5 Mental Models Every Seller Should Understand
I had coffee recently with a founder who’d built a solid business over twenty years. Profitable. Loyal customers. A real reputation in his market.
He leaned in and said, almost apologetically, “I just want a fair price.”
What he didn’t realize yet was this: fair is not how buyers think.
That disconnect is why so many exits disappoint. Not because the business isn’t good, but because the seller is operating with the wrong mental models at the exact moment they matter most.
Most owners spend decades mastering how to run a company, then walk into the most important transaction of their life thinking it works the same way. It doesn’t. Selling a business is not a continuation of operations. The rules that rewarded you before no longer apply.
I see this every week in Main Street and lower Middle Market deals. Founders assume revenue equals value, loyalty equals defensibility, and effort equals outcome. Buyers assume risk first, optionality second, and price last.
The gap between those perspectives is where value is either created…or quietly destroyed.
One mental model that consistently surprises sellers is how buyers separate cash flow from transferability. I spoke with a manufacturing owner earlier this year who had strong EBITDA but also personally approved every major customer order.
From his seat, that showed care and quality. From the buyer’s seat, it screamed concentration risk.
Until we restructured decision rights and documented operating authority, the offers lagged well below his expectations. Once we did, the multiple moved meaningfully, not because the numbers changed, but because the risk profile did.
Another overlooked model is that buyers don’t buy history; they buy confidence in the future. I often tell sellers that last year’s performance gets you in the room, but next year’s story determines the check size. Strategic buyers, in particular, underwrite growth narratives tied to systems, not heroics. According to PwC’s Global M&A Outlook, over 70% of acquirers cite future growth potential as a primary valuation driver, even in smaller transactions. Sellers who can articulate that growth without positioning themselves as the bottleneck win more leverage at the table.
Here’s where skepticism usually shows up. Owners push back and say, “But I am the secret sauce.”
Sometimes that’s true. More often, it’s just undocumented process wearing a familiar face.
Founders can unlock as much as six or seven figures in additional value simply by externalizing what lived in their head and embedding it into the business. The buyer didn’t fall in love with the playbook; they fell in love with the fact that the playbook survived without the author.
Your business is not worth what you built; it’s worth what can survive you.
Another mental model sellers miss is that negotiations are rarely about price. They’re about risk transfer. I spoke to a services firm owner who fixated on headline valuation while ignoring reps, warranties, and earn-out structure. A competing offer came in lower on price but cleaner on risk. He took it and later told me it was the first night he’d slept well in years. Harvard Business Review research supports this dynamic: sellers who choose deals that are more certain to close and less risky…rather than chasing the biggest headline price…often end up better off in the end.
Then there’s timing. Many sellers assume the market will reward patience. In reality, buyers reward preparedness. Deals that come to market with clean financials, normalized earnings, and a clear equity story close faster and with fewer last-minute changes in offers. Bain & Company has shown that well-prepared sellers reduce value erosion during diligence by as much as 30%.
Preparation isn’t polish; it’s protection.
Finally, there’s the identity shift. This is the hardest mental model of all.
Owners who cling emotionally to the business during a sale unconsciously sabotage outcomes.
I’ve watched founders talk buyers out of deals by over-explaining past mistakes or defending outdated decisions. The sellers who do best mentally rehearse letting go long before the LOI shows up. They move from operator to steward to negotiator, deliberately and with support.
The positive future here is very real. Sellers who internalize these mental models don’t just exit better; they exit calmer. They gain optionality, leverage, and dignity in a process that often strips all three away. They walk into diligence prepared, negotiate from understanding, and close knowing they didn’t leave invisible value on the table.
The solution isn’t more hustle or sharper elbows. It’s reframing how you think about value, risk, and yourself before the process begins. That’s the essence of a Virtual Family Office mindset applied to exits: long-range thinking, disciplined preparation, and decisions that honor both wealth and well-being.
If you’re a founder contemplating an exit in the next three to five years, the real question isn’t “What’s my business worth?”
It’s “Which mental models am I still carrying that buyers do not share?”
David Hermann, CEO of hermanngroup and M&A Advisor/Broker at Sunbelt Business Brokers of Colorado
David Hermann is a transformative advisor and strategist who turns complex business challenges into extraordinary successes. Known for driving over $500 million in documented financial improvements for clients, David partners with C-suite leaders to unlock their full potential. With 60+ speaking engagements, numerous publications, and a spot in the top 1% of Consulting Voices and top 1% of the Social Selling Index on LinkedIn, he’s passionate about making strategy, change leadership, and operations insightful and accessible.