Texas service business owners: bringing in a majority partner

Texas has no shortage of HVAC, plumbing, electrical, pest control and staffing companies built by one owner over decades. If yours is one of them and you are weighing a partner who buys control while you keep a stake, three Texas details are worth knowing before the first meeting.

Texas draws the same line on control

The Texas State Securities Board has its own exemption for mergers and acquisitions dealers (7 Tex. Admin. Code 139.27). It applies to deals that transfer ownership and control of a privately held company, and it requires that the buyer or group of buyers actively operate the company after the deal. Control is presumed when the buyers can vote 25% or more of a class of voting securities.

That matches the deals we work on: a buyer acquires a controlling interest and runs the business with you, and you keep a minority stake. If what you want instead is a passive investor who leaves you in control, that is a different transaction. We do not arrange minority investments or growth-capital raises; if one may fit, we can refer you to a registered broker-dealer.

The franchise tax shows up in diligence

Texas taxes most businesses through the franchise tax, collected by the Comptroller. For the 2026 and 2027 reports, the no tax due threshold is $2,650,000 in revenue, and the rates are 0.375% for retail or wholesale businesses and 0.75% for others (Texas Comptroller). A company at or below the threshold owes no tax but still files its Public Information Report or Ownership Information Report.

A partner's diligence team will want to see that those reports were filed and the account is in order. If a year was missed, fix it before the letter of intent.

Two certificates people mix up

The Secretary of State issues certificates of fact, including a certificate of status for an entity formed or registered in Texas (Texas Secretary of State). That is a different document from a certificate of account status, which comes from the Comptroller and speaks to franchise tax. Buyers and their lenders often ask for both near closing. Know which one you hold.

What a partner will look for in a Texas service company

• Clean books for at least the last few years, with owner perks separated from operating costs.
• Licenses held in the right names: if a trade license sits with you personally, ask how it moves or stays after the deal.
• Customer contracts and maintenance agreements that can be assigned, or that do not need consent to change owners.
• A team that can run a week without you, because the partner is buying a company, not a job.

Settle these before you sign anything

Your role and pay after closing. The size and class of the stake you keep. What happens to that stake if you leave. When the partner plans to sell again. Our article on how rollover equity works covers each one.

Retained ownership and future upside are possibilities, not promised second paydays. Rolled or retained equity is usually illiquid, often a minority position behind acquisition debt, and can lose some or all of its value.