Business Succession in the Commercial Cleaning Industry

A Generational Shift in the Building Cleaning Industry—A Quiet Challenge

With approximately 700,000 employees and 30,000 companies, the building cleaning industry is one of the most important pillars of the German service sector. Small and medium-sized enterprises (SMEs) account for over 82 percent of the industry’s revenue—most of which are owner-managed and heavily impacted by demographic change.
According to the KfW SME Panel, more than half of business owners were already over 55 years old as of 2024. Many businesses will therefore need to be handed over in the coming years—but there is a shortage of successors.

Why succession planning is crucial now

According to the KfW Succession Monitoring Report, around 231,000 small and medium-sized enterprises plan to close their businesses by the end of 2025 due to a lack of successors. This also affects many skilled trades businesses, particularly in the building cleaning sector.
Strategic succession planning is therefore not an option but a necessity—it safeguards jobs, customer relationships, and the owner’s life’s work.

Four Key Challenges in the Skilled Trades

1. Demographic Change:
   Business founders from the 1980s and 1990s are reaching retirement age. In eastern Germany, 35 years after reunification, nearly all first-time founders are facing a business handover. About half of all businesses will undergo a generational transition in the next five years.

2. Shortage of Young Talent and the Shift Toward Higher Education:
   The trend toward higher education means that fewer and fewer young people are entering the skilled trades. Job security and predictable work hours seem more attractive than self-employment. Programs to attract young talent, modern training concepts, and societal recognition are urgently needed.

3. Owners’ emotional attachment:
   Many business owners find it difficult to let go. The desire to continue having a say delays the handover. A phased transition model—such as serving as a consultant after the handover—can help ensure trust and continuity.

4. Financial and Legal Complexity:
   Valuation, taxes, financing—succession planning is challenging. Those who enter this process unprepared risk making poor decisions or causing conflicts.

An Overview of Succession Models

Internal Succession:
A handover within the family fosters trust but requires the successor to be qualified and willing. Due to the trend toward higher education, this model is becoming less common. It is important to involve successors early on and establish clear guidelines regarding inheritance and taxes.

Family Foundation:
It protects assets across generations and offers tax advantages, but is administratively intensive. It is particularly suitable for larger family businesses.

External succession:

• Management Buyout (MBO): Sale to employees who are familiar with the company and its culture. Financing is often the biggest hurdle.

• Management Buy-In (MBI): External executives bring capital and expertise to the table but require careful cultural integration.

• Sale to Strategic Buyers: Particularly attractive for growing service providers as part of a buy-and-build strategy. Sellers benefit from favorable purchase terms, while buyers benefit from synergies.

• Hybrid models: Partial sales or phased transfers offer flexibility but require clear agreements; it must be clear who makes the decisions.

The Right Time: Better Early Than Late

Experts recommend actively planning starting no later than age 55. A successful succession often takes three to ten years. The most important steps:

• Selecting the appropriate succession model

• Involving tax, legal, and M&A advisors

• Preparing all relevant documents

• Identifying and selecting suitable successors

• Support and handover

Early planning creates freedom, preserves value, and increases the sale proceeds.

Why External Support Is Indispensable

As intra-family succession becomes less common, external acquisitions are gaining in importance. Market knowledge, discretion, and negotiation skills are crucial in this context.
An experienced advisor helps determine the realistic value of the business, avoid tax and legal pitfalls, and find suitable buyers.
Tax advisors alone are usually not enough—what’s needed is a combination of financial acumen, communication skills, and empathy.

Conclusion

Business succession in the building cleaning industry is challenging—but achievable. With foresight, openness, and professional support, the transition becomes a win-win for everyone: business owners, successors, employees, and customers.
Those who plan early, seek advice, and share responsibility not only secure their life’s work but also the future of an entire industry.