How To Sell a Business in Texas in 2024

If you’ve never sold a business in Texas, it can seem like an intimidating process — but it doesn’t have to be. Your business is an asset; it has a certain value. A robust market is out there that’s interested in buying it for the right price. 

Here’s how to sell a business in Texas in 2024, step-by-step.

1. Business Valuation

The first step to selling your business is understanding what it’s worth on the open market. Setting the right price is a crucial part of getting buyers interested, so you want to go with data rather than your gut here. If you want to sell your business in Austin or similar hot markets, research is vital.

Order a professional appraisal of your business by a broker, appraiser, or valuation expert. The value of a business is generally based on a combination of its revenue and/or cash flow, assets, and market demand for this kind of business.

2. Prepare For Due Diligence

Due diligence is (typically) the responsibility of the buyer, but the sale is more likely to close if you make it easy on them. Start pulling together financial reports, supporting documents, legal documents, contracts, intellectual property, asset verification, or more. Basically, gather anything potential buyers might need to verify that your business is what it appears to be. 

3. Market the Business

This involves getting the word out about the business to potential buyers. If you hire a reputable business broker to facilitate the sale, the broker probably has a network of potential buyers interested in companies like yours. 

In 2024, marketing a business may also include inbound and outbound digital marketing, as well as listing your business on online marketplaces where interested buyers go to evaluate business opportunities.

4. Screen Potential Buyers

Once potential buyers begin to make themselves known, it’s important to verify their ability to close the deal. Screening criteria might include verification of funds on hand, creditworthiness or letters of pre-approval from financiers, current asset portfolio, and history of closing deals like this or running businesses like this. 

If you want to sell quickly, it may be worth evaluating whether or not the buyer intends to close quickly, including whether or not there will be a long financing contingency.

5. Letter of Intent (LOI)

A “letter of intent” (LOI) is essentially a short-form purchase contract. It’s essentially a contract that agrees to go under contract. It also sketches out the terms of the deal that are to be represented in the final purchase agreement. Purchase agreement contracts tend to be complex and full of legalese, but LOIs tend to be simpler and easier to understand. 

At the bare bones, an LOI says, “I want to sell my business in Dallas,” and this person wants to buy it. The terms of an LOI do not need to be binding, but they can be. An LOI might include general information for a purchase price, payment terms, contingencies, and more. 

6. Negotiate Terms

Before you sign the LOI, there will probably be an opportunity to negotiate terms. If you and the prospective buyer come to an agreement about new terms, the buyer submits a new LOI reflecting those terms.

7. Purchase Agreement

Once the LOI is signed, the drafting of a purchase agreement can begin, usually on the part of each of the parties’ attorneys. At this point, a deposit (similar to an earnest money deposit for the transfer of real estate) may be submitted. Once the contract is signed, the due diligence period can begin.

8. Formal Due Diligence

This is the buyer’s chance to dig deep into the deal and decide whether or not they want to push forward to closing. This usually involves a thorough audit and verification of all documentation (financial, legal, etc.) and inspection of any premises, inventory, and assets. Buyers look to verify you’re the owner, and the business is a transferable asset that can be sold. 

9. Financing

If the buyer needs to finance the purchase with a loan, the buyer can attempt to obtain financing while under contract. This process can take months. 

An all-cash purchase is typically much quicker. The seller could also speed up the process by offering seller financing if they are in a position to do so. 

10. Closing