The biggest mindset problems of business owners: Why the right focus is critical to a successful business sale
By Andreia Pinto
Published On 9. May 2025
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Managing a company is a complex task that requires not only expertise and dedication, but also a long-term perspective. From my experience as an M&A advisor, I have realized that many business owners do not develop the necessary mindset to prepare their company for a sale in the long term. As a result, valuable opportunities are missed and the value of the company decreases in the event of a potential sale. In this article, we highlight the most common mindset mistakes that business owners make and how these affect the success of the business sale. We look at key aspects such as corporate structures, legal and tax planning and cultural differences between Germany and the USA.
1. The lack of an exit plan: “I'm keeping my company forever”
One of the most fundamental problems I observe with many entrepreneurs is the lack of an exit plan. Most run their business as if they are going to keep it forever without ever thinking about selling or handing it over. As a result, strategic decisions are often made without considering a potential handover. A clear exit plan, on the other hand, gives the entrepreneur a structure for the future. It enables strategic decisions to be made that increase the value of the company and prepares the company for a potential sale or succession plan.
Why is an exit plan so important?
A well-thought-out exit plan not only helps to make the company more attractive to buyers, but also protects the entrepreneur himself. By planning a sale at an early stage, risks can be minimized and opportunities maximized. For example, contracts with customers can be negotiated for the long term, investments can be made in processes and structures and the company can be continuously prepared for sale. Companies that operate without this planning often find it more difficult to find buyers and achieve the desired sales price.
2. Dependence on the founder: “I am the company”
Many entrepreneurs are unable to detach themselves from their company. They are involved in day-to-day operations and are at the center of all processes. This behavior leads to the company being heavily dependent on the founder, which makes the sales process much more difficult. Buyers are looking for companies that function smoothly even without the presence of the founder.
Independent management and clear structures are crucial to increasing the value of the company. If a company is too dependent on the founder, the value drops considerably, as potential buyers see the risk that the company can no longer operate successfully without the founder. It is therefore important to hand over responsibility at an early stage and build up a management team that can run the company independently.
3. Short-term thinking: “Profit now, future doesn't matter”
Another mindset problem for many entrepreneurs is short-term thinking. They focus on current profits instead of planning for the long term. This can lead to decisions being made that appear profitable in the short term but reduce the long-term value of the company. Buyers, on the other hand, are interested in companies that are sustainable and promise long-term profits.
Short-term measures such as cutting back on investments or foregoing the development of new products may increase profits in the short term, but reduce the value of the company in the long term. Buyers look for stable earnings, recurring sales and sustainable business models. Companies that are only geared towards short-term success appear unstable and risky.
4. Lack of systems and processes: “chaos instead of structure”
A company without clear processes and structures looks disorganized and chaotic to buyers. This can significantly reduce the value of the company as potential buyers fear that the business is inefficient and requires additional resources to function. To increase the value of the company, repeatable systems and processes that work independently of the founder should be implemented early on.
Buyers are looking for companies that operate in an efficient and structured manner. This includes standardized processes in areas such as production, sales, human resources and customer service. Clear workflows and structures create trust and increase the value of the company.
5. Tax optimization and choosing the right legal form: the path to maximum tax savings when selling a company
Tax optimization is a crucial aspect when preparing for the sale of a company. Choosing the right legal form can have a major impact on the net sales proceeds. However, many entrepreneurs, particularly in small and medium-sized businesses, are not fully aware of the tax advantages and disadvantages of the various corporate structures. In this section, we will take a closer look at the tax implications of different legal forms such as the GmbH, GmbH & Co. KG and the advantages of a holding structure.
GmbH: Tax advantages through the partial income method
For entrepreneurs whose company is run as a GmbH (limited liability company), the sale of GmbH shares offers tax advantages. If the company is held in the form of a GmbH, the so-called partial income method applies to the sale. This means that only 60% of the profit from the sale of the company shares is subject to income tax, while the remaining 40% remains tax-free. This means considerable tax relief compared to other types of company, where the entire capital gain is taxed.
However, this procedure only applies if the GmbH shares are part of the seller’s private assets and if the capital gain exceeds the exemption limit of EUR 9,060 (as of 2024). Entrepreneurs who are considering a sale should therefore check whether a GmbH structure could be advantageous for them. However, it should not be forgotten that a conversion from a partnership (e.g. GmbH & Co. KG) to a corporation such as a GmbH involves an important hurdle: the tax advantages of the GmbH only take effect after a seven-year period, which is known as the “elapsed lock-up period”. This period is required for the tax benefits to take full effect and for the transition from a partnership to a GmbH to be fully completed for tax purposes.
GmbH & Co. KG: Advantages for older entrepreneurs
Another common company form is the GmbH & Co. KG, a partnership that offers tax advantages, especially for older entrepreneurs. When a company is sold, the capital gain from a GmbH & Co. KG is taxed via the seller’s personal income tax. In principle, this means that the full profit is taxed. However, there are exceptions that offer considerable tax relief for entrepreneurs over the age of 55.
For this group of entrepreneurs, German tax law provides for a one-off tax-free allowance of up to 45,000 euros on the capital gain. However, this allowance is gradually reduced from a capital gain of EUR 136,000. In addition, the capital gain can be taxed using the so-called one-fifth rule, which leads to a significant reduction in the tax burden. This rule spreads the capital gain over five years for tax purposes, resulting in a progression-related tax advantage. Entrepreneurs who use the GmbH & Co. KG as a legal form can thus benefit from considerable tax relief, especially at an advanced age.
Conversion: seven-year lock-up period for change of legal form
If an entrepreneur plans to convert their company from a partnership (e.g. GmbH & Co. KG) to a corporation (e.g. GmbH) in order to take advantage of the tax benefits of the GmbH, this must be done at an early stage. From a tax perspective, such a conversion takes seven years before it becomes fully effective. This means that the GmbH structure can only realize its full tax benefits upon sale after this lock-up period has expired.
Entrepreneurs should therefore plan in good time and act in close consultation with their tax advisors. Under no circumstances should this conversion be carried out shortly before a planned sale, as otherwise the tax advantages, such as the partial income procedure, cannot be used. Early restructuring ensures that the sale proceeds in the best possible way from a tax perspective and that the entrepreneur achieves the highest possible net proceeds.
Holding structures: A powerful instrument for tax optimization
In addition to the choice between GmbH and GmbH & Co. KG, there is another way to optimize the sale of a company for tax purposes: the holding structure. A holding company is a parent company that holds one or more operating subsidiaries. This structure offers considerable tax advantages, especially when it comes to the sale of the subsidiary.
The special feature of a holding structure is that 95% of the capital gain on the sale of a subsidiary is tax-free. Only 5% of the sales proceeds are subject to taxation, which leads to considerable tax relief. This structure not only allows entrepreneurs to minimize the tax burden on the sale, but also to retain flexibility for future investments, as the capital remaining in the holding company can be reinvested.
However, a holding structure must also be set up at an early stage in order to take full advantage of the tax benefits. Here too, a holding company should ideally be set up several years before the planned sale in order to avoid possible tax blocking periods and make optimum use of the structure.
6. What makes a company valuable? The buyer's perspective
Buyers are particularly interested in companies that offer stable, predictable earnings and growth potential. A strong, recurring revenue model, such as that generated by subscriptions or long-term contracts, is particularly attractive. Companies that rely on short-term, one-off income, on the other hand, are riskier and less interesting for buyers.
The customer structure also plays a decisive role. Companies that are dependent on a few major customers appear risky, as the loss of a single customer can have a significant impact on sales. Buyers prefer companies that have a diversified customer base, as this reduces risk and promises stability.
The role of the brand and market position
Another important factor is a company’s market position and brand strength. A company with a strong brand and a clear positioning in the market is much more attractive to buyers. Buyers want to acquire a company that is not only financially stable, but also has a strong brand identity that promotes growth.
7. The cultural difference: Germany vs. the USA
There is an interesting cultural difference between Germany and the USA when it comes to dealing with companies. While many entrepreneurs in Germany see their company as an inseparable part of their identity, the idea that the company is an asset is much more widespread in the USA. The motto there is often “I own the company, the company doesn’t own me. Sure, I will sell it if the price and the time are right.” (translated: “I own the company, the company doesn’t own me. Sure, I will sell it if the price and the time are right”)
This difference in mindset is particularly evident when selling a company. In Germany, many entrepreneurs are so emotionally attached to their company that the sale is perceived as a loss. In the USA, on the other hand, entrepreneurs see the sale as part of the natural growth process. This openness towards a sale means that US entrepreneurs often build their company from the outset in such a way that it can one day be sold or handed over.
8. Personnel and management: building a strong team
An often underestimated factor when selling a company is the personnel and management. Buyers want to acquire a company that has a competent and stable team that can continue to run the business after the sale. A company that is too dependent on the founder is less attractive, as it may no longer be able to operate successfully without the founder.
Entrepreneurs should therefore establish a strong management team at an early stage that can make decisions independently. This team not only creates trust among potential buyers, but also increases the value of the company as it ensures stability and continuity.
Conclusion: Long-term planning is the key to success
Selling a company is a complex process that requires careful planning and preparation. Entrepreneurs should start early to prepare their company for a potential sale. This includes implementing clear processes, reducing dependence on the founder, tax optimization and building a strong management team.
Choosing the right legal form and long-term tax planning can have a significant impact on the net sale proceeds. Entrepreneurs should be aware that the successful sale of their business is not the result of short-term decisions, but the result of years of preparation and strategic planning.
If you are looking for support in planning the sale of your company or have questions about how you can best prepare your company for an exit, we will be happy to assist you. Arrange a free and non-binding initial consultation with us right away, during which we will analyze your current situation, discuss possible strategic directions and prepare an initial indicative valuation based on your company’s financial figures.
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