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SELLING A BUSINESS

Feb 10, 2023

Business Brokers in Houston, Texas: Who They Are, What They Do, and Where to Find Them

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Houston is the economic powerhouse of Texas, boasting over 600,000 small businesses. Among the businesses, the vast majority are non-employee businesses (e.g., sole proprietorships or freelancers). However, there are 94,936 businesses with 20 employees or fewer. These small businesses will all likely work with a business broker at some point, whether to get a valuation or broker the purchase or sale of a business.

Why use a business broker in Houston?

A small business broker is a professional who helps entrepreneurs buy and sell small businesses. Unlike the real estate industry, having a buy-side broker is pretty rare in a small business acquisition. Most business brokers in Houston specialize in representing the owner of a business in a sale.

They use their knowledge and expertise to estimate a business’s value, market it to potential buyers and negotiate the best deal for the business owner they represent. A good broker will understand the complexities of the process and common pitfalls in a transaction.

For owners of small businesses, it is often the first and last time they may be selling a business. By working with a seasoned business broker, owners can maximize their proceeds from a sale while minimizing the risk associated with a sale. Additionally, leveraging a broker allows the business owner to remain focused on running their business while the broker takes care of the sale.

Should I use a business broker in Houston, TX?

We recommend using a Houston business broker if you have a business worth at least $250K and are likely selling to a third party (e.g., a competitor, a local entrepreneur, etc). If your business is worth less than $250K, most business brokers in the Houston area will not be able to take your business on as they would not earn enough commission to justify the work.

If you are not selling to a third party, you can likely navigate the transaction with an attorney, CPA and business advisor. At Beacon, we offer custom pricing for employee- and family-transfers.

Types of business brokers in Houston, TX

1. National business brokerage franchises

There are a number of national business brokerage franchises: Transworld Business Advisors, Murphy Business Brokers, VR Business Brokers, Sunbelt Business Brokers and others. These franchisees undergo training in the world of consulting, business brokerage, franchise sales, and franchise development. Many come from a background in business ownership or corporate sales.

2. Local business brokers

In addition to national franchises, there are a good number of local business brokers in the Houston Market. These are independent brokerages with a number of agents and 1-3 business brokers. The upside of these brokers is that they have been in the market for a while and typically have been in business for longer than a given franchisee of a national chain.

3. Industry-specific brokers

Aside from brokers that may focus on a region, there are business brokers that focus on specific industries. For instance, Alfred Detillier is a Houston broker focused on selling routes. His brokerage is called The Route Guy, and he handles selling FedEx routes, vending machine routes, and more. Shana Williams is another industry-specific broker. Her firm Childcare Sales and Consulting has sold over 100 childcare centers in the state of Texas.

4. Investment bankers

For owners of businesses worth more than $10M, there are a number of local investment banks that may be a fit for your needs. Investment bankers typically work with owners of businesses in the Lower Middle Market (LMM) or the Middle Market (MM). At Beacon, we work exclusively with "Main Street" businesses, so if we encounter an owner of a large business, we often refer them to investment bankers.

Aside from helping owners broker the sale of their business, investment bankers can also provide capital services (e.g., raising debt or equity to grow your business).

5. Real estate brokers and agents

Aside from full-time business brokers and investment bankers, a number of commercial real estate agents may broker the sale of small businesses on the side. In Houston, Kenneth Li of Southwest Realty Group and Susan Hoang of B&W Realty are both real estate brokers who offer business brokerage services as well.

We generally recommend owners to avoid working with a real estate agent as their primary advisor, as selling small businesses is not their bread and butter. They are an important party to a transaction, if a lease needs to be negotiated or a property is included in a sale, but they are not experts on valuing, buying or selling small businesses.

6. Business valuation and exit planning professionals

There are a few firms in the Houston market that will perform business valuations for owners or assist in exit planning. These firms are great resources for owners of small businesses who want to be proactive about planning for retirement or an exit. That being said, these firms typically do not actually broker the sale of small businesses. Instead, they stay focused on understanding the personal and business finances, advising on maximizing the value of a small business, and assisting the owner in planning for a transition.

Best business brokers in Houston, TX

#1. Transworld Business Advisors

Transworld is a national business brokerage franchise with over 200 territories.

#2. Beacon

Beacon is a Texas-focused business brokerage with headquarters in Austin, TX.

#3. Loyalty Business Brokers

Loyal Business Brokers is a national franchise with three territories: Texas, Florida and New Jersey.

#4. TruView Business Advisors

TruView Business Advisors is a boutique business brokerage located in Houston, TX.

#5. Certified Business Brokers

Certified Business Brokers is a large business brokerage located in Houston, TX and serving the broader state.

#6. Barnett Capital Group

The Barnett Capital Group is a Texas- based business brokerage and intermediary firm specializing in the sale of private schools and childcare centers

Questions to ask your business broker

How do you charge? Are there any upfront fees or retainers?

It's important to understand how business brokers will charge you. Do they require their entire commission upfront? Or are they willing to take it as you get paid, given that they recommended the buyer? Do they require a hefty upfront retainer? Do they have a minimum fee?

At Beacon, we earn a commission as the owner gets paid. That means that if there is an installment component to the sale, we share the same risk as our clients. In other words, we put our money where our mouth is.

What types of business buyers do you work with and know?

Some business brokers in Houston, TX focus on international buyers, others may know very large private equity funds. Depending on who your ideal buyer is, you should make sure that the business broker you're speaking with has experience finding and closing that type of buyer.

Will you perform a complimentary valuation?

Some brokerages require owners to pay for valuations. The price can range from $499 to more than $3,000. Ensure that you know what you're getting yourself into. Knowing your exit options is important before committing to a third-party sale with a business broker.

At Beacon, we provide complimentary valuations to owners. But, we do ask owners to pick us when they are ready to sell. As you can see, we like to pay it forward.

Can you provide a reference to an owner who recently worked with you?

We highly recommend asking for references from past clients of the broker. How accurate was the broker's valuation? How careful were they with vetting and selecting buyers to advance to meeting the owner? How helpful were they in helping close the deal after the initial offer was countersigned?

Some brokerages will provide testimonials on their websites, which can share color on how the brokers have helped their clients navigate business transactions.

What types of businesses do you specialize in?

If you have a unique business, make sure that the broker is capable of helping you sell. Some business brokers may focus on online or e-commerce businesses. Others may specialize in medical or manufacturing. Having a business broker who truly understands your business is key to achieving the ideal outcome.

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Katie Lamar
Katie Lamar
Business Development

If you're interested in acquiring a Main Street business, Katie is your go-to person. Katie hails from Kansas City originally and majored in Art History at the University of Kansas. In her free time, she enjoys climbing, paddleboarding, and cooking.

Information posted on this page is not intended to be, and should not be construed as tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.

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