What Is My Facility Management Business Worth in Texas?

Texas facility management businesses are in demand right now. The state's population growth, booming commercial real estate in Dallas, Houston, and Austin, and a strong industrial corridor have created consistent work for facility management operators. More importantly, private equity search funds and regional consolidators are actively hunting for established FM businesses in Texas because the recurring revenue model, absent state income tax, and operational scalability make these businesses attractive acquisition targets. If you have built a facility management company over the past decade or longer, you are sitting in one of the hottest buyer markets in the country. The question is not whether to sell, but at what valuation and to whom.

What Drives the Value of Facility Management Businesses in Texas

Buyers evaluate facility management businesses on a handful of core metrics. First is recurring revenue. Unlike one-off service calls, facility management contracts with schools, office parks, industrial complexes, and retail chains typically renew annually or multi-year, making the cash flow predictable. Buyers will pay significantly more for a business where 80 percent of revenue is locked in under contract versus one where deals are transactional. Second is customer concentration. If your top 3 customers represent 60 percent of revenue, buyers will haircut your valuation. Conversely, a diversified customer base across 40 to 50 accounts reduces risk and commands a premium. Third is owner dependency. Can the business run without you making every sales call, managing every crew, and handling every problem customer? Fourth is employee depth and turnover. Facility management is labor intensive. Buyers want to see supervisors, crew leaders, and operations staff who know the routes and customers, not just you and a revolving door of temporary workers. Fifth is contract quality. Written scope of work, clearly defined SLAs, and documented performance metrics tell a buyer the business has operational discipline. Finally, growth trajectory matters. A business holding flat over three years is worth less than one growing 5 to 10 percent annually, even if current EBITDA is identical.

EBITDA Multiples: What to Expect in Texas

Facility management businesses typically trade at 4 to 7 times EBITDA in the current market. The range depends heavily on the profile above. A well-run FM business with 85 percent recurring revenue, low customer concentration, a strong operations team, and 7 percent annual growth will sit at the top of that range, often 6.5 to 7x. A business where the owner is still the primary salesperson, customers are concentrated, and contracts are informal might trade at 4 to 5x. Texas-based buyers, particularly regional PE firms and search funds, are not price-sensitive on quality assets. The state's no-income-tax advantage means a buyer can retain more cash post-close, which effectively increases what they will pay. A business that would trade at 5.5x EBITDA in California might fetch 6 to 6.5x in Texas, simply because the buyer's after-tax returns improve. National consolidators also view Texas FM businesses as platforms for add-on acquisitions in the region, which pushes multiples higher. Three years ago, 5x was typical for a mid-market FM business. Today, it is 5.5 to 6x for comparable quality. That shift reflects both the buyer appetite and the recurring-revenue premium in the current environment.

What Drags Your Valuation Down

• Owner as sole salesperson: If you are the one landing every contract, buyers immediately assume revenue will drop when you leave. They will discount the multiple 1 to 2 full points or demand a two to three-year earnout to protect the purchase price.
• Verbal or informal customer agreements: FM buyers want written contracts. If you have been running on handshakes or loose email confirmations, buyers cannot trust the revenue will stay. They will ask for written addendums before close or walk.
• Inconsistent or commingled bookkeeping: If your personal expenses, business expenses, and owner draws are tangled together in your accounting, it takes months to untangle for due diligence. This delays the deal and signals operational risk.
• High customer concentration: If two or three customers represent more than 50 percent of revenue, buyers will apply a concentration discount (10 to 20 percent haircut) or demand customer consent letters before signing.
• No non-compete from prior owners or key employees: If a former owner or your best crew lead could legally walk out and compete, your revenue is at risk. Buyers will require signed non-competes, and if they are missing, they will lower the offer.
• Inconsistent crew quality or high turnover: If your margins are thin because you use temp labor or turnover is above 30 percent annually, buyers see a job shop, not a scalable business. They will value it as operations-heavy with lower multiples.

How to Get an Accurate Valuation in Texas

There are two common valuation methods for facility management businesses: EBITDA multiple and seller's discretionary earnings (SDE). EBITDA multiple applies when the business is large enough to have professional management and clear separation between owner compensation and business operations. If you have 10 or more employees, documented management structure, and clear operating expense records, buyers will use EBITDA multiples. SDE applies to smaller or owner-operated FM businesses. It starts with net income, then adds back owner salary, benefits, owner's vehicle, and other personal items that would not exist under new ownership. Online valuation calculators often use neither method correctly, applying generic formulas to local data and producing wildly inaccurate numbers. Before approaching buyers, normalize your financials for the past three years. Normalize means removing one-time expenses (litigation, equipment replacement, owner bonuses), adding back true cost of goods sold, and separating contract labor from employee payroll. Buyers will request three years of tax returns, profit and loss statements, customer list with annual revenue by customer, and a list of active service contracts. If your records are disorganized, hire a CPA for three to four weeks to recast your P&L. That investment, typically five to ten thousand dollars, often adds fifty thousand to two hundred thousand dollars to your sale price by presenting a clean, credible financial story. Do not use online calculators. Work with an M&A advisor or broker who understands Texas facility management specifically. They will run comparable transactions, account for local buyer appetite, and give you a valuation range grounded in actual market data.

What Buyers Are Actually Paying Right Now in Texas

A typical facility management deal in Texas closes with 70 to 90 percent cash at closing. The remainder is often structured as a seller note (three to five-year term) or an earnout tied to customer retention or revenue targets in the first 12 to 24 months after close. Transaction timelines run 6 to 12 months from initial inquiry to closing, assuming your financials are clean and contracts are in order. If documents are scattered or EBITDA is unclear, add three to six months for due diligence and restatement. Search funds and independent sponsors (first-time founders backed by capital partners) typically move fast because they are incentivized to close within a set time frame. Regional PE firms move deliberately because they layer in operational due diligence and often impose a transition period where the owner stays on for 60 to 90 days. Earnouts are common in Texas FM deals. A buyer might pay 5.8x EBITDA with 80 percent at close and 20 percent conditional on customer retention or revenue over 18 months. This protects the buyer if key customers leave during the handoff but gives you an incentive to transition properly. Competition among buyers in Texas is high right now. If your business is well-run and well-documented, you may have multiple offers. Use that leverage to negotiate lower earnout percentages, higher upfront cash, or a shorter transition period. Buyers are paying more for certainty. If you can deliver clean records, written customer contracts, and a trained management team, you will command a premium price relative to a business that is still running on the owner's reputation and memory.