Selling an Engineering Services Business

An engineering services firm is usually priced as a multiple of annual profit, and the multiple moves based on how transferable the work is after the owner steps back. Deep licensure coverage, backlog that reliably converts to billable hours, and steady utilization with controlled write-offs tend to support stronger outcomes. For a fast estimate based on real transaction data and owner add-backs, use Rejigg’s free valuation calculator.

Add-backs are expenses running through the business that a buyer likely will not have after closing, so they shouldn’t reduce the firm’s true earning power. In engineering services, common add-backs include one-time legal costs, personal travel, above-market owner compensation, and one-off recruiting fees or software implementation costs. Buyers usually accept add-backs when they tie cleanly to invoices and the general ledger, not when they rely on memory.

Sometimes. SBA loans can work on smaller engineering services deals when cash flow is consistent and the buyer has relevant experience, but lenders can get cautious when the firm relies on one license holder or one major client. Expect requests for clean financials, strong collections history, and a clear transition plan for client relationships and responsible charge. Rejigg’s SBA loan calculator helps model payments before you negotiate terms.

Most engineering services firms take about 4–9 months from “we’re ready to talk” to closing, with the range driven by how organized your project accounting and contract files are. Diligence often slows down around WIP, billing timing, write-offs, claims history, and licensure coverage by state. Using a structured checklist like Rejigg’s due diligence checklist cuts avoidable back-and-forth.

No. Brokers typically charge 5–10% of the sale price for coordination you can handle yourself when you have buyer access and a clean process. Rejigg supports broker-free sales with pre-vetted buyers, digital NDAs, a secure data room, and a dashboard that compares offers side-by-side. Start with the prepare-to-sell guide.

Most buyers ask for three years of profit-and-loss statements, a current year-to-date P&L, balance sheets, and job-level reporting that ties to WIP and billings. Many will also ask for utilization and write-off trends because that explains whether margins are repeatable. If your books are in QuickBooks, Rejigg’s QuickBooks integration can import core financials into the secure data room so you are not rebuilding diligence from scratch.

Unbilled WIP is work you performed but have not invoiced yet, and over-billings are invoices sent ahead of the work. Buyers want a consistent approach so they do not pay twice for the same economics or inherit a hidden shortfall. Many deals address this with a closing working capital target, which is a negotiated “normal” level of short-term assets and liabilities delivered at closing. Clean WIP reporting keeps this from becoming a post-close fight.

A working capital adjustment is a true-up so the buyer receives a normal amount of short-term liquidity at closing. In engineering services, the big movers are accounts receivable, unbilled WIP, accrued payroll, and billing timing. Late invoicing or slow collections can reduce delivered working capital and lower your proceeds even when the headline price stays the same. Planning early helps you avoid a last-minute price change at closing.

An earnout pays the seller additional money after closing if the firm hits agreed targets, often tied to revenue, gross profit, or retention of key accounts. In engineering services, earnouts show up when relationships are closely tied to the seller or when backlog conversion is uncertain. Earnouts can be reasonable, but you want targets that are easy to measure and terms that prevent the buyer from cutting staff or resources and then blaming missed numbers. Rejigg’s offer comparison view lets you weigh earnout terms against cash at close.

Seller financing means you take part of the purchase price over time, basically as a loan to the buyer. It can expand the buyer pool and sometimes support a stronger headline price, especially for smaller firms or specialty practices. The trade-off is risk and slower cash. If you offer it, push for clear terms around the interest rate, payment schedule, collateral, and default remedies, and then compare offers on cash at close plus risk, not just total price.

Most professional liability policies are written on a claims-made basis, so coverage depends on when a claim is made, not when the work was performed. After a sale, buyers and sellers need to decide how prior projects stay covered and who pays for tail coverage or another structure that protects past work. Expect diligence around prior acts coverage and claims handling responsibilities. Bring your insurance broker and attorney in early so this does not turn into a closing-week fire drill.

Non-competes are meant to reduce the risk that the seller leaves and immediately competes for the same clients and staff. The enforceability and acceptable scope vary by state, and engineering services deals usually work best with a practical scope tied to the firm’s real niche and geography. Buyers often also ask for non-solicitation language that limits actively poaching clients or employees. Your attorney should tailor the terms to your market and licensure realities.

Client notification usually works best as a sequence of conversations, not one announcement. Buyers want to avoid spooking municipalities, institutions, and repeat owners, especially when contracts require notice or consent on a change of control. A solid plan spells out which clients get early one-on-ones, who attends, and what continuity commitments are made. Rejigg’s buyer messaging and scheduling tools help coordinate those meetings while keeping confidentiality tight with pre-vetted buyers and signed NDAs.

Most diligence data rooms include financials, backlog detail, sample project files, key client contracts, subconsultant and teaming agreements, insurance policies, a claims summary, an org chart, and licensure coverage by state and discipline. Buyers also commonly ask for QA/QC documentation and a clear description of your WIP and billing review cadence. Rejigg includes a built-in secure data room so you can control access by buyer stage instead of emailing sensitive files around.

Buyers look at revenue from your top clients, and then they dig into why the concentration exists. A multi-year on-call relationship with steady task orders underwrites differently than a single relationship tied to one person at the client. Expect questions about what triggers new work, who owns the relationship day-to-day, and how work flows if people change on either side. Clear client history and program context often matter more than the raw percentage.

A transition period often runs 6–18 months, especially when the seller is tied to stamping coverage, shortlist interviews, or top client relationships. The right length depends on licensure bench depth and how quickly PMs and technical leads are viewed by clients as the new safe hands. Transition plans work best when they define duties, time commitment, and an exit path. Rejigg’s transition planning guide lays out the pieces.

Compare offers on the full package: cash at close, seller financing, earnouts, working capital expectations, employment terms, and expected timeline to close. In engineering services, also pay attention to who the buyer is operationally, because integration decisions can affect staff retention and project delivery. Rejigg’s deal tracking and offer comparison dashboard puts terms side-by-side so you can make a clear decision without relying on memory and email threads.