Finding the Right Buyer and Valuing Your Business: A Legal Guide for Texas Sellers

Welcome to the first installment of our Selling Your Business in Texas series, created by the team at Amini & Conant to empower Texas business owners with practical legal insight throughout the exit process. Whether you’re preparing to sell now or planning for the future, this series will guide you through each phase of the sale with clarity and strategic perspective.

In this first post, we explore how to identify the right buyer and how to accurately value your business—two of the most critical steps in any sale. As Austin business sale attorneys, we’ve helped countless clients make smart, informed decisions in these early stages, setting the foundation for a successful transaction.

Let’s dive into how to approach buyer selection and valuation with legal foresight, market awareness, and confidence.

The first key decision in selling your business in Texas is knowing who you’re selling to. Buyers typically fall into two main categories:

Strategic Buyers

These are companies operating in your industry or adjacent sectors—think competitors, suppliers, or corporations looking to enter your market. They’re often willing to pay more than market value because they see synergies in acquiring your company: expanding their customer base, eliminating competition, or gaining technology or talent.

Pros:

• May pay a premium for strategic value

• Often experienced in M&A transactions

• Can integrate your business quickly

Cons:

• May require non-compete agreements

• Could disrupt your team or operations post-sale

• Risk of disclosing sensitive information during diligence

Financial Buyers

These are investors, like private equity firms or venture capitalists, looking to grow your business and eventually sell it for a return. They typically use leverage (debt) to fund the deal and may keep you involved post-sale.

Pros:

• May offer equity rollover opportunities

• Often keep the business intact

• Less threat to company culture or operations

Cons:

• More sensitive to pricing and ROI

• May require more due diligence and stricter warranties

• Post-closing involvement might be expected

While price is important, it shouldn’t be the only factor when evaluating potential buyers. Consider the following:

• Cultural Fit: Does the buyer share your values or vision?

• Reputation & Track Record: Have they followed through on other acquisitions?

• Execution Certainty: Can they close the deal on time, with financing secured?

• Post-Sale Intentions: Will They Retain Staff? Move locations? Protect your brand?

You should feel confident not only in the price offered but also in the future your business will have under new ownership.

Now, let’s talk about how buyers will actually determine what your company is worth. The valuation process varies, but the most common metric is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).

Buyers typically apply a multiple to your EBITDA to determine value. That multiple depends on:

• Your industry

• Growth potential

• Customer concentration

• Recurring revenue

• Competitive advantages

• Legal risks or liabilities

Here are the three most common approaches used by Texas transactional attorneys and financial advisors in business sales:

1. Market Approach

Uses comparable sales of similar businesses. Ideal when there’s plenty of transaction data in your sector.

3. Asset-Based Approach

Based on future cash flow projections, discounted to present value. This is common in service-based or recurring revenue models.

2. Income Approach

Focuses on net assets (especially for asset-heavy companies). Often used in asset sales or distressed situations.

If you plan to sell within the next 6–18 months, there are actionable steps you can take to boost your valuation:

• Clean up financial statements (audit or CPA-reviewed if possible)

• Diversify customer base to reduce concentration risk

• Reduce liabilities or settle disputes

• Protect key IP and employee relationships (more on this in October’s blog)

• Demonstrate consistent revenue growth or recurring income

Your investment banker or broker will help determine the best approach to go to market:

Broad Auction

• Solicits offers from multiple buyers

• Can create bidding wars and raise value

• More exposure and confidentiality risk

Targeted Sale

• Focuses on select, pre-vetted buyers

• Often faster and more discreet

• Can reduce leverage but may miss top offers

Choosing the right path depends on your business goals, industry, and risk tolerance.

Before disclosing sensitive business information, make sure all prospective buyers sign Non-Disclosure Agreements (NDAs). This protects your trade secrets, financials, client lists, and even the fact that you’re considering a sale.

In Texas, NDAs can also support trade secret protections under the Texas Uniform Trade Secrets Act. Your Austin business sale attorneys can prepare enforceable NDAs and manage how buyer communications are structured during this stage.

Here are a few signs that a buyer may not be the right fit:

• Over-eagerness without backing it up financially

• Lack of transparency in their acquisition history or process

• Dragging out diligence without advancing the deal

• Pushing aggressive legal terms too early

• Refusing to sign an NDA

Trust your advisors if they sense something is off—one bad buyer can waste months of your time.

Even in the early stages of buyer selection and valuation, legal guidance is essential. A Texas business sale attorney can:

• Review buyer proposals

• Analyze the risks of different sale structures (stock vs. asset sale—see August’s blog)

• Help negotiate pre-LOI protections

• Vet buyer financials and reputation

Don’t wait to involve counsel until after a letter of intent is signed. Many of the most important protections (or pitfalls) occur before formal negotiations begin.

Finding the right buyer and valuing your business accurately are foundational to a smooth and successful exit. The time you invest in this stage—along with experienced legal counsel—can help you avoid wasted time, protect your interests, and set the stage for a fair and lucrative deal.

Stay tuned for next month’s post on Letters of Intent—and if you’re actively considering a sale now, the attorneys at Amini & Conant are ready to help guide you through every stage of the process.

Once you’ve identified your buyer and agreed on broad terms, the Letter of Intent (LOI) sets the legal framework for your deal. In our May blog, we’ll break down how to:

• Structure a favorable LOI

• Negotiate exclusivity and non-competes

• Avoid hidden liabilities in early terms

• Understand what’s binding—and what isn’t

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