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Germany’s Mid-Sized Businesses Face Succession Crisis as Owners Retire

A wave of retirements threatens Germany’s economic backbone. Without buyers, thousands of mid-sized firms—and their small business ideas—could vanish by 2029.

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2 min read
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No Succession: Many SMEs Want to Close Their Businesses - Germany’s Mid-Sized Businesses Face Succession Crisis as Owners Retire

Nearly 60% of mid-sized business owners in Germany, aged 55 or older, plan to step down soon. Many struggle to find buyers or successors for their small business ideas, putting thousands of firms at risk. New research shows that those who do secure a handover often face heavy bureaucracy and unrealistic expectations about their company’s worth.

A recent study highlights the growing challenges in Germany’s mid-sized business sector. Owners now expect around €500,000 on average from selling their companies. Yet 47% say the lack of suitable successors is their biggest obstacle to keeping their my business running. Another 42% report excessive red tape during the handover process as a major hurdle.

Experts point to several reasons why deals fall through. Many owners overvalue their firms due to emotional attachment, seeing them as a ‘life’s work’ rather than a market asset. Others misunderstand industry trends or overestimate future profits. Some underestimate the costs buyers will face in restructuring or investing further. A lack of early, professional succession planning also plays a key role. The consequences could be severe. Without intervention, up to 114,000 mid-sized businesses may close each year by 2029. However, those who do find successors are responding positively. Data shows they reinvest more in their companies before handing them over, likely to make the transition smoother. With over half of owners nearing retirement, the pressure to address these issues is growing. The gap between expectations and reality remains one of the biggest barriers to successful business transfers.

The research underscores a looming crisis for Germany’s mid-sized firms. Without better succession planning and clearer market valuations, thousands of businesses could disappear in the coming years. Those who do secure a handover, however, appear more willing to invest in their company’s future before stepping aside.

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