Founder Succession: Half of AEC Owners Leaving in Five Years Have No Plan.

The founder succession issue is the most predictable — and most ignored — threat in the AEC industry. Here's what the data says, and what the best firms are doing about it.

50%

OF SOON-TO-EXIT AEC CEOS HAVE NO EXIT PLAN

FMI / CFMA

70%

OF FOUNDER-LED FIRMS FAIL TO PASS THE SECOND GENERATION

RUSSELL REYNOLDS, 2024

13%

OF AEC FIRMS HAVE SUCCESSION PLANS FOR MID-LEVEL EMPLOYEES

AECE / FMI OTCS SURVEY

You spent decades building something remarkable. The question is whether it will survive you.

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Founder succession is the most consequential decision an AEC firm leader will ever face — and the industry is consistently, demonstrably failing to make it. The data is not subtle. A landmark 2024 study by FMI Corporation and the Construction Financial Management Association (CFMA), drawing on nearly 300 industry leaders, found that half of all AEC owners planning to exit within three to five years have no ownership transition plan in place. Not a partial plan. No plan.

These are not firms in crisis. Many are healthy, growing, well-regarded businesses whose value — built over decades — is quietly at risk of evaporating because one or two people haven't had a sufficiently uncomfortable conversation yet.

Stratwell's Core Finding on CEO Succession

Succession is not an exit event. It is a continuous governance discipline. The firms that execute it well — Gensler, Burns & McDonnell, and hundreds of mid-market leaders who transition on their own terms — share one characteristic: they started planning long before they had to. The average successful internal succession in AEC requires 8–10 years of groundwork.

 

The Readiness Gap Is Wider Than You Think

The ACEC Research Institute and FMI Capital Advisors have tracked ownership transfer and management succession (OTMS) across U.S. engineering and architecture firms for years. Their findings, replicated across every survey wave, point to the same structural problem: firms think they're more prepared than they are.

62%

of AEC firms have a formal ownership transition plan

ACEC / FMI OTMS Survey

52%

have a clearly defined set of ownership criteria

ACEC / FMI OTMS Survey

58%

have formal plans for key management roles — despite 84% calling it "important"

ACEC / FMI OTMS Survey

49%

of firms without a plan have not explored any options at all

ACEC / FMI OTMS Survey

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Among smaller firms — those with fewer than 50 employees — only 51% have a formal ownership transfer plan, compared to 89% of firms with 200 or more employees. Size doesn't protect you from needing a plan; it just correlates with whether you've built one.

"The research highlights that many business owners remain ill-prepared for the future of their companies," said Matt Godwin, Managing Director of FMI Financial Advisory Services. "Too often, owners rely on a buyer coming to the table or key employees coming up with a buyout plan; however, passively waiting isn't a strategy."

Zweig Group's 2025 Principals, Partners & Owners Report adds a striking generational data point: the proportion of AEC principals who are founders is declining sharply, especially among women — from 25% to just 13% in a single year. Fewer founder-principals means the industry is already mid-transition. The question is whether those transitions are being managed or simply happening.

What Founder-Led AEC Firms Get Right — and Wrong

It's tempting to frame founder succession purely as risk mitigation. But the more complete picture is a genuine strategic tension: founder leadership creates real advantages in mature AEC firms, even as it creates real constraints.

Founder Strengths Worth Preserving

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• Deep client trust and personal relationship equity

• Cultural anchor — the firm's values made human

• Long-horizon, legacy-aligned decision-making

• Decades of tacit project and risk knowledge

• Personal brand as a talent magnet for top technical hire

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Where Founder Presence Stalls Growth

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• Founder's Syndrome: control aversion blocks delegation

• Key-person concentration risk (banking, bonding, clients)

• Identity fusion that paralyses succession conversations

• Suppression of potential successors — unconscious threat response

• Valuation erosion at exit from unresolved key-person risk

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The Cranfield Trust's research on Founder's Syndrome captures the paradox precisely: the personal characteristics that enabled an organization to grow and succeed in the first place eventually turn against the founder and start to undermine the organization. Decisiveness becomes rigidity. Vision becomes control. The very engine of growth becomes the ceiling of growth.

"Founder-CEO handovers are significantly more prone to failure than other leadership transitions."

Harvard Business Review, Jan–Feb 2026 — ghSMART research team

The Harvard Business Review's most recent analysis of founder transitions, published in early 2026, identifies the core problem: incoming successors are rarely truly empowered to lead. The founder's ongoing influence — through retained board seats, continuing client contact, or simply cultural authority — creates an impossible dual-leadership dynamic. The successor holds the title; the founder holds the power.

Case Studies: What Success and Failure Look Like

CEO Successions That Worked

✓ Success

Gensler — The Co-Leadership Mode

Art Gensler founded the world's largest architecture firm in 1965. By 2005 — forty years before any urgency — the board had installed a three-person co-CEO structure, distributing authority and eliminating single-point-of-failure risk in a single move. In 2024, after nearly two decades of that model, co-CEOs Andy Cohen and Diane Hoskins became global co-chairs, and Jordan Goldstein and Elizabeth Brink were named the new co-CEOs. Seamless. Planned. On the firm's terms.

Gensler's $1.785 billion revenue and 53-city global footprint did not happen despite this structure. It happened because of it.

Key lesson:

Distributed leadership eliminates key-person dependency. The successor structure matters as much as the individual successor.

✓ Success

Burns & McDonnell — Succession Built Into the Structure

In 1985, Burns & McDonnell's parent company (Armco Steel) was preparing to sell the firm to a German manufacturer. A 10-person management team chose differently: they executed an employee buyout, and became a 100% employee-owned ESOP in 1986. No single employee holds more than 1.5% of shares. CEO succession is now a governance event, not an existential moment.

When CEO Ray Kowalik retired in 2023, Leslie Duke succeeded him without fanfare, without client attrition, without valuation disruption. The firm had grown from under 1,000 employees to over 13,500, and $6.9 billion in revenue — the ESOP model outcompeting conventional structures at every stage.

Key lesson:

Structural solutions (ESOPs) remove the emotional barrier to succession. When no individual holds concentrating ownership, exits become routine.

Patterns of Failure

⚠ Cautionary

The Waiting-for-a-Crisis Pattern — Industry-Wide

A 2025 peer-reviewed study in ScienceDirect examined nine established engineering consulting firms. Seven of the nine had no formal succession plan. Founders were still leading while second-generation managers handled operations — but without documented handover frameworks, every firm was one health event or retirement decision away from leadership chaos.

In several documented cases, the COVID-19 pandemic revealed the depth of succession vulnerability when founders could not work and no capable second-in-command existed. The result: client attrition, project delays, and in some cases firm dissolution. A crisis is not a succession plan.

Key Lesson:

"We'll figure it out when the time comes" is the most expensive strategy available. External disruption always exposes internal unpreparedness.

⚠ Cautionary

The Family Enterprise Cliff — 70% Don't Make It to Gen 2

Russell Reynolds Associates' Global Leadership Monitor (2024) documents a stark reality: 70% of family enterprises fail to successfully pass to the second generation, and 88% fail to reach the third. For AEC, the pattern is consistent — founders prefer family succession but defer action when family members are unprepared or uninterested. Emotional attachment to a preferred outcome replaces actual planning.

The ACEC/FMI survey confirms: many AEC owners are postponing retirement precisely because adult children are "not interested nor prepared" — but no alternative pathway has been developed in the interim.

Key Lesson:

Family preference is not a succession strategy. Without objective criteria and external governance, emotional preference will override business judgement every time.

The Four Pathways — and When to Use Each

PATHWAY	BEST FIT	CRITICAL REQUIREMENT	LEAD TIME
Internal Buyout	Strong bench; culture preservation priority	Affordable buy-in structure; clearly defined ownership criteria	>8–10 years
ESOP	Independence commitment; retention-led culture	Consistent profitability; qualified ESOP legal and financial advisors	3–5 years
Strategic M&A	No internal successor; scale or geographic expansion ambition	Clean WIP/AR; normalized EBITDA; licensed leadership bench	2–3 years prep; 9–12 month process
External CEO Hire	Transformation needed; no credible internal candidate	Strong board governance; founder genuinely exits executive role	6–18 months search

Each pathway requires a different financial structure, a different cultural conversation, and a different timeline. The common thread: none of them work if you start them the year you want to leave.

PSMJ Resources — which has advised AEC leadership transitions for over 45 years — puts it simply: in their observation, it takes eight to ten years to fully transition leadership and ownership in an AEC firm. That's not pessimism. That's the timeline required to transfer client relationships, develop credible internal successors, adjust the firm's financial structure, and build the governance mechanisms that prevent the exit from being a crisis.

"In a business full of so many unknowns, proactive succession planning is one of the most effective ways for an AEC firm to control its own destiny."

Dennis Cornick, 40-year AEC veteran, former SVP Gilbane Building Company

What Your Successors Actually Need From You

Wipfli's construction and real estate advisory team — Brian Bohman, Ryan Rademann, and Tom Cox — draw a distinction that every founder should sit with: the difference between running the business and leading the business. Founder-led firms excel at the former. Scaling requires the latter.

"You can't expect the next generation to inherit muscle memory," says Wipfli Principal Ryan Rademann. "They need structure. They need data they can trust. They need alignment on roles and the freedom to lead in new ways." That means the founder's most important pre-succession investment isn't identifying a successor. It's building the systems, financial transparency, and governance structures that allow someone else to lead effectively.

Zweig Group's 2025 data points to an interesting shift: firms are increasingly de-emphasizing technical licensure and project management experience as leadership criteria, in favor of strategic contribution and firm-wide influence. The successor profile is becoming more general-management oriented. If your development program is producing technically excellent project managers but no one who can hold a client relationship, run a P&L, or drive business development — your succession pipeline has a structural flaw.

The Questions Your Board Should Be Asking Right Now As You Transition as CEO

If your firm doesn't have a functioning board (or advisory board) asking hard questions about leadership continuity, that itself is the problem. Here are the five questions every AEC C-suite and board should be able to answer clearly:

1. If our CEO/founder left tomorrow, who leads — and for how long? Emergency succession and planned succession are different plans. Both are required.

2. What percentage of our revenue is personally dependent on one or two individuals? This is your succession risk number. Every M&A buyer will calculate it. You should know it first.

3. Do our potential successors have a financially viable path to ownership? Rising firm valuations have made internal buy-ins increasingly unaffordable without structural financing solutions.

4. Have we documented the firm's institutional knowledge — client relationships, project history, subcontractor relationships, and risk judgements? Tacit knowledge that lives in one person's head is a liability, not an asset.

5. Is the founder emotionally prepared to be succeeded? The research is unambiguous: identity fusion between founder and firm is the single most common cause of succession failure. This is not a business question. It is a personal one that has business consequences.

Your succession timeline starts today.

Our advisory team works exclusively with AEC firm leaders on ownership transition, leadership development, and the strategic groundwork that makes succession a competitive advantage — not a crisis. Book a Confidential Conversation

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Sources & Further Reading

• FMI Corporation / CFMA — 2024 Ownership Transfer and Management Succession Study

• ACEC Research Institute / FMI Capital Advisors — OTMS Survey (annual)

• Zweig Group — 2025 Principals, Partners & Owners Report of AEC Firms

• Harvard Business Review (Jan–Feb 2026) — "Leading After the Founder" (ghSMART)

• Russell Reynolds Associates — Global Leadership Monitor H1 2024

• ScienceDirect (2025) — "Leadership succession and its impact on organizational resilience: A contingency perspective in engineering firms"

• Cranfield Trust — "Founder's Syndrome Undermines the Legacy of Strong Leaders"

• PSMJ Resources — AEC Ownership and Leadership Transition Advisory

• Wipfli LLP — "Succession Strategy for Founder-Led Businesses" (2025)

• Burns & McDonnell / ESCA — ESOP performance research

• Gensler — Wikipedia / annual reports / leadership announcements