How to Sell a Facility Management Business in Texas

Texas facility management businesses are selling faster and at higher multiples than they were three years ago. The state's population growth, booming commercial real estate in Austin and Dallas, and lack of state income tax have attracted search funds and regional PE firms specifically hunting for recurring-revenue service businesses in this geography. If you've built a facility management company in Texas over the last decade or longer, now is genuinely a seller's market.

Who Is Buying Facility Management Businesses in Texas

Three types of buyers are actively acquiring facility management companies across Texas right now. Search funds, typically backed by institutional capital and run by operating partners in their 30s and 40s, target founder-led businesses generating $1 million to $5 million in EBITDA with strong customer relationships and recurring contracts. They value businesses that don't depend entirely on the founder's relationships. Regional PE firms based in Dallas, Houston, and Austin are building platforms by acquiring 3 to 7 facility management companies in adjacent markets, combining back-office functions to improve margins, then adding bolt-on acquisitions. They typically target businesses with $2 million or more in EBITDA and clean financials. Independent sponsors, sometimes called sponsor-operators, partner with credit funds to acquire single facility management businesses and improve operations over 3 to 5 years before refinancing or selling. All three buyer types are attracted to Texas specifically because of the population density in major metros, the commercial real estate activity, and the tax efficiency of doing business here compared to California or New York.

What Your Business Needs to Look Like Before You Go to Market

• Three years of audited or reviewed financial statements (tax returns alone won't cut it for buyers above $2 million EBITDA). Buyers want a normalized P&L showing consistent revenue and EBITDA margins, with owner compensation and one-time expenses clearly separated.
• A customer concentration analysis. If one customer represents more than 15 to 20 percent of revenue, you'll lose valuation. Serious buyers will discount your multiple or walk away. Ideally you have 30 to 50 customers with no single account larger than 10 percent.
• Documentation of customer contracts, particularly long-term service agreements with renewal terms. Buyers are paying for recurring revenue, so prove it exists. Month-to-month contracts significantly lower multiples.
• Clear separation between the owner and the business. If every customer knows you personally and calls you for approvals, the business loses value. Buyers need confidence the company runs without you.
• A documented management team and organizational chart. Identify which staff members are staying post-close and for how long. A transition plan that keeps your best people is worth 10 to 15 percent more in purchase price.
• Clean contracts with your facilities, equipment vendors, and any subcontractors. Buyers will review these for unfavorable terms, hidden liabilities, or clauses that don't survive a change of ownership.

Valuation: What Multiple Should You Expect in Texas

Facility management businesses with strong recurring revenue typically sell for 4.5 to 6.5 times EBITDA in the current Texas market. Businesses with long-term contracts, low customer concentration, and documented management teams command the higher end. A business with mostly month-to-month customers or one that depends heavily on the owner will sit at 3.5 to 4.5 times. Texas multiples have been rising over the past 18 months because of buyer competition and the state's economic tailwinds, but they remain slightly below California's multiples, primarily because cost of living and operational costs are lower here. A $3 million EBITDA facility management business in Dallas might sell for $15 to $20 million. The same business in Austin, where search funds and PE firms are particularly active, could push higher if the customer base is strong and geographically diversified across multiple commercial districts.

The Selling Process, Step by Step

• Month 1 to 2: Engage an M&A advisor who knows the Texas facility management market. This person will help you prepare financials, customer lists, and contracts for buyer review. They'll also benchmark your business against recent Texas sales to set a realistic price range. Plan to spend 15 to 20 hours of your time answering questions and gathering documents.
• Month 2 to 3: Create a confidential information memorandum, or CIM. This is a 20 to 30 page document summarizing your business, customer base, growth trajectory, and market position. Buyers won't sign a nondisclosure agreement with you personally; they'll do it to review the CIM. Your advisor will target 40 to 60 qualified buyers, including search funds, PE firms, and independent sponsors active in Texas.
• Month 3 to 4: Qualified buyers sign NDAs and review the CIM. You'll likely receive 8 to 15 initial expressions of interest. Your advisor will manage these conversations so you don't have to. Expect 3 to 5 buyers to request management presentations and customer reference calls.
• Month 4 to 5: Leading buyers conduct management interviews, usually 2 to 3 hours each, and speak directly with your largest customers (with your permission). They'll also send financial interrogatories asking for detailed breakdowns of revenue by customer, margin trends, and capital expenditure history. Prepare a detailed 3-year revenue analysis by customer and service line.
• Month 5 to 6: Two to three final buyers move forward to offer stage. Your advisor negotiates the letter of intent, or LOI. This document locks in purchase price, structure (cash, note, earnout), and key closing conditions. In Texas deals under $10 million, LOI negotiations typically take 2 to 3 weeks.
• Month 6 to 9: The chosen buyer conducts final due diligence. Expect 2 to 4 weeks of intensive review: financial audits, customer contract verification, facility inspections, safety compliance checks, employee interviews, and tax return analysis. You'll need to produce invoices, payroll records, insurance policies, and customer service data. Your business is open for inspection during this phase.
• Month 9 to 12: Purchase agreement negotiation, closing conditions, and walk toward close. The buyer's counsel and your counsel draft the definitive purchase agreement. Common closing conditions include customer retention (typically 90 percent must stay), employee employment, no material adverse change, and third-party consents. Plan 4 to 8 weeks for this phase, longer if there are escrow or earnout disagreements.

Common Mistakes Sellers in Texas Make

• Waiting until the last minute to clean up financials. If your books are messy, you either won't find qualified buyers or you'll leave 10 to 20 percent of value on the table. Spend 3 to 6 months preparing audited financials, normalizing expenses, and documenting customer contracts before you engage an advisor. Buyers can smell urgency and disorganization.
• Overestimating your business's value because you've poured your life into it. Sentiment doesn't matter. Your business is worth what a buyer will pay for it, based on EBITDA, customer concentration, contract terms, and team stability. Refusing to accept market multiples will stall the process and cost you deals.
• Telling customers and staff about the sale before the ink is dry. Early disclosure creates anxiety, customer defections, and employee departures. Your advisor will manage buyer confidentiality. Stay quiet until there's a signed LOI with closing conditions met.
• Not planning for the transition. If you plan to stay for 12 months post-close to ensure customer retention, that's valuable and adds deal certainty. If you want to walk away day one, buyers account for that risk by lowering multiples. Know what you want before you start the process.
• Choosing an M&A advisor who doesn't specialize in facility management or doesn't know the Texas market. Generalist brokers will get you offers, but specialists will get you the highest price because they understand buyer preferences and can position your business correctly.