Ownership Transition

By: Jim Zahn, Of Counsel

Every business owner should be concerned about eventual ownership transition. This is especially true for architects planning to retire in the near future. Too often, the architect will fail to plan for eventual retirement and will not think about the sale or ownership transfer of his/her architectural practice until it’s too late. It is very difficult to sell an architectural practice to another architect. It is far easier to sell the practice over a period of time to an existing employee who is being groomed for the eventual transfer of the firm’s ownership.

The benefits of sharing the firm’s ownership with a favored employee far outweigh the loss of total control over the firm. An existing employee is familiar with the firm’s clients, the firm’s practices and the firm’s current greatest business asset, the retiring employer. Working together can produce favorable benefits to both parties. Any architect who is unwilling to consider bringing in a future partner or shareholder of the firm is an architect that will most likely have to close shop upon retirement, because he/she failed to allow anyone else to move up into an ownership position.

The employee who knows that he/she will eventually own the firm will work as hard as possible to assure success of the firm before the total transfer of ownership occurs. This will create value to the selling owner and will most often assure an income for the seller many years after the actual transfer to the purchasing former employee. The gradual transfer of ownership also allows the purchasing employee the ability to be able to purchase the firm by spreading the purchase price over a longer period of time.

The time to sell is when the firm is doing well, not when it is doing poorly. Share the wealth now and gain the most when you retire later.

Chicago, Illinois 312-377-1501 | Schererville, Indiana 219-488-2590

Chicago, Illinois


Schererville, Indiana