In Texas, licensing decides your buyer pool before price does.

Who is licensed to operate what the buyer is buying

In Texas, leasing or renting real estate for someone else, for compensation, is brokerage activity, and brokerage activity requires a license from the Texas Real Estate Commission. TREC draws the line at employment: an employee of the property owner is exempt, and an on-site apartment manager is exempt, but managing condominiums or town homes, soliciting rental prospects, or acting as a residential rental locator all require a license. A third-party management company earning a fee to lease and manage other people’s property sits inside the licensed activity, not outside it.

That is a valuation fact rather than an administrative one. A business entity acting as a broker in Texas operates under a designated broker, so the population of buyers for your company is not everyone with capital and an appetite for recurring revenue. It is that group narrowed to buyers who already hold a Texas broker license, already employ someone who does, or can put that arrangement in place before closing. The same regime applies whether the doors are in Dallas-Fort Worth, Houston, San Antonio, or Austin, which is why this page is written to the state rather than to a city. Nothing in the analysis changes between them.

The bar moved this year. Effective 1 January 2026, TREC Rule 535.56 raised the minimum qualifying experience for a broker license from 360 points to 720, and cut the credit a bachelor’s degree contributes from 630 hours to 300. Fewer people clear the Texas broker bar each year than did before. For a seller that cuts both ways: it thins the field of buyers who can step straight in, and it raises what an already-licensed Texas operator is worth to a platform that wants into the market without solving the problem from scratch.

In practice this is a diligence item a prepared seller raises first. An out-of-state private equity platform that has not acquired in Texas before will find it eventually. Finding it in week two of exclusivity, where it becomes a reason to re-trade, is a worse outcome than the seller having named it and mapped the fix in the first conversation. Naming constraints early is most of what a managed sale process is for.

What Texas does not take out of the proceeds

Texas levies no state personal income tax, so the gain on a sale carries no state-level income tax for the owner. The state does levy a franchise tax on the entity, which is a separate question from how an owner’s proceeds are treated and does not disappear because a sale is happening.

What that changes is arithmetic rather than strategy. Federal treatment is unchanged, and the split between asset and equity consideration, the allocation across asset classes, and the shape of any earnout still drive most of the tax outcome. What the absent state layer removes is one variable that in states which do tax the gain, California and Washington among them, can be large enough to decide deal structure on its own.

The reason it belongs on this page is that sellers routinely compare an offer against what a peer got somewhere else and conclude their own number is short. Net of state tax, the same multiple in Texas and in California are not the same outcome for the owner. That comparison is worth running with a CPA before an offer is judged. It is not advice this firm gives.

Whether the non-compete a buyer asks for will hold

With the federal rule that would have banned most non-competes now vacated, enforceability is once again entirely a question of state law. That makes where your company operates a live question rather than a settled one, and Texas answers it in a way that generally favors whoever is buying.

Texas enforces non-competes given in connection with the sale of a business where they are ancillary to an otherwise enforceable agreement and reasonable in time, geographic area, and scope of activity. Covenants running several years are routinely upheld in the sale context, a longer horizon than Texas courts generally accept in a pure employment context. Where a covenant is drawn too broadly, Texas law directs a court to reform it to reasonable limits and enforce the reformed version rather than strike it out, which is a materially different risk than in a state that voids an overbroad covenant outright.

The trap is documentary. Texas courts have declined to enforce a buyer’s non-compete where the purchase agreement moved tangible assets but never stated that goodwill was among them. For a property management company, goodwill is most of what is being bought: the owner relationships, the referral sources, and the reputation that keeps doors from leaving. If the documents do not say goodwill transferred, the covenant meant to protect it may not survive a challenge.

A seller may reasonably ask why the buyer’s protection is their problem. Because it is priced. A buyer who is not confident the covenant will hold discounts, holds more back, or stretches the earnout. Getting it clean is one of the few diligence items genuinely in both parties’ interest.

The clearance that sets your closing date

A purchaser of a business in Texas is liable for amounts the seller owes the state under the Tax Code, up to the purchase price. That exposure is called successor liability, and the buyer’s protection against it is to withhold enough of the purchase price to cover any amount due until the seller produces a certificate of no tax due, or to obtain the certificate directly.

The request is joint. Form 86-114 carries both the seller’s and the purchaser’s signatures, so it is not something a buyer quietly handles on its own schedule. The Comptroller describes roughly ten business days for a straightforward account and up to 90 days where an audit is involved. The rule also releases the purchaser’s withholding obligation if the certificate is not issued within the stated period.

For a seller, the number to plan around is the 90 and not the ten. A management company with a clean sales tax history will probably land near the short end, but the risk is asymmetric: the certificate sits on the critical path to funding, and a seller who starts it at signing rather than at letter of intent has added weeks to a process where momentum is the thing protecting the price. In one closed engagement the whole process ran 172 days, which is not a lot of room to give back.

The consequence of skipping it is not theoretical. In one Texas case the buyer of a heating and cooling business closed without a certificate, the Comptroller later assessed unpaid pre-sale sales tax, the seller could not cover it, and the buyer was left carrying it. Buyers’ counsel know that case. Expect the certificate to appear as a closing condition rather than a courtesy.