Germany’s business community is aging rapidly: In just five years, a solid 70% of business owners will be well over 55 years old. This is the finding of an analysis covering all 79 German Chamber of Industry and Commerce (IHK) districts. The largest study on generational succession in companies, conducted by the consulting group KERN, confirms that—in the wake of the COVID-19 crisis—the need for family business owners in Germany to take action is greater than ever.
The city of Munich leads the list of cities with the greatest need for business succession, followed by Cologne, Berlin, Stuttgart, and Augsburg. By industry, the construction sector, along with retail and wholesale trade, will have the highest proportion of entrepreneurs aged 55 and older by 2025.
The study focuses on the age distribution of family business owners in Germany. A total of just over 580,000 companies with annual revenues ranging from 250,000 euros to 50 million euros were surveyed.
In addition, the number of managing directors/partners and owners was categorized into four age groups:
• Born between 1971 and the present
• Born between 1966 and 1970
• Born between 1956 and 1965
• Born in 1955 or earlier
For clarity, entrepreneurs over 55 and under 55 were then analyzed in terms of trends from 2020 to 2025.
The most important finding of the study is the dramatic aging of German business leaders. After all, the generations of entrepreneurs born during the country’s baby boom years must slowly begin to think about retirement:
• 51% of all business leaders are already over 55 years old.
• The number of small and medium-sized enterprises in Germany that will need to organize succession planning for their CEO will rise to about 70% of all businesses by 2025. This affects over 1.5 million jobs in Germany.
In addition, the company data was broken down by industry, providing previously unknown detailed insight into the succession situation in individual sectors.
“It is important to understand that in the German SME sector, more than 90% of family-owned businesses employ fewer than 25 employees and generate less than 5 million euros in revenue,” says Nils Koerber, founder of KERN, a firm specializing in business succession.
KERN partner Ingo Claus adds: “The combination of the COVID-19 crisis and demographic trends is making succession planning the most important issue for SMEs. In times of a shortage of skilled workers, entrepreneurs must seek successors for their employees, managing directors, and even themselves.”
The analysis shows that in Germany, in just five years, a good 70% of all owners and executives will be 55 years old or older. The experts at KERN warn that this aging trend in family-owned businesses is often accompanied by a backlog in investment and a dangerous erosion of assets.
Depending on the personal health of the shareholders, the majority of German family-owned businesses will face the challenge of arranging their succession in a reliable and forward-looking manner within just a few years.
