While capital chases growth markets, a buyer's market is quietly emerging in the German Mittelstand: hundreds of thousands of profitable businesses will be looking for a successor in the coming years — and finding one less and less often. Those who treat succession as an investment acquire substance, an established customer base and cash flow on terms no stock exchange can offer.
The demographics of ownership
The KfW succession monitor (Fokus Volkswirtschaft No. 526, January 2026) puts figures on the situation: by the end of 2029, around 545,000 owners plan a succession — roughly 109,000 per year — while at the same time 569,000 owners are considering closing down entirely because no solution is in sight. By the end of 2026 alone, around 243,000 small and medium-sized enterprises will be without a settled succession. The bottleneck is not the quality of the businesses — it is the shrinking generation of founders and buyers.
~109,000 planned handovers per year through 2029 · ~114,000 potential business closures per year · average asking price around €499,000.
Why successions work as an investment
- Valuation levels: Owner-managed businesses change hands at EBIT multiples well below listed comparables — the discount prices in owner dependency and illiquidity.
- Established cash flow: Unlike a start-up, you are not buying business-model risk but a settled base of customers and orders.
- Value-creation levers: Digitalisation, professionalised sales and buy-and-build in fragmented sectors are plannable value drivers.
- Financeability: KfW succession programmes, guarantee banks and vendor loans allow structures with a measured equity commitment.
The acquisition routes: MBI, MBO, equity stake
Three patterns dominate: in a management buy-in (MBI) , an external executive takes over; in a management buy-out (MBO) , the second tier of management buys the business; strategic investors and family offices build majority stakes with rollover participation by the outgoing shareholders into portfolios. In every case, the transition period with the former owner — typically 6 to 24 months — is the single most important value-protecting element of the contract. For the transaction process itself, see our step-by-step guide Buying a Company in Germany , where we walk through it in detail.
The tax side of the handover
For intra-family succession , the relief for business assets under §§ 13a, 13b ErbStG remains the central instrument — standard relief of 85 per cent, optional full relief of 100 per cent, each tied to payroll and holding-period conditions. The mechanics, including the pitfalls, are covered in our article on Inheritance Tax Exemption.
For a sale to a third party , seller-side structuring is what counts: the tax-free allowance and reduced rate under §§ 16, 34 EStG from age 55, or alternatively a sale out of a holding company with a 95 per cent exemption under § 8b KStG (German Corporation Tax Act) — structuring the exit years in advance is what determines the net proceeds. On the buyer side, reinvesting capital gains through the § 6b reserve opens up additional room for manoeuvre where real estate is involved.
Pricing risks with a clear head
The three most common sources of error: owner dependency (customer relationships hinge on one person), an investment backlog (machinery and IT were run down ahead of the sale) and hidden staffing risks (key departures after the handover). All three can be addressed in due diligence and the purchase agreement — through earn-outs, warranties and staggered purchase prices — but only if they are named before the price is set.
Frequently Asked Questions
Is buying a succession business worthwhile compared with starting from scratch?
Often, yes: the buyer takes over the customer base, staff and cash flow from day one and carries no market-entry risk. In return, they pay a purchase price and assume responsibility for integration — the trade-off is a question of returns, not of taste.
How long does a business succession take?
From first contact to closing typically takes 9 to 18 months, plus the transition period with the former owner. Sellers should allow three to five years' lead time for tax structuring.
What funding is available for successors?
Above all KfW loans (including the ERP promotional loan), programmes run by the regional development banks and default guarantees from the guarantee banks — all combinable with vendor loans and earn-out structures.
More than 20 years advising entrepreneurs, investors and family businesses. Reserved tax services are provided by our partner tax firm, TABAK Steuerberatung.
Firm Profile →Buying a business — or handing one over.
We structure both sides of the handover — valuation check, tax architecture, financing and support through to closing.