It's been said that architects never retire.  The reasons can be lofty—including a passion for architecture as an art form; a belief that the profession is a way of life; or a strong commitment to make society better through one's work—while some are more practical. This is because the kind of financial rewards which can provide for a comfortable and secure retirement can still be elusive for many.

Post-2020, and with the competition for top talent still heated (the trajectory to-date of the Architecture Billings Index aside), the focus on culture for many A+D firms has gone beyond onsite amenities, and hybrid or remote working options. Transparency around a firm's financial health and ownership opportunities for all staff are also on the table, as part of recruitment, retention and succession planning which relate to leadership and/or ownership transitions.

On the one hand, founders and firm leaders of large A+D firms have more options when it comes to their exit strategy. These include in addition to the common buy-outs, mergers, and private equity acquisitions, the option of an employee stock ownership plan (ESOP). An ESOP is a type of trust offering owners / exiting shareholders tax advantages for the sale while paying employees / incoming shareholders buyout upon termination of employment in addition to annual profit sharing. Among the ESOP pioneers is SWA Group, the landscape architecture, planning and urban design firm (founded in 1957) which became 100% employee-owned more than 60 years ago. Some of the largest ESOPs in the U.S. are architecture firms, including SWA Group, BNIM, SHoP and Gensler - as The Architects Newspaper recently reported.

Meanwhile the London-based ARUP, which describes itself as a "multinational professional services firm," is also employee-owned. It operates as an employee owned trust (EOT), a structure which benefits past and present employees through annual profit sharing.

Taken in this larger context, planning an exit strategy can seem daunting for sole practitioners, as well as founders and leaders of small and mid-size A+D firms.  While ownership transition is process driven on the business side (often starting with a valuation of the company), it is a very personal matter, particularly for founders of design-forward studios whose names are still on the door.  Their reaction might be to delay, or deny, what to them might seem like the inevitable. 

Increasingly over the past five years or so, I have been tapped, mostly by founders, to advise on succession planning; often the end goal is ownership transition.  While there is no one-size-fits-all approach to exit strategies, having one is key, whether the timeframe is 20 years or five.

On the topics of ownership structures, and strategies around succession planning and leadership transitions, you can view a recording here of my panel discussion at AIA San Francisco.  The conversation continues next month with Skin in the Game: Paths to Ownership at AIA East Bay.