Established Infrastructure Architectural Firm, 50-Year Houston SLED Practice

$4.2M

Revenue

$739K

SDE

2.3x

Multiple

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Full Editorial Writeup

This is a multi-decade architectural design practice based in Houston, established in 1973 and focused squarely on the state, local, and education (SLED) market. The firm designs K-12 and public-sector facilities, winning work through the standard public-agency RFQ, shortlist, interview, and award process. Its bread and butter is school bond programs, and revenue has jumped from $1.2MM to a $4.2MM TTM run rate on the back of a large bond-funded award, with over $10MM of contracted work in progress that has not yet been invoiced.

What makes this notable is the depth and stickiness of the client base. Top district relationships span 25 to 30 years and are under contract, which for a services firm is about as durable as it gets in public architecture. The practice runs lean with just five full-time employees, no owned real estate, and a modest lease at roughly $5,225 per month through 2029. An outside contract marketing firm handles proposal preparation, which is a structural advantage in a business where winning RFQs is the whole game.

The headline financials are attractive: $739K EBITDA on $4.17MM revenue at a 2.25x multiple, or an asking price of $1.661MM. Both owner-principals want to stay on in project-delivery roles and are explicitly seeking a larger platform to bid bigger contracts, which reframes this less as a clean exit and more as a bolt-on or merger for an acquirer with capacity and bonding to chase larger public work.

Why we like it

Earnings quality is strong for a services firm, with $739K EBITDA on $4.17MM revenue (roughly 18% margins) and over $10MM of contracted, not-yet-invoiced backlog that de-risks the forward revenue. That backlog is the single most important asset here: it converts a growth story into visible, contracted cash flow rather than a hope.
Durability is exceptional because the top district relationships run 25 to 30 years and are under contract, which is rare in a business won through competitive RFQs. Public school clients renew architects they trust, and multi-decade incumbency creates real switching friction on the next bond cycle.
Market tailwinds are concrete rather than speculative: revenue nearly quadrupled from $1.2MM to $4.2MM on a large bond-funded award, and Texas school districts keep passing bond programs that fund new K-12 construction. SLED spending is politically insulated and largely counter-cyclical, so the demand base holds up in a downturn.
The operator advantage is the platform-merger thesis the sellers themselves are chasing. Both principals want to stay in delivery roles, so an acquirer keeps the technical talent and reputation while adding the bonding capacity, staffing, and balance sheet to bid larger contracts the firm currently walks away from.
Capital intensity is negligible: just $10K of FF&E, five employees, and a leased office. This is a low-asset, high-relationship business where nearly all the value is in the client roster and backlog, so the 2.25x multiple looks reasonable against the earnings and contracted work.

How to improve it

Formalize a backlog-to-invoice acceleration plan in the first 90 days. With $10MM+ contracted but uninvoiced, the fastest cash unlock is tightening billing cadence and milestone recognition, which directly improves working capital without winning a single new project.
Lock the two owner-principals into multi-year employment and consulting agreements with earn-out or retention structure. The entire moat is their relationships and technical delivery, so the deal only works if their departure risk is contractually mitigated before close.
Build succession and add mid-level licensed staff to reduce key-person concentration. Five employees carrying a $4MM+ practice is thin, and the platform thesis of bidding larger contracts requires bench depth that does not exist today.
Leverage the minority and small-business certifications more aggressively across additional districts and public agencies. These certifications are already held but underused, and set-aside and preference programs are a low-cost path to expand the pipeline beyond current relationships.
Diversify beyond K-12 into adjacent public and institutional sectors (municipal, higher-ed, healthcare facilities) using the same RFQ competency. Concentration in school bond cycles is the biggest structural risk, so broadening the pursuit list smooths revenue across bond timing.
Bring proposal and RFQ response capability partially in-house or onto retainer with tighter SLAs. Winning work is entirely a function of proposal quality, and over-reliance on an outside marketing firm is both a cost and a control risk on the most important function in the business.
Pursue teaming agreements with complementary engineering and construction firms to pursue larger-scope, higher-fee projects. The listing explicitly flags this, and joint pursuits let the firm punch above its five-person weight while a new owner builds capacity.

Diligence notes

Verify the $10MM+ backlog contract by contract: scope, fee schedule, milestone triggers, cancellation and termination-for-convenience clauses, and realistic delivery timing. Public contracts can be appropriated in phases and paused, so confirm how much of that backlog is genuinely committed versus contingent on future bond disbursements.
Stress-test client concentration behind the 25-to-30-year relationships. Ask what percentage of revenue and backlog the top two or three districts represent, and understand whether those contracts survive an ownership change or contain assignment/consent provisions that public agencies could invoke.
Scrutinize the revenue jump from $1.2MM to $4.2MM to separate durable run-rate from a one-time bond spike. If the $4.2MM TTM is inflated by a single large award, normalized EBITDA and the effective multiple could look very different once that project delivers out.
Confirm the economics and dependency on the outside marketing firm that prepares all RFQ responses. Understand the cost, contract terms, and whether that relationship transfers, because losing the proposal engine would directly impair the firm's ability to win new work.
Diligence the sellers' post-close commitment in detail: hours, comp expectations, non-compete, and what happens if they leave for the larger platform they say they want. The reason for selling is to pursue bigger projects elsewhere, so quantify the risk they exit sooner than a buyer needs.
Review the professional-liability and E&O insurance history, licensure status of the practice, and any claims or disputes tied to delivered projects. Architecture carries long-tail design-defect exposure, so confirm coverage adequacy and any open matters before assuming clean earnings.

Source

Originally listed on BizBuySell. View original listing →