Texas continues to dominate the national business landscape with unprecedented growth, boasting nearly 2.9 million active business entities as of January 2025 and recording over 1,368 qualified capital investment projects in 2024[1][2]. In this thriving environment where businesses are flourishing and M&A activity remains robust, Texas business owners considering a sale must navigate the process with complete transparency to maximize their success. Whether you’re running a manufacturing operation in Houston, a tech startup in Austin, or a construction services business in Dallas, the fundamental principle remains the same: honesty with your business broker is not just advisable—it’s essential for achieving the best possible outcome in today’s competitive Texas marketplace.
The Critical Importance of Transparency When Selling Your Texas Business
If you’re considering selling your business in the Lone Star State, and you are employing a professional business broker or intermediary like Gateway Mergers & Acquisitions, it’s imperative to be absolutely open with them about every aspect of your operation. Texas’s booming economy, which now exceeds $2.6 trillion in GDP and ranks as the eighth-largest economy in the world if it were a country, has created an incredibly competitive environment for business sales[1]. In this market, transparency isn’t just good practice—it’s your competitive advantage.
This is not the time for secrecy or even for subtlety, especially when it comes to problems that could impact your business valuation or sale timeline. Whether you’ve been having trouble with your lease, issues with one of your best customers, or concerns about your fixtures and equipment, you must spell it out clearly to your broker. Any one of these “sleeping dogs” is bound to wake up sometime during the process, and when they do, the consequences can be severe.
After the first growl comes the bite, and in Texas’s fast-moving business environment, timing is everything. The sale will get buried deeper than last year’s bone, and the buyer, scared off by the ruckus, will have long since disappeared to one of the many other opportunities available in Texas’s thriving marketplace. With Texas adding 125,000 new business entities in 2024 alone, buyers have numerous options, making transparency crucial for maintaining their interest[1].
Building Trust in Texas’s Competitive Business Environment
Tell your broker all there is to know prior to the beginning of the marketing effort. This approach is particularly important in Texas, where the business community values straight talk and honest dealing. Your professional business broker, whether at Gateway M&A or another reputable firm, and potential buyers are aware that there is no such thing as a perfect business. In fact, Texas business attorneys preparing for 2025 note that buyers are much more likely to deal with the problems of your business during the decision-making process rather than after they have decided to buy[3].
The stakes in Texas are particularly high given the state’s robust M&A activity. In the first half of 2024, Texas saw 58 billion-dollar deals representing 21.9 percent of all deal activity, with energy deals accounting for 43.4 percent of billion-dollar transactions[4]. This level of activity means that transparency can make the difference between closing a deal and losing out to competitors.
Legal and Financial Consequences of Non-Disclosure
And it’s not just the sale that’s at stake in Texas’s litigious business environment. Concealing a problem or defect that adversely affects the business can lead to litigation and years in court, which is particularly costly in Texas where business litigation can be complex and expensive. It’s simply not worth the risk, especially when you consider that problems and defects don’t necessarily mean your business won’t command an attractive price in Texas’s favorable market conditions.
Your professional business broker at Gateway M&A is prepared to deal with these issues and give you competent advice based on their extensive experience in the Texas market. With over 20 years of serving North Texas business owners and having closed over a thousand business transactions, Gateway understands how to navigate challenges while maintaining deal momentum[5].
Some sellers try to hide the problems of their business and hope the sleeping dog never wakes up, but this approach is particularly risky in Texas’s transparent business culture. You’d be well-advised to get potential issues on a good, strong leash instead of letting them “lie”.
Navigating Lease Considerations in Texas’s Dynamic Real Estate Market
The lease represents a critical component of most business sales in Texas, often serving as a major determining factor in deal success. Texas’s real estate market, valued at $18 billion for brokerage services alone, creates unique opportunities and challenges for business owners. Whether you are buying or selling a business in major Texas markets like Houston, Dallas, Austin, or San Antonio, it’s important to understand that if the real estate is not included in the transaction, the lease becomes a critical element of the sale process.
Understanding Texas Lease Transfer Options
Other than owning the real estate outright, there are only three ways the transfer of the business can be handled under Texas law. First, a new lease can be entered into by the lessor and the new tenant, the buyer. This option is often preferred in Texas’s competitive commercial real estate market, where landlords may be willing to negotiate favorable terms to retain quality tenants.
Second, a sub-lease can be negotiated between the seller and the buyer. In a sub-lease arrangement, the seller of the business becomes the landlord to the buyer. However, the existing landlord, who most likely is also the owner of the property, must always approve a sub-lease under Texas Property Code[6]. In a few cases, the existing lease provides that the tenant has the right to sub-lease, but this is relatively uncommon in Texas commercial leases.
Third, and most commonly used in Texas business sales, is the assignment of lease. The seller simply assigns the existing lease to the buyer, and the buyer assumes responsibility for the lease terms. In most cases, the landlord must approve the assignment under Texas Property Code § 91.005, which provides that a tenant may not sublease or rent leased premises during the term of the lease without first obtaining the landlord’s consent[6]. Sellers should be aware, however, that in most cases, they remain responsible for the terms of the lease even after assignment.
Critical Lease Evaluation Questions for Texas Business Owners
Sellers should take a careful look at the lease at their business and ask themselves several key questions that are particularly relevant in Texas’s current market conditions. Is the lease long enough and the rent low enough to make the business attractive to a potential buyer in Texas’s competitive environment? With commercial real estate costs varying significantly across Texas markets, rent competitiveness can make or break a deal.
Is the rent consistent with similar businesses in the area? Texas’s diverse metropolitan areas each have their own market dynamics, and what’s reasonable in Austin may not be competitive in Houston or Dallas. Are there any terms or conditions of the lease that might be unfavorable in the eyes of a possible buyer? Most importantly, are you on good terms with the landlord, and can the lease be transferred without any hitches?
If there could be any problems with the lease or the landlord, it’s best to resolve them prior to selling the business. Your business broker professional at Gateway M&A is an excellent source to review the lease and its terms from a business sale perspective, particularly given their deep understanding of Texas market conditions[5].
Texas’s Thriving Business Environment: Opportunities and Considerations
Record-Breaking Business Growth in the Lone Star State
Texas’s business environment in 2025 presents unprecedented opportunities for business owners considering a sale. The state has achieved remarkable growth, with active business entities nearly doubling from 1.47 million in 2015 to 2.93 million in 2025[2]. This explosive growth reflects the state’s business-friendly policies, including no personal or corporate income tax, a predictable regulatory environment, and significant investments in workforce development and infrastructure[1].
For business owners in Texas, this growth translates to a robust market for business sales. The state added 125,000 new business entities in 2024 alone, demonstrating the continued influx of entrepreneurs and established companies seeking to capitalize on Texas’s advantages[1][2]. This environment creates both opportunities and competition for sellers, making professional guidance from experienced brokers like Gateway M&A even more valuable.
M&A Activity and Market Dynamics
Texas’s M&A market has shown remarkable resilience and growth potential. In the first half of 2024, middle market M&A activity in Texas saw 33 transactions with an aggregate disclosed value of $8.3 billion, representing a 32% increase from the previous period[7]. The reported average enterprise value to revenue multiples increased from 1.6x to 3.2x, indicating strong valuations for well-positioned businesses[7].
Strategic buyers remained the most active buyer type, representing approximately 58% of closed transactions in the first half of 2024[7]. Consumer discretionary and energy were the most active sectors, accounting for 36% of M&A deals, while industrials and information technology sectors each represented 12% of transactions[7]. This data suggests that businesses in these sectors may find particularly receptive markets for their sales.
The state’s record for hosting billion-dollar deals remains impressive, with 58 such transactions in the first half of 2024 alone[4]. Energy deals dominated the largest transactions, including Diamondback Energy’s $26 billion acquisition of Endeavor Energy Resources and ConocoPhillips’s $22.5 billion acquisition of Marathon Oil[4]. These mega-deals demonstrate the scale and sophistication of Texas’s M&A market.
Economic Outlook and Future Prospects
Looking ahead to 2025, Texas M&A lawyers are preparing for what many expect to be an active year[3]. The reopening of financing markets, greater stability in valuations, and rising confidence in the market’s long-term prospects are creating optimism among deal professionals[3]. Continuing declines in interest rates and borrowing costs are expected to allow more deals to come to fruition that have previously stalled due to financing challenges[3].
However, business owners should also be aware of potential headwinds. The Dallas Federal Reserve notes that while Texas’s economy grew 3.9% in 2024, outperforming the national average, there are variables to watch including energy prices, inflation trends, and trade policies, particularly tariffs affecting Mexico, Texas’s top trading partner[1][8]. Despite these challenges, Texas’s deregulated, market-driven economy positions the state well to navigate economic uncertainties[1].
Preparing Your Texas Business for Sale: Best Practices and Strategies
Understanding Business Valuation in Texas Markets
Timing is everything when it comes to selling a business in Texas, especially in today’s fast-moving market environment. Business owners must prepare their operations, financial records, and leadership teams to appeal to buyers while timing the sale to align with rising earnings and a favorable lending environment. The first step is understanding the fair market value of your business, which is best accomplished by reaching out to one of our brokers at Gateway that can examine asset-based approaches, market comparables, and income-based approaches using current lending interest rates.
Assembling Your Professional Team
Engaging experienced professionals, such as business brokers, CPAs, and attorneys, can help navigate the legal, financial, and tax implications of a business sale in Texas. Gateway M&A’s team, with their integrity-focused approach and personal touch in building relationships between buyers and sellers, exemplifies the type of professional guidance that leads to successful transactions[5]. Their experience serving North Texas business owners for over 20 years and completing over a thousand business transactions provides the expertise needed to navigate complex sales.
Marketing and Due Diligence Considerations
Effectively marketing your business, negotiating favorable deal terms with strategic buyers, and ensuring thorough due diligence are essential steps toward a successful closing. Gateway M&A’s recognized excellence in customizing marketing packages to showcase the very best of each business to potential buyers demonstrates the importance of professional marketing in today’s competitive environment[5]. Their commitment to confidentiality, requiring buyers to sign confidentiality agreements before sharing business information, protects sellers throughout the process[5].
Conclusion: Embracing Transparency for Success in Texas’s Business Market
In Texas’s dynamic and competitive business environment, transparency with your business broker isn’t just good practice—it’s essential for success. With the state’s economy exceeding $2.6 trillion and M&A activity reaching record levels, business owners have tremendous opportunities to achieve successful exits[1][4]. However, success requires honest communication about challenges, thorough preparation of business operations and financial records, and partnership with experienced professionals who understand the Texas market.
The sleeping dogs of business problems will inevitably wake up during the sale process. Rather than hoping they remain dormant, smart Texas business owners address these issues proactively with their brokers, creating stronger, more attractive opportunities for buyers. With Gateway M&A’s proven track record and commitment to integrity, Texas business owners can navigate the complexities of business sales while maximizing value and ensuring smooth transitions.
Whether you’re running a manufacturing operation, technology company, retail business, or service provider in Texas, the principles remain the same: transparency builds trust, preparation creates value, and professional guidance ensures success. In Texas’s thriving business environment, these fundamentals become even more critical for achieving your exit strategy goals and maximizing the legacy of your business in the Lone Star State.