How to sell my architectural firm?

You might be wondering:

– How much will my architectural practice sell for? 

– How do I determine an asking price? 

– How do I find potential buyers to sell my architectural firm?

– How to sell my architectural practice through a broker?  

On the last question:  Use a broker when you only need a connection to a buyer (i.e. when selling real estate or stocks).  Instead, use an M&A advisor when selling an architectural firm because what you need is vastly more complex.  Details on the ways to sell your architectural practice and more answers are ahead.

Think Years, Not Months

If you’re wondering how to sell your architectural practice and walk away after closing, it isn’t possible.

Much of the value of an architectural practice is tied to its owners — to their expertise, reputation, and relationships.  In most successful sales, that value is transferred to a buyer over a multi-year transition during which the seller works 2 to 35 hours per week.  The seller should have a sales- or profit-sharing incentive to complete an effective transition.  Consequently, most architectural firms cannot simply be sold for just a fixed payment at closing.  This is especially true for selling a small architectural firm.  It applies to a number of different businesses to varying degrees, and largely depending on firm size. Even the average selling price for a small architectural firm varies based on the clients.

Seller Beware: Protect Yourself as you are Selling your Architectural Business

Because selling an architectural practice entails sharing sales or profit with a buyer you have just met, you need protection.  We recommend the following when trying to sell your architectural practice: 

(1) List the adverse outcomes that can occur.  For each, design a resolution mechanism that protects your assets.

 (2) List the possible disputes that can arise between you and your buyer.  For each, implement a binding procedure for resolving the dispute fairly and at a low cost, ideally without involving courts or lawyers.

Deep expertise in designing protection mechanisms matters.  (Hint: We are exceptional at it.)  Lawyers will draft the legal language that implements protections in a contract, but only a capable advisor can design protection mechanisms.  Proper protection design requires economics and finance expertise, not legal expertise.

Sell by Auction or Not?

 You might be seeking exit strategies to sell your architectural firm.

Did you know you can sell your architectural firm via an auction?  If you are like other architectures and have a strong preference for orderliness, then an auction can be perfect for you.  

The first step in selling your architectural practice is selecting one of two sale mechanisms:

Option 1: Auction Mechanism

If you wonder “how do I sell my architectural practice for maximum price,” look here:

There are several differences between the auctions we see in movies and an auction mechanism for selling your architectural business.  Here are a couple:

(1) Bids will entail several numbers in addition to purchase price.  For example, the percent of the price paid through a multi-year seller note and your compensation during the transition period are two other numbers that could be included in a bid when selling architectural practice.

(2) The winning bidder will be selected based on a valuation formula that calculates how much each bid is worth to you.

(3) The bidders will not be aware of each other’s bids.

 What are the benefits of selling my architectural firm via auction?  

(1) If we have at least two bidders, then an auction will generate more value for you than an ad hoc mechanism.  This is how to sell an architectural firm for a maximum price.

(2) The business is more likely to end up in the hands of the right person.

(3) The high amount of structure required for an auction forces everyone to produce and act upon a high degree of clarity early in the process.  This reduces the likelihood of the deal falling through late in the process.

What are the disadvantages if I sell my architectural business via auction?

(1) There is somewhat more work to do upfront when selling an architectural business via auction: 

(a) Closing documents need to be generated upfront rather than late in the process.  (b) We need to decide upfront on precisely how you would value different possible deal structures.

(2) You have less flexibility.  Once you have executed an auction agreement with the prospective acquirers, you cannot back out of it.

Option 2: Ad Hoc Mechanism

 If you’re thinking, “I want to sell my architectural business the old fashioned way, and an auction sounds too complex,” look here:

 In this mechanism, we negotiate with each prospective buyer one-on-one.  If you like what someone offers, you move forward with them.  If you are uncertain about their offer, we ask them to wait until we have more offers. 

What are the benefits of selling my architectural practice via ad hoc mechanism?  

(1) Less work is required before engaging prospective buyers.

(2) You commit practically nothing to the acquirer until final closing documents are signed, which is relatively late in the process.  This implies that you are free to change your mind about selling your architectural practice until then.

 What are the disadvantages if I sell my architectural firm this way?

(1) If you ask a prospective buyer to wait until you have fielded more offers, you risk losing them because they might find another opportunity.

(2) The best prospective buyer might drive a hard bargain, offering too little for your architectural practice.  A less qualified prospective buyer might not drive such a hard bargain.  As a result, you might go forward with the less qualified buyer.  It is important that we find the best buyer because everyone wins when that is the case.

 (3) Because this is a less structured process, with less agreed upon upfront, it is more likely that the deal will fall apart after a non-binding offer is accepted.  This can result in significant lost time, money, and energy.

Optimal Deal Structure

If an owner commanded, “Sell my architectural practice for the highest possible price!” then I would say, “Be careful what you wish for.  You probably wouldn’t sell your architectural business at a price of $10 million paid over 100 years with a 0.1% interest rate.”

The correct mandate is, “Sell my architectural business under a deal structure that maximizes the net present value of my future cash flows, considering expected and worst case scenarios, and that allows me to exit comfortably on my realistic timeline.”

 Deal structure is the set of terms in your sale contract that affect the timing, contingencies, and amount of payments you receive.

In the architecture industry, successful firms have long-term clients for which they perform annual services related to audits, taxes, and financial reporting.  It can be sensible for some of your payment to be tied to the retention of these long-term clients when selling your architectural practice.

If you are open to a broader array of deal terms, you will have a larger pool of prospective acquirers.  That translates to extracting more value out of your firm.  For example, if a handful of architectural projects comprise a large portion of your services revenue, then it will be difficult to attract buyers without tying part of your sale price to the retention of those big clients.

How much do architectural practices sell for?

The deal structure is equally as important as the purchase price.  If you want to sell your architectural firm, you can value it in two ways:

 (1) Discounted cash flow method.  We will analyze your currently client relationships and marketing mechanisms.  Based on that, we will project your revenue in future years under a best case, worst case, and expected case scenario.  We will project your costs and expenses given their current levels.  This will allow us to project your architectural firm’s operating cash flows under each scenario.  We will then sum up the values of each future year’s operating cash flow, discounting it by dividing it by (1+r)^number of years in the future.  We will determine the value of r by analyzing the volatility of your historic cash flows relative to historic stock market performance.

 (2) Comparables method.  We have data on past sales of architectural firms.  Using comparable sales data, we will infer the value of your architectural practice.  For example, we know that the median architectural firm sold for 1.44 times seller’s discretionary earnings.  That is low.  Using the optimal deal structure and selling mechanism, we can achieve a higher valuation than that when selling your architectural business.

What are the steps to sell my architectural firm?

 Several of these steps occur in parallel:

 (1) Consultation.  If you contact us at or 407-256-1482, we will provide more information tailored to your architectural practice regarding everything on this page.  From this conversation, you will understand your options.

 (2) Valuation.  We will conduct a valuation by the above methods.  If you wish to sell your architectural firm via an auction mechanism, we will develop a model enabling us to value every acceptable deal structure.

 (3) Materials Preparation.  We will prepare a 50-page memorandum, 2-pager, and brief messaging that we will use to convey the opportunity of buying your architectural business.  If you wish to sell via auction, we will work with our economical attorney or yours to develop the auction and closing documents.

 (4) Targeting We will determine the criteria for the companies and individuals that would be suitable acquirers of your architectural practice.  Criteria can involve size, geography, specialty, years of experience, and more.

 (5) Outreach.  We will contact buyers in several different ways, including contacting some of the 28,000 buyers in our network, sending direct messages to other individuals and companies who meet your criteria, and online advertisement on business for sale websites and professional job boards.  We will only introduce you to the most qualified prospects to sell your architectural practice.

 (6) Negotiation.  We receive offers, improve them, and work to pick the best one.  If we are using an auction, negotiation is automatic.

 (7) Due Diligence and Closing.  The winning bidder conducts due diligence on your architectural practice.  If we are using an ad hoc mechanism, then in parallel their attorney produces closing documents.  Once all of that is concluded, the deal is closed.

 (8) Post-Closing.  We will be available to help make your architectural business sale successful.  We can create accounting dashboards that calculate the payments you are owed.  We are also available to act as administrators in any dispute resolution process described under the “Seller Beware: Protect Yourself” section.

Examples of architectural firm listings

For you to get a sense of what is on the market, here are some recent listings:

Asking Price: $200,000
Cash Flow: $270,527
Price Multiple: 0.7x
Revenue: $401,000
Employees: 0
Take advantage of an opportunity to own a well established residential architectural firm serving Silicon Valley. This firm has been in business since 1987 and has built a loyal clientele from its reputation for quality product offerings and customer service. The excellent online reviews are a testament to the positive reputation the business has built in the local community, and with the current owner looking to retire, this provides an excellent opportunity to an incoming buyer to capitalize on the investment and reputation of the business up to this point.

Asking Price: N/A
Cash Flow: $570,955
Price Multiple: N/A
Revenue: $4,201,533
Employees: 0
Founded in 1989, this Architecture Firm provides architectural design services primarily for three markets. These markets include educational (K – 12 schools and facilities), municipal (public safety facilities, public works facilities, parks and recreation, administration, etc.) and ecclesiastical (church facilities, halls, private schools). Potential Buyer should have experience in the architecture industry. Preferably a licensed architect who can seal drawings. Detailed Confidential Business Review available to qualified buyers.

Asking Price: $1,000,000
Cash Flow: $701,983
Price Multiple: 1.4x
Revenue: $2,063,590
Employees: 0
A prominent and highly reputable Architectural Firm in Palm Beach County is now available for acquisition. Established 35 years! This fine operation is known for high quality work in the following: All facets of Architecture, Master Planning, Building Analysis, Renovation & Preservation, New Facilities Design, Commercial/Residential/Retail, Architectural Photography, Interior Photography, Exterior Photography, Support Services, AutoCad Architecture, Revit Architectural Suite, Sketchup / VRAY, Quantity and Material Take Offs, BOMA Measurements, BOMA Calculations, Leasing Stack Plan Books, Quality Control, Scheduling, Budgeting, Project Management, Programming, Space Planning, Furniture, Fixtures & Equipment, Interior Design, Contract Documents, Specifications, Bid Administration, Contract Administration/Field Representation, Post-construction Administration, Technical Quality Control, Contract Documents & Administration.

Asking Price: $575,000
Cash Flow: $273,352
Price Multiple: 2.1x
Revenue: $765,774
Employees: 5
Lighthouse Business Brokers is proud to introduce a rare acquisition opportunity for an award winning luxury architectural firm with an exceptional reputation and prestigious customer base. Located in a high next worth town with many second homes, this firm is fully staffed and the owners are willing to provide an in depth transition with ongoing support.

Asking Price: $425,000
Cash Flow: $231,454
Price Multiple: 1.8x
Revenue: $542,194
Employees: 3
A unique opportunity to acquire a prominent and highly reputable Architectural and Interior Design Firm in Sarasota. Established over 27 years ago. The firm’s major strength is designing oceanfront architecture and managing the complex permitting process with the many state, and federal government agencies that regulate coastal construction. Excellent clientele. Long resume of successful projects. The owner is willing to stay with the firm to ensure smooth transition. Opportunities like this are rare. All buyers must be pre-qualified prior to disclosure.

Asking Price: $699,999
Cash Flow: N/A
Price Multiple: N/A
Revenue: $1,000,000
Employees: 60
A renowned Shanghai Landscape architecture firm design agency, just recently renew the qualification approval and continue to grow in the coming years. The company specializing in environmental landscape, urban space, and architectural planning. It was registered in Shanghai, China in 2006. It has nearly 100 design projects in the past 14 years, covering Shanghai, Beijing, Hainan, Chongqing, Tianjin, Wuhan, Nanjing, Hefei, Fuzhou, Qingdao, Yantai, Suzhou, Wuxi, Kunshan, Changzhou, Zhoushan, Dalian, Liuzhou and other Chinese cities of various types.

Asking Price: $650,000
Cash Flow: $335,000
Price Multiple: 1.9x
Revenue: $1,350,000
Employees: 6
RVA Business Brokers is pleased to offer this architectural firm founded nearly 3 decades ago by the current owners. The firm will celebrate 30 years of excellence with an impeccable reputation in 2020. The two owners are retiring and fully understand that they may need to assist the Purchaser for an extended transition period if necessary and potentially to continue in some professional capacity if needed. In addition, the owners are including up to 60 hours of their time in the price to make customer introductions, employee transition time and administrative overview.

We make selling architectural practices easy and lucrative

At Next Bridge Advisors, we sell architecture firms and other professional services firms anywhere in the United States.

Having been established for 13 years, we have built a network of 28,000 buyers and a unique combination of expertise in the finance, marketing, structuring, and dispute prevention aspects of business sales.  

Email us at or learn how to maximize your earnings from selling an accountancy practice.