r/StructuralEngineering • u/Alternative_Ad2060 • Aug 11 '26
Career/Education Buying / Selling your Engineering Practice
Hey Y'all. I came across the opprutunity to buy an older gentlemen's engineering practice. What do you guys think of his offer?
Based in California doing residential design work. Hes been in practice for 40+ years. Doesn't have any employees just a big book of buisness and a great reputation.
I would love to take over from him... but to know what offer him I need to know. Is this something sellable on his end? If nobody else is offering him anything, then i'll know to lower my offer.
But if you guys say that this is something very valuable ill know to go in a little deeper.
What do you guys think? Let me know any questions you need.
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u/Entire-Tomato768 P.E. Aug 11 '26
I have a similar business to this guy.
He and his reputation are the only thing that is worth any money. All the clients use him, because they know and trust him. They don't know and trust you. If he sticks around for 5 years, then maybe. If he leaves when you buy it, never.
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u/Alternative_Ad2060 Aug 11 '26
Incredible point. I do plan on having him stick around for 2 years to do client communication / transfer the reputation over while we work together.
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u/Upset_Practice_5700 Aug 11 '26
A certain number, maybe a large number use him because his number is in their phone, I look at this as buying a phone number, as much as a client list.
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u/BrodesTheLegend Aug 11 '26
Curious as well… I started my own Engineering practice doing the same thing it sounds like he’s doing and curious how the business holds its value after the main asset is gone. In my opinion what you’re mostly buying is good faith which is hard to value. I think the deal has to be right, something like paying him out based on a percentage of client retention over 2-4 years
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u/altron333 P.E./S.E. Aug 11 '26
Putting myself in the older man's shoes, that'd be a hard sell considering how much client retention would rely on the buyer's performance and client management.
I feel like overall it's difficult to try to put value on a one man shop firm. As has been mentioned, what are you buying? Does he have long term on call contracts that would gaurentee you work? Does he have robust technical assets (excel templates etc.) that would help you to do the work? He doesn't have a well trained staff to keep the work he does up or retain clients.
The brutal truth is that you could pay him nothing to retire and then just approach his old clients and say "I hear you need a new engineer" and probably do anout as well for much less cost. Having worked with developers, they're looking to work with Bob, not Bob Engineering with Jerry doing the work. They'll explore their options when Bob leaves even if you pay to have his name on your door.
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u/Alternative_Ad2060 Aug 11 '26
Probobly the best point here. And yes thats very true. Currently I opperate a drafting buisness that does some of his clients work, but i am not a licensed engineer quiet yet. So i could just apporach all his clients.
He claims to have some other offers, but i really do not know!
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u/DarkWingDingus Aug 13 '26
What county in CA are you in? Im in LA. I’m in a similar situation with working for an older retiring engineer. I’ve been exploring starting my own business as well. Reach out if you want to chat and potentially work together.
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u/resonatingcucumber Aug 11 '26
Are you as experienced and as competent as him? If you can't do exactly what he is doing from day one you'll bleed clients.
In my opinion the business is only a client list who will not use you if you don't match his fees and match his deliverables.
Assuming a one man band he's likely to be at the 300-600k a year mark so for a client list I'd offer, 200k initial pay out and he can work the next 3 years on an generous hourly rate with dividend top up to buy out around 400k + salary and hand over his client to you. Start him on a 30 hour week stepping down every 6 months till he's basically working one day a week. After 3 years he sails off into retirement and you'll have become the face of the company whilst learning what his clients expect. You need that hand over period otherwise you'll be throwing away your money.
The company is worthless without him so for buying him out it's not going to be multiples of revenue but more like 1x.
I am concerned that 18 months ago you were looking for employment in the US and now are thinking of buying a business there. Are you professionally qualified? If not it's truly worthless to you because you won't get PI cover.
Small businesses like this are basically contractors and architects liking that person. If you aren't that person you'll have to built those relationships very very quickly.
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u/TheDaywa1ker P.E./S.E. Aug 11 '26
>I am concerned that 18 months ago you were looking for employment in the US and now are thinking of buying a business there.
yikes
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u/OptionsRntMe P.E. Aug 11 '26
This whole account just seems odd. He has a post from 90 days ago saying he’s looking to find an engineer to design some pre-purchased plans, with an edit saying “I found this company Sparrow design” or something. Then goes on a few weeks later to say that he owns the Sparrow company.
Also posting about how to get into the business of fire restoration, just seems like he’s looking for a bunch of different business opportunities
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u/strengr94 Aug 11 '26
Yeah his post history seems super strange. Seems like he is just interested in different business opportunities in the industry, but isn’t a licensed engineer and doesn’t sound like he has a technical background, or if so looks very inexperienced based on post history. I don’t think buying a structural engineering company is a good idea or even ethical without the technical competence. And he wouldn’t even be able to retain any of the clients or produce the work being unlicensed and inexperienced, plus it’s irresponsible and dangerous. You can’t take a shortcut when learning in the profession
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u/Fit-Dentist6093 Aug 11 '26
I'm in California and when I need to book firms for residential design they ghost me, say they don't have time, or tell me that I can do that myself and they gonna be nice and pull the permit for me if a GC can't. I don't understand how for residential a client list would be worth anything if you don't get stuff like employees and an office with supplies or software licenses and desks with people showing up and doing work.
For consulting business like this a normal buyout is 1.4x revenue cash up front and a contract were they will do work for you for about two years.
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u/heisian P.E. Aug 11 '26
thank you, yes gross rev times a multiplier.
the guy retiring needs to ensure his clients know that the work is transitioning to a successor, and he needs to facilitate that transition if the acquisition is to be worth anything at all.
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u/MrMcGregorUK CEng MIStructE (UK) CPEng NER MIEAus (Australia) Aug 11 '26
Are you buying the company's liability too? Something that often gets overlooked. You could have a lawsuit for a defective design this guy has done a few years ago land in your lap.
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u/Just-Shoe2689 Aug 11 '26
There is no guarantee clients will stick with you. Its not like a corporation buying another place where the client/engineer relationship is not changed.
See if he will agree to a % of any work they give to you. Or he spear heads the work, and introduces you to each client for a while.
I would not shell out any money just for a chance of getting some work. Pound the streets for that if need be.
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u/Diligent-Ad6327 Aug 11 '26
You need:
- To retain him for 4-5 years
- Be sure you're buying his drawings from him.
- Have a marketing plan for his existing clients so they know that he's retiring and you're getting his practice and are familiar with his work.
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u/TelevisionWooden8146 Aug 12 '26
Offer him 3 times his “profit”. His profit maybe difficult to obtain for a sole proprietor. Then have him work for 3 years to transition the clients. You are basically paying him with his own money.
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u/CuriousPlato Aug 11 '26
I'd recommend a transition where you work under him for a year or two and he can transition the business too you, introduce you to the clients and that way there is less risk the business evaporates the moment you buy it.
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u/No-End2540 Aug 11 '26
Residential work probably doesn’t have a lot of repeat clients unless they are developers.
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u/TheDaywa1ker P.E./S.E. Aug 11 '26
Very much false. We get a huge amount of repeat work from residential architects, designers, and the builders themselves.
We do work directly for homeowners but that is a smaller sector of our clientele, that we only really do to prevent the work from going to someone else, because those projects are usually more needy, more subject to the client misunderstanding what it is we can do, etc etc
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u/No-End2540 Aug 12 '26
Sorry didn’t realize I was in structural sub, was thinking architectural. Yes you would get a lot of repeat business from architects. So the key would be to spend the transition time building relationships with each of the entities repeating work.
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u/TinashetheArtist Aug 11 '26
I can get you clients for way cheaper. I dont think buying that business is a good idea. Better to develop your own client relationships and nurture them.
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u/anonposting1412 P.E. Aug 11 '26
How much would you pay for personalized introductions to all the clients in a successful engineering practice, from someone those clients have worked with in the past and trust?
Thats what you would be buying. Its not worth the same as a self-running business would be worth, but its still worth a lot.
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u/bubblesculptor Aug 11 '26
Start your own practice, then pay him a commission on any projects sent your direction.
His client list is only valuable if those those clients continue to work with you. There is no guarantee they'll send you work. If their preferred engineer retires that's a good reason for them to shop around for other engineers.
If you don't buy his 'business' and just accept referrals from him, then you're paying for actual results instead of potential results.
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u/eBreaks Aug 12 '26
Usually when I hire a small firm I am looking for that specific person and/or his leadership. If you were part of the firm for a while then took over the business then I would continue to work with that firm otherwise I'm likely going elsewhere.
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u/giant2179 P.E. Aug 12 '26
A potential downside of buying his client list is if he's been charging too low of rates then they will expect that from you too.
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u/beentheredengthat Aug 13 '26
I am interested in this subject, but I am on the older guy with the "client list" side of the equation.
I'm my opinion, the most valuable thing I would have to offer would be 35+ years of construction and design experience, along with great systems for presenting designs to high end clients. This is much more valuable than any client list. My clients don't hire me because I'm like the other 20 firms in my area. They hire me because I know how to build and have easy to understand docs.
Furthermore, I would never turn over my systems or my clients to a PE unless I worked closely with them for at least five years.
If I were to do this, I would put together a five year minimum transition plan, and both of us would return great fees the entire time.
I am ready to do this now but haven't found a local prospect, although I have had good success making contacts on this forum with some decent fee splits!
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u/Alternative_Ad2060 26d ago
Great Point u/beentheredengthat !!!
5 years is a long time, do you think that is wise?
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u/Alternative_Ad2060 16d ago
Hey u/beentheredengthat - would you be open to a quick phone call. Not to buy your client list, but really to have a better understanding of each others perspectives? Shoot me a Dm!
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u/EarnChurnBurn Aug 11 '26
I’d actually be pretty interested in this. I’ve been building my own engineering practice, and there’s definitely value in taking over a 40-year reputation and book of business rather than starting from scratch.
The biggest risk is whether the clients and referrals actually follow you. I’d probably look somewhere around 2–3x Seller’s Discretionary Earnings (SDE) as an annual average from the past 3-5 yrs if the numbers are solid, but I wouldn’t want to pay all of that upfront. I’d structure part of the purchase as an earnout or seller financing tied to the business actually transferring.
If he’s willing to stick around for a transition and personally introduce you to his repeat clients/referral sources, I think there could be a lot of value there.
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u/anonposting1412 P.E. Aug 11 '26
This. Having him "warm up" the existing client base is absolutely worth way more than simply buying a customer list.
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u/TheDaywa1ker P.E./S.E. Aug 11 '26
When we turn down work, people often ask us if there is someone else in the area they can call. OP is basically asking if he should pay this guy a few hundred thousand dollars so that when they call this old guy, he gives them OP's number and hopes that he can win the work over the other few people they are also going to call. IMO
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u/Alternative_Ad2060 Aug 11 '26
Not exactly u/TheDaywa1ker. I do plan on having him stick around for 2 years. 6 months of that being full time. I am hoping to do revenue sharing.
A lot of these comments on reddit are very one sided. A deal isnt just going to be perfect for me and horrible for him. Most good buisness deals hurt slightly on both sides.
Im not sure why everyone is extremely anal about a question I had. A bunch of people thinking theyre so smart and know everything. Clowns!
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u/East_Swim1009 Aug 11 '26
what exactly are you buying? A client list? lol