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The Dramatic Situation
German small and medium-sized enterprises (SMEs) are under growing pressure: According to a recent analysis by KfW Research, approximately 215,000 companies are currently planning to hand over their businesses to a successor. During the same period, about 231,000 companies are considering closing their operations. [1]
For the first time, more businesses are facing closure than a successful succession. If succession efforts fail, Germany will lose jobs, innovative capacity, and regional stability.
Small and medium-sized family-owned businesses—the backbone of the economy in rural regions—are particularly affected. According to the DIHK Report 2025, in the retail, service, transportation, and IT sectors, there are three to four businesses willing to be handed over for every potential successor [2]. The economic downturn and location-related challenges are further exacerbating the problem.
We have identified five key developments that business owners should prepare for.
Solutions from outside the family are on the rise
Entrepreneurial families are increasingly facing the challenge that no family member wants to lead the business into the next generation. As a result, external buyers—such as management buy-ins (MBIs), strategic buyers, investors, and family offices—automatically come into focus.
More listings are meeting more discerning buyers. 73% of businesses cite a lack of prospective buyers as their biggest problem. [1] Expressed in numbers, this means that as of mid-December, on Nexxt Change—Germany’s largest business marketplace—there were approximately 6,200 business listings at the beginning of January, compared to only about 1,700 prospective buyers. The same picture is evident on the German Business Exchange (DUB.de). Despite a high number of active prospective buyers, many companies are unable to find sufficiently qualified and suitable successors. In practice, it is clear that the challenge lies less in the visibility of the listings and more in the limited number of suitable buyers who are actually willing to take over a business.
A clear imbalance is also evident among the chambers of commerce: According to the DIHK report “Business Succession 2025,” in IHK consultations nationwide, approximately 9,600 companies ready for transfer are matched against only about 4,000 potential successors.
That is why it pays to prepare thoroughly for the sale of your own business in order to present yourself successfully in this buyer’s market.Value drivers are at the heart of succession planning
In recent years, buyers have become significantly more professional. This is because prospective buyers evaluate companies with a much stronger focus on the future: scalability, dependence on owners and key employees, the customer base and industry conditions, the level of digitalization, and the associated long-term earnings prospects are essential for investment decisions.
This compels sellers to invest in clarity and transparency: clear unique selling propositions, sound financials with attractive margins, streamlined automated processes, documented contracts, and a second tier of management increase the company’s appeal to buyers. Preparing for the sale of a company is thus becoming significantly more important and must be factored into the timeline. Consequently, a seller should address the key value drivers of their business model early on and prepare their company for the sale in a timely manner.
Changing Succession Processes
Thanks to digitalization, new platforms are accelerating the succession process: They analyze a company’s potential, create digital matching profiles, and bring sellers and investors together more quickly. Standardized due diligence and digital data rooms reduce transaction costs.
Greater Importance of Variable Purchase Price Components
According to studies, approximately 32% of all succession deals fail during purchase price negotiations. [2]
Increasingly, buyers and banks are requiring sellers to remain with the company for a limited period following an acquisition. Variable purchase price components such as earn-outs, seller loans, or minority stakes serve to share risk. Occasionally, we are already seeing transaction models in which over 50% of the purchase price is variable.
Reaching Prospective Buyers Nationwide and Regional Roots
Most business sellers start looking for a buyer too late and focus their search too narrowly on their region. According to the Institute for SME Research, 68% of successors come from the same county, while only 9% come from another federal state [3]—the search remains too narrow.
Reaching out to buyers beyond regional boundaries is becoming increasingly important for the success of a business succession. Nevertheless, buyers continue to pay attention to the location and the availability of skilled workers, the workforce’s ties to the region, and regional networks—especially in traditional small and medium-sized enterprises.
Failed business successions have devastating consequences for entire regions
When businesses close, it undermines the economic stability of entire regions. Jobs disappear, skilled tradespeople and service providers become scarce, local supply chains break down, local value creation and tax revenues decline, and innovative capacity plummets.
The reverse conclusion: Germany is squandering opportunities
According to theDIHK report *Business Succession 2025*, thenumber of “succession founders”fellfrom 203,000 (2002) to just 45,440 (2023) [2]. Lower birth rates mean fewer successors, and being an entrepreneur is not necessarily seen as attractive in the public eye.
This could change again as a result of the economic restructuring process.
A business takeover offers clear advantages over starting a new business: a proven business model, stable customer relationships, experienced employees, and established processes.
If no one locally is able to take over, the search should focus on places where people are actively looking to take over—for example:
Managers with entrepreneurial ambitions
Entrepreneurs with expansion plans
Investors
Skilled professionals with an entrepreneurial spirit
In practice, we’ve found that there are suitable successors for almost every company—you just have to find them.
What Entrepreneurs Should Do Now
It often takes several years from planning to the handover. Those who start early increase their chances of securing their life’s work.
Succession in small and medium-sized businesses is not a private matter—it affects the prosperity of entire regions and, thus, the future of the German economy.
Sources
[1] KfW Research: Succession Monitoring for Small and Medium-Sized Enterprises 2024
[2] BUV Report 2025 – Challenges and Opportunities in Business Succession
[3] DIHK Report on Business Succession 2025 – SMEs Sound the Alarm
