News & Press

Originally published in The Mann Report June/July 2025 Issue

For many design and architecture firms, planning for succession is about more than selecting the right exit strategy – it’s about ensuring the business is in peak form long before any transition begins. Whether you’re considering family succession, an internal buyout, an ESOP (Employee Stock Ownership Plan), a sale to private equity, or a merger with another practice, preparation is the foundation of a successful transition. Firms with strong leadership, steady financial performance, specialized creative niches, and operational discipline will not only be in a better position but also increase their valuation and long-term viability.

The most effective succession plans are those that begin years in advance. Engaging legal, financial, and business advisors early provides time to thoughtfully evaluate your options and optimize the firm’s structure, operations, and valuation. Developing structured timelines around a transition is crucial — waiting until retirement is imminent often limits options and can lead to rushed decisions or undervalued exits.

A succession plan starts with a skilled leadership team. Prospective buyers, investors, or next-generation principals want assurance that the firm can operate successfully without its current leadership the helm. If key decisions still flow solely through the few current leaders at the top a smooth transition becomes far less likely. Developing leadership early — through mentorship, structured responsibilities, and long-term planning — ensures that future leaders understand both the business and creative direction of the firm. They should also be well equipped with talents in various facets of the business, and those at the helm must be adept at identifying business development opportunities that benefit the firm’s bottom line.

Regardless of the chosen succession route, a firm’s financial strength is key. Firms with healthy balance sheets, predictable revenue, and disciplined cost management are far more attractive to potential successors. A record of consistent profitability — often supported by a strong pipeline of billable work and long-term client relationships — sends a clear signal of a stable and scalable business. Beyond creative talent, a firm’s operational strength plays a central role in succession planning. Well-run firms, those with project delivery system and sound risk management protocols, are better positioned to maintain continuity through leadership changes. Clear governance structures and internal controls around contracting, billing, and quality assurance create confidence among investors and successors alike.

Specialization can also increase value. Whether a firm is known for institutional work, residential innovation, urban planning, or sustainability-focused design, a distinct market identity helps drive profitability and sets the firm apart from competitors. This is compounded if a firm is known for work in more than one niche area, and can show diversity across work streams

In a highly competitive industry, differentiation is a crucial value driver. Firms that stand out for their design philosophy, sustainability credentials, regional dominance, or long-term client partnerships are more appealing to successors or outside buyers. Conversely, generalist firms operating in crowded, low-margin spaces without a clear identity may struggle to generate strong interest or premium valuations.

Investment in technology, like BIM, project management platforms and adopting other innovations in design tools and software also enhances a firm’s scalability and efficiency. Just as important is cultivating a workplace culture that supports employee growth, retention, and engagement.

By emphasizing leadership development, financial health, and operational efficiency, owners can expand their succession choices, whether that means passing the reins to a family member, executing a buyout with key staff, transitioning to an ESOP, attracting private equity investment, or merging with another design practice.

Each option has distinct benefits and challenges. For family-run firms, internal succession may preserve the firm’s legacy and culture. For others, strategic mergers can offer expanded service offerings, client bases, or geographic reach. For owners seeking a clean exit and maximum value, selling to a larger architecture or multidisciplinary firm may offer the most attractive outcome.

Private equity and ESOPs are also increasingly popular routes. PE firms are drawn to design practices with consistent cash flow, strong reputation/brand, and niche specialization. ESOPs, on the other hand, provide tax benefits and may foster a deep sense of ownership among employees – driving engagement and retention in the long term.

Clear internal processes, active budgeting and forecasting, and strong financial oversight all contribute to a firm’s readiness for transition. Ultimately, a well-prepared design firm isn’t just easier to transition – it’s stronger, more resilient, and better equipped for continued success under future leadership.

Phillip Ross is a Partner at Anchin and Co-Leader of its Architecture & Engineering and Construction Industry Groups.