As architecture, engineering, and design firms mature, planning for ownership transition becomes critical. One challenge many firms face is facilitating a smooth and financially sound exit for retiring principals, especially when the next generation of leaders isn’t yet ready or able to buy in. In these situations, a stock redemption can be a strategic and effective solution.

Stock redemptions involve the firm repurchasing an owner’s shares, rather than transferring them directly to another shareholder. This approach offers flexibility, maintains internal control and can be tailored to the financial and operational realities of the firm. It also provides a structured process for exiting owners while helping preserve firm stability.

While stock redemptions can be highly effective, they also come with significant tax and cash flow considerations that must be carefully addressed to avoid unintended consequences.

At DM Consulting Group, our professionals are experts in structuring stock redemptions to avoid the tax pitfalls that often arise in such transactions. Our approach is both strategic and highly personalized. We consider the unique financial structure of your firm, the retirement timeline of exiting shareholders and the readiness of future leadership.