Selling a business in Texas.
Masswell advises Texas owners on confidential sales of trades, manufacturing, distribution and professional services businesses — in the fastest-growing large state, where buyers are competing for scaled service businesses.
- Tax on the gain
- No personal income tax; the entity-level franchise (margin) tax applies above $2.65 million of revenue.
- Before closing
- Buyers withhold part of the price until the Comptroller issues a certificate of no tax due, or become liable up to the price.
- Trade licenses
- Electrical and A/C businesses need a licensed master or A/C licensee; plumbing needs a Responsible Master Plumber.
- Non-competes
- Enforceable if tied to the goodwill sold and reasonable; courts reform overbroad covenants.
What buyers see in Texas.
Texas added about 391,000 residents in 2024–25 (1.2%), the most of any state we cover, and 83% of homes have central air. Population growth, heat and an aging installed base of equipment make HVAC, plumbing and electrical services some of the most sought-after acquisitions in the state.
Private equity add-ons make up a large share of HVAC and home-services deals nationally, and larger, platform-ready Texas businesses can draw strong competition from buyers looking to establish or expand a presence in the state’s major metros.
Industries we advise in Texas:
How a sale is taxed in Texas
- Texas has no personal income tax.
- The franchise (margin) tax applies to LLCs and S corporations as well as C corporations. For 2026 and 2027 reports there is no tax due below $2.65 million of revenue; rates are 0.375% for retail and wholesale and 0.75% for most other businesses. Ask your CPA how a sale year affects the margin base.
- If the entity winds down after the sale, it files a final franchise tax report and obtains a certificate of account status before terminating with the Secretary of State.
Tax clearance and successor liability
- Under Tax Code §111.020 and 34 TAC §3.7, a buyer of a business or its stock of goods is liable, up to the purchase price, for the seller’s unpaid state taxes — unless it withholds enough of the price until the seller produces a Comptroller certificate of no tax due.
- The request must be made before closing. The Comptroller issues the certificate within 60 days after records are available (and no later than 90 days); if it doesn’t, the buyer is released.
- The seller notifies the Comptroller of the buyer and files a final report immediately after the sale.
When a trades business changes hands
- Electrical (TDLR): the contractor must employ a master electrician, who may be the owner. If the master leaves, the business must name a new one within 30 business days.
- Air conditioning and refrigeration (TDLR): the licensee must be a full-time employee or owner of the company; changes must be reported within 30 days.
- Plumbing (Texas State Board of Plumbing Examiners): the company needs a Responsible Master Plumber; without one it can’t contract for plumbing work.
- Buyers will want the licensed person to stay through closing — or a replacement lined up.
Seller non-competes in Texas
Under Texas Business & Commerce Code §15.50, a non-compete is enforceable if it is ancillary to an otherwise enforceable agreement — in a sale, the transfer of goodwill — and reasonable in time, area and scope. Courts must reform an overbroad covenant rather than void it. List goodwill clearly in the purchase agreement.
We prepare your business, run a confidential, competitive process with qualified buyers, and work alongside your Texas CPA and attorney on the tax, licensing and closing steps above.
Our ProcessKnow where you stand before you talk to a buyer.
Get an instant value range for your business, or see how ready it is for a sale across the five areas buyers evaluate.
Selling a business in Texas: FAQ
Do I pay state tax when I sell my Texas business?
Not personal income tax — Texas doesn’t have one. Your entity may owe franchise (margin) tax if its revenue is above the $2.65 million threshold, so ask your CPA how the sale year is treated.
What is a Texas certificate of no tax due?
It is a Comptroller certificate confirming the seller owes no state taxes. Without it, a buyer can be liable for the seller’s unpaid taxes up to the purchase price, so buyers withhold part of the price until it is issued.
What happens to my electrical or A/C license when I sell?
Texas electrical contractors must employ a master electrician, and A/C contractors a full-time licensee who is an employee or owner. If that is you, the buyer needs a replacement — within 30 business days for electrical.
Are non-competes enforceable when I sell my business in Texas?
Yes, if tied to the goodwill being sold and reasonable in time, area and scope. Courts will narrow an overbroad covenant rather than throw it out.
What is my Texas business worth?
Most owner-led businesses we see are valued at roughly 3x–4x EBITDA below $1 million of EBITDA, 4x–7x between $1 million and $5 million, and 6x–9x above $5 million. Try our business value estimator for a quick range.
Sources
- Texas Comptroller — franchise tax
- Texas Comptroller — reinstating or terminating a business
- 34 Tex. Admin. Code §3.7 — successor liability
- TDLR — electrical contractor license
- 16 Tex. Admin. Code §75.70 — A/C contractor responsibilities
- Capstone Partners — HVAC services M&A update
- U.S. Census Bureau — 2025 population estimates
Last reviewed October 2026. This page is general information, not tax, legal or investment advice; rules change and depend on your facts. Confirm the details with your CPA and attorney before a sale. The principals of Masswell Capital Advisors are licensed investment banking agents, registered with Burch & Company, Inc. Services involving securities shall be performed by Burch & Company.
Other states: