Small and Medium-Sized Enterprises
Depending on the definition, the SME sector consists of small to medium-sized enterprises with up to 500 employees and a maximum revenue of 50 million euros. The German SME sector is the largest employer in Germany and consists of approximately 3.5 million companies. You can find more facts on the BVMW e.V. website:https://www.bvmw.de/themen/mittelstand/zahlen-fakten/
Small and medium-sized enterprises in Germany are facing a generational transition
Many companies listed on the business exchange are seeking a successor to take over as the current owner retires and have no internal succession plan in place. A survey by Creditreform and KfW of 1,200 companies shows that more than a quarter of businesses must consider succession planning in the short to medium term. The average SME owner in Germany is 53 years old, and one in four business owners is 60 or older. This means that for many business owners, handing over the business to the next generation is likely imminent.
One initial finding of the survey is that business transfers have long been common in the SME sector. Particularly in the size segment of 51 to 250 employees, one in two companies (49.1 percent) was not founded by the current owner but taken over from a predecessor.
In line with the age structure of business owners, many respondents are already considering their own retirement from the company (43.3 percent). While this often initially involves gathering information on the topic of succession (46.2 percent), one in four (24.6 percent) are already making concrete plans for the handover. For nearly as many companies (23.7 percent), the handover process has already been initiated.
The survey results also show that small and medium-sized enterprises often plan business transfers over the long term. This means that even though a large proportion of business owners are already thinking about stepping down, the handover is scheduled for the near future (in less than three years) in only one in ten SMEs (10.1 percent).
Just under half of SME owners are looking for successors outside their own family
Business transfers will occur increasingly in the coming years among companies with 100 to 250 employees. A transfer within three to ten years is planned for 40.9 percent of respondents. For just under half of the companies surveyed (45.7 percent), the handover to the next generation will not become an issue for more than ten years.
The preferred succession model among SMEs is continuation within the family (51.7 percent)—particularly in medium-sized companies. A sale to external parties is a consideration for 44.9 percent of respondents. For many SME entrepreneurs, continuing the business through employees or co-owners is also a conceivable form of business succession (40.3 percent).
For smaller companies (up to five employees), closing down is considered more often than average (12.3 percent). Only in the service sector is handing over the business to family members (44.0 percent) not the first choice. Even more frequently, continuation by employees or co-owners is preferred (44.4 percent)—possibly because there are no successors or because they have other plans.