Dear Insider,

When an architecture or engineering firm is sold, the transaction isn’t just about numbers- it’s about people. The day the deal is closed, each person should not feel like they're starting a new job. It should feel like their company has just taken a momentous step into a major opportunity. Today, we bring the most important considerations to you so that you can make sure any deal you enter will be the best decision you ever made for your firm.

The Balancing Act: Deal Terms vs. People Considerations

The best deal in the world on paper won’t succeed if the team feels impacted. Sellers need to recognize that negotiating “clean” deal terms; clear payment structures, minimal post-closing liabilities, and straightforward earnout provisions, must be balanced with terms that protect and incentivize employees. This means:

Benefit Continuity: Preserving comparable health insurance, retirement plans, PTO policies, and other benefits to minimize disruption.

Role Clarity: Ensuring employees know where they fit in the new organization on day one, reducing anxiety and speculation. Make your announcement to your team at the right time and in the right way.

Retention Agreements: Clear agreements for key staff to remain for a defined period post-close, often with financial incentives like equity incentive plans. Rule of the road: Non-compete clauses are not for everyone in the firm; consider the impact of this individual on the bottom line of the company as well as the proceeds these individuals are receiving.

Buyers will also want clean terms that reduce uncertainty, but sellers should push for provisions that safeguard employees from sudden negative changes. This requires negotiation skill and an understanding of industry norms. Here, more than anywhere else, is where an M&A Advisor focused on the AEC industry shines with a precise knowledge of the fairway built on dozens of deals in this space.

Integration: Where Retention is Won or Lost

The integration period is when the promises made during negotiation are tested in real life. PSMJ has seen time and again that integration success depends on these key items:

Early, Honest Communication: Employees should hear about the deal and what it means for them from leadership; not from the rumor mill. Anyone who is brought ‘under the tent’ into the process should sign a non-disclosure agreement.

Cultural Bridging: Even firms with similar markets can have wildly different decision-making styles, client management approaches, and internal communication norms. Identify and address those differences early in discussions.

Visible Leadership Involvement: Both seller and buyer leadership should be present and engaged during integration, showing employees they’re valued and needed.

The Plan: Does the buyer have a multi-faceted integration plan? Is that plan built on your discussions with them and specific points of difference between your firms? Or does it seem like something more generic? The right buyer will build a plan specifically targeting the differences and friction points between the two firms.

PSMJ’s M&A advisors have guided dozens of buyers and sellers through the integration process. We have helped build great plans, and we've found many that are fraught with potholes.

PSMJ’s Perspective: Start Retention Planning Before You Sell

Too often, owners wait until a signed LOI to connect the potential impact on their employees with the deal terms that have been written up on paper. By then, leverage is limited and options are fewer. Experienced M&A advisors know exactly how to make sure your people get the best outcome possible.

Identifying Key People Early: Understanding who drives client relationships, project delivery, and firm culture.

Creating a Retention Narrative: Explaining not just the financial “why” of the deal, but the growth and opportunity it creates for the team. Do this first for yourself to see if a deal is right for you. When the time comes to announce the deal to your team, it should be an exciting opportunity for them. If it isn’t, maybe that deal isn’t right for your firm.

Structuring Win-Win Incentives: Finding a balance between buyer risk and employee reward that works for both sides. Consult with an expert M&A advisor and leverage their knowledge to nail the sweet spot.

At PSMJ, we believe the best transactions are those that achieve your financial goals and ensure your people thrive after close. In our experience, that’s not a happy accident- it’s the result of planning, negotiation, and integration done right.

Are you ready? PSMJ’s M&A Advisory and Ownership Transition practice has helped thousands of AEC firm owners find, structure, and execute their M&A strategies with lasting results. Whether you’re looking to expand your firm with an acquisition, plan your exit strategy via internal or external sale, our bespoke approach is built around you and your goals. PSMJ’s award winning team of experts is here for you every step of the way.

Learn more about PSMJ’s M&A advisory services here.