments at current rates. A $1M SBA 7(a) loan at 10.5% over 10 years costs approximately $13,000/month. The Architecture Firm must generate at least 1.25x debt service coverage after a market-rate manager salary to pass underwriting.
Confirm the seller note is properly subordinated to the SBA loan and goes on 24-month standby as required by SBA rules. If an earnout is included, define exact measurement metrics, time period, and dispute resolution process before signing the purchase agreement.
Before signing a Letter of Intent, request these documents from the seller. Missing or incomplete items are a red flag — not a reason to proceed without them.
Most states require a licensed architect to serve as the responsible principal on record. Buyers must confirm a qualified replacement is in place before close or the firm risks losing its certificate of authorization.
Review only signed contracts as hard backlog. Apply realistic conversion discounts to LOI-stage or verbal pipeline. Verify that backlog projects are not personally contingent on the seller's continued involvement.
Yes. Architecture firms are SBA-eligible under professional services. Lenders will scrutinize key-man risk, E&O claims history, and backlog quality as part of their underwriting for SBA 7(a) loans.
Asset purchases with earnouts tied to 12–24 month client retention are most common. Stock purchases paired with a 2–3 year founder consulting agreement are used when licensure continuity is a primary concern.
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