Plan business succession correctly: 7 common mistakes and how to avoid them
Many successors fail due to avoidable mistakes. Learn how to plan your corporate succession successfully and sustainably.
Business succession is one of the most important and at the same time most complex decisions in entrepreneurial life. And yet: Around 70% of all successions in Germany are problematic — sometimes with massive financial or emotional consequences.
Why is that so? Because many owners approach the issue too late, too one-sidedly or without a clear structure. In this article, we'll show you the 7 most common mistakes in succession planning — and how you can do it significantly better.
1. Act too late
Many entrepreneurs put the issue of succession on the back burner — often due to uncertainty, emotional commitment or lack of time. But a good succession requires at least 2-5 years in advance. The more complex the business, the earlier you should start.
✔️ Better: Strategically prepare the succession process from the age of 55 — regardless of whether the implementation takes place at 60 or 67.
2. No clear objective
Do I want to sell? Lease? Handed over within the family? Or is it a management buy-out? Without a strategic policy decision, there is no basis for all further steps.
✔️ Better: Write down the target image: economically, emotionally and organizationally.
3. Wrong candidate selection
Not every son, daughter or managing director is really suitable — and not every external buyer fits the corporate culture. Emotionality is no substitute for an aptitude test.
✔️ Better: Set objective criteria for eligibility and involve external sparring partners (e.g. PALA CF).
4. No well-founded company valuation
Many succession negotiations fail due to price expectations that are not based on realistic values. Requested prices that are not related to the market often result in sales.
✔️ Better: Obtain a professional evaluation at an early stage — with comprehensible derivation based on cash flows, multipliers & market analyses.
👉 What is my company worth? Assessment methods explained
5. Legal-financial complexity underestimated
Succession is not an easy purchase contract. Tax structure, company structure, liability, financing models — everything must be professionally regulated.
✔️ Better: Early involvement of corporate finance consultants, tax experts and lawyers.
6. Poor communication
Whether employees, customers or banks — anyone who keeps the succession secret or communicates too late jeopardizes trust and business. That is exactly why many buyers are dropping out.
✔️ Better: Develop a targeted communication strategy with internal and external stakeholders.
7. Ignore the emotional factor
It is difficult to let go of a company. Anyone who underestimates this is subconsciously sabotaging their own succession — through hesitation, questioning or backing down at the last minute.
✔️ Better: address emotions consciously — and, if necessary, have them accompanied by moderation or coaching.
Conclusion: Succession is not a project, but a process
A successful succession requires:
✅ Time
✅ Structure
✅ external perspective
✅ and honest goal definition
Act now: Succession check with PALA
Plan your succession professionally and early on. In a free initial consultation, we will analyse together where you stand — and where you want to go.
