Private Equity’s M&A Wishlist: Texas and the Lone Star Advantage

Private Equity’s M&A Wishlist: Texas and the Lone Star Advantage — William & Wall

1. The Macro Backdrop: Capital Still Seeking a Home 📈

As 2026 approaches, private equity finds itself in an environment of both constraint and abundance. Interest rates remain above their post–financial crisis averages, public markets are turbulent, and geopolitical risks continue to pressure global deal volume. Yet private equity funds hold more than $3 trillion in undeployed capital — liquidity that limited partners demand be put to work.

This tension is reshaping deal focus. Rather than competing for mega-deals at inflated valuations, private equity is zeroing in on the lower middle market: founder- and family-owned businesses generating $3M–$15M of EBITDA. Here, fragmentation enables roll-ups, valuations remain rational, and operational improvements drive returns.

Texas has become a centerpiece in this recalibration. The Lone Star State offers unparalleled scale, diversification, and business friendliness. With population inflows, corporate relocations, and sectoral breadth spanning energy to technology, Texas represents one of the most attractive geographies for both platform investments and add-on acquisitions. For general partners facing deployment mandates, Texas is no longer optional — it is essential.

2. Demographic Gravity: Why Texas Draws Buyers 🤠

Private equity is attracted to Texas not only because of its size, but because of its growth fundamentals.

Population & Migration: Texas has been one of the nation’s fastest-growing states, consistently ranking at the top for inbound migration. Dallas-Fort Worth, Houston, Austin, and San Antonio have all expanded rapidly, fueled by corporate relocations and household migration from California, New York, and Illinois.

Business Climate: With no personal income tax, a low corporate tax burden, and a pro-business regulatory environment, Texas consistently ranks as one of the best states to start and scale companies. These factors create a fertile ground for private equity to underwrite durable returns.

Corporate Relocations: Household names from Tesla to Oracle to Charles Schwab have moved or expanded headquarters in Texas. This influx of enterprise anchors accelerates demand across professional services, logistics, housing, and consumer sectors — creating tailwinds for middle-market companies.

Industry Breadth: Energy remains foundational, but Texas now offers diversification across technology, logistics, industrial services, and healthcare. Austin’s “Silicon Hills” drives software and innovation. Houston anchors global energy and healthcare. Dallas-Fort Worth serves as a logistics and finance hub. San Antonio contributes defense, cybersecurity, and manufacturing strength.

Succession Dynamics: Many of Texas’s mid-market companies remain founder- or family-owned. As Baby Boomers retire, succession transitions are creating a steady pipeline of sell-side opportunities — opportunities that private equity is eager to capture.

Together, these fundamentals make Texas one of the most strategically important lower middle market geographies in the U.S.

3. What PE Wants in 2026: The Buy-Side Checklist 🔍

The private equity wishlist in Texas reflects the same five core criteria investors prize nationwide — attributes that align directly with the state’s economic strengths:

🔄 A. Recurring Revenue & Predictability
Contracted revenue streams are essential. Examples include managed IT services firms in Dallas, oilfield services with multi-year contracts in Houston, and subscription-based SaaS providers in Austin. Predictability commands valuation premiums.

💰 B. Margin Defensibility
Businesses with EBITDA margins >20% attract strong competition. Specialty logistics operators serving the Port of Houston, or niche medical practices with strong reimbursement profiles, represent margin-resilient opportunities.

🧩 C. Platform Potential
Texas is rich in fragmented industries where consolidation can unlock value. Landscaping, industrial services, behavioral health, dental practices, and specialty construction all present opportunities for anchor platforms.

👥 D. Leadership Continuity
Founders willing to retain a minority equity stake or management benches capable of scaling are highly valued. Texas’s deep executive talent pool, particularly in Austin and Houston, enhances continuity prospects.

⚖️ E. Growth Story Alignment
Investors underwrite future growth. A healthcare services group expanding into Oklahoma, a distribution company scaling nationally from a Dallas base, or a SaaS provider broadening verticals from Austin all present compelling forward narratives.

For Texas sellers, aligning company positioning with these five investor criteria is critical to maximizing valuations.

4. From Brokers to Bankers: How William & Wall Reshaped Texas M&A 💼

Historically, many Texas business owners relied on local brokers or attempted DIY sale processes through attorneys and accountants. These approaches often undersold businesses, ceded negotiating leverage to buyers, and left significant value on the table.

William & Wall has introduced institutional-grade advisory rigor to Texas transactions:

• Vectorized Buyer Ecosystem: Mapping thousands of private equity firms, family offices, and strategic acquirers actively targeting Texas industries.

• Competitive Auction Engineering: Running multi-party processes that create competitive tension, eliminating single-buyer dynamics.

• Excruciating Valuation Analysis: Employing Wall Street methodologies to benchmark, defend, and expand enterprise value.

• Texas M&A Insights: Publishing detailed analyses of regional deal activity, valuations, and buyer movements to inform attorneys, CPAs, and founders.

With William & Wall, Texas sellers can now command outcomes equal to or better than peers in coastal markets, leveraging the state’s unique fundamentals to achieve premium valuations.

5. Preparing for 2026: Founder To-Do List 📝

For Texas business owners considering a sale in the next 12–24 months, preparation is paramount. Key steps include:

• Audit Financials: Commission a sell-side QoE to validate reporting and mitigate diligence risks.

• Codify Revenue Composition: Present revenue clearly by customer, geography, and product line, addressing concentration risks with mitigation strategies.

• Clarify Ownership & Governance: Streamline capitalization tables, finalize shareholder agreements, and establish clear succession planning.

• Craft a Growth Thesis: Frame the company as a platform with adjacencies, geographic expansion, or technological enhancements.

• Select the Right Advisor: Avoid broker-led processes that undersell. Partner with an investment banker capable of competitive auctions and institutional buyer access.

The difference between thorough preparation and reactive improvisation is measured not only in valuation multiples but in the preservation of legacy.

6. Conclusion: The 2026 Window 🚪

Private equity’s wishlist for 2026 is clear: recurring revenue, defensible margins, platform potential, leadership continuity, and credible growth narratives. Texas delivers on all five with unmatched scale, diversity, and pro-growth fundamentals.

At William & Wall, we ensure Texas founders don’t just participate in this cycle — they command it. Our role is to align Wall Street expertise with Texas’s local realities, delivering premium valuations, favorable terms, and safeguarded legacies.

💡 Thinking about selling? Let’s talk. Texas’s M&A ecosystem is evolving quickly — and the advantage belongs to those who prepare. Contact William & Wall, Texas’s trusted M&A advisory experts, to explore your business sale. With $30B+ in Wall Street transaction experience and a nationwide network of private equity, family offices, and strategic buyers, we help middle-market owners maximize enterprise value, secure legacy, and achieve premium outcomes.

William & Wall is a Scottsdale-based boutique investment bank serving business owners across Texas and the Southwest. With institutional-grade sell-side M&A advisory, rigorous valuation analysis, and engineered auction processes, we elevate Texas companies to the national stage while preserving the legacies built over decades.