A main-street business in Texas typically sells for 1.5 to 2.5 times the owner's true annual earnings. Texas is a friendly state to sell in, with no personal income tax eating your gain. It still has a successor liability rule and a liquor permit process that reward sellers who plan ahead.
Your tax returns almost always prove a higher number.
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| Business type | Revenue multiple | Owner-earnings (SDE) multiple |
|---|---|---|
| Hair salon / Barbershop | 0.35 to 0.65 times yearly revenue | 1.5 to 2.5 times owner earnings |
| Cleaning service | 0.5 to 0.9 times yearly revenue | 1.8 to 2.8 times owner earnings |
| Landscaping / Lawn care | 0.45 to 0.85 times yearly revenue | 1.8 to 2.8 times owner earnings |
| Restaurant / Cafe | 0.25 to 0.45 times yearly revenue | 1.3 to 2.2 times owner earnings |
| Auto repair / Detailing | 0.4 to 0.75 times yearly revenue | 1.7 to 2.6 times owner earnings |
| Retail shop | 0.3 to 0.6 times yearly revenue | 1.5 to 2.3 times owner earnings |
| Other service business | 0.35 to 0.7 times yearly revenue | 1.5 to 2.5 times owner earnings |
Under the Texas Tax Code, whoever buys your business can be held responsible for your unpaid state taxes, up to the full purchase price, unless they hold back enough money to cover what you owe. The shield against this is a Certificate of No Tax Due from the Comptroller. Since a 2021 law change, you and your buyer request it jointly on Form 86-114, signed by both sides.
Because the certificate only protects a buyer when it arrives before closing, expect your buyer's attorney to make it a condition of the deal. Submit the joint request as soon as you have a signed letter of intent, and bring any past-due sales or franchise tax current first so the Comptroller has nothing to flag.
Texas courts enforce non-compete agreements that are reasonable in time, area, and scope, and a covenant signed as part of selling your business is the textbook case where they hold up. So when your buyer asks you to stay out of the same line of work for a few years within a defined area, assume a Texas judge will make you keep that promise. Have a licensed attorney read it before you sign. That is typically one flat-fee review, and it can come out of the sale proceeds.
If your bar or restaurant sells alcohol, your TABC permit cannot be handed to the new owner. The buyer files their own application through the state's online AIMS system, posts the required 60-day sign at the location, and clears city and county approvals. The process commonly runs 45 to 60 days or longer.
Build that clock into your closing date. Some deals bridge the gap with a TABC-approved management agreement that lets the buyer operate under your permit temporarily, but that takes paperwork and approval too. The worst outcome is a closed deal and a dry bar, so have your buyer start the application early.
Texas has no personal income tax, which means the state takes nothing from the profit on your sale. Federal capital gains tax still applies, and how the purchase price gets allocated across your assets changes what you keep. That allocation is negotiated, not automatic, so know your numbers before your buyer's accountant proposes the split.
Start by gathering three years of business tax returns. Most small business sales close with seller financing or an SBA loan, and SBA lenders will not fund a buyer without those returns in hand. Run your free valuation range below, and get your number on paper before you quote a price to anyone.
Most main-street businesses sell for 1.5 to 2.5 times the owner's true yearly earnings, or their replacement value, whichever is higher and can be proven. True earnings means salary plus profit plus the personal things the business pays for. Most owners forget those add-backs count, so most owners guess low.
SBA lenders require three years of business tax returns to finance a buyer. Three years also shows a trend, not a snapshot. We saw a salon whose latest year looked like decline. Three years proved it was one expensive staffing year, and that was worth tens of thousands on her price. Fewer years looks like hiding. More rarely changes the number.
No. YourBizWorth is not a broker, appraiser, or law firm. We prepare your analysis and drafts. We flag exactly which steps need a licensed attorney, usually one flat-fee engagement at closing, often payable from the sale money. We make the lawyer cheaper, not absent.