The succession gap: why healthy companies close.

The succession gap describes a simple but significant situation. In Germany, more owners of small and mid-sized companies want to give up their businesses than there are people ready to continue them. It does not mainly affect companies in crisis. It often affects healthy companies with a loyal customer base, an experienced team and ongoing operations.

The German Mittelstand (small and mid-sized companies) is the backbone of Germany. And it is getting older. According to data from KfW Research (Germany's state development bank), 57 percent of SME owners are 55 or older. About 20 years ago, this figure was around 20 percent. This shift is the core of the problem.

The figures at a glance.

The KfW Succession Monitoring report shows how big the gap has become:

• 545,000 companies want to arrange their succession by the end of 2029. That is about 109,000 per year.
• 569,000 companies plan to close down completely in the same period. That is about 114,000 per year.
• For the first time, more companies are planning to close than to hand over.
• In the short term, by the end of 2026, around 243,000 companies without a successor plan to close, according to KfW. Around 186,000 are aiming for a handover.

It is important to put this into perspective. Not every planned closure is a loss. Some companies are heavily dependent on one person or no longer have a viable business model. But a large proportion of these closures affect companies that could continue to operate with the right person.

Why companies close without a successor.

The most common reason for planning to close is age. Almost half of the respondents who plan to close say that no one in the family wants to take over. The traditional family succession, once the norm, is no longer as common as it was in previous generations.

• The children have their own careers and life plans.
• External candidates do not know the company, and the company does not know them.
• The search often starts too late, leaving little time to get to know each other and for a handover period.
• Bureaucracy is increasingly seen as a hurdle. According to KfW, around 42 percent cited it as a reason not to continue in 2025, compared to 22 percent in 2023.
• Purchase prices have risen. According to KfW, the average purchase price is around 499,000 euros, up from 372,000 euros in 2019.

What is lost when a company closes.

A company that closes takes more with it than just a name on the letterbox. It takes customers who have to find a new supplier. It takes jobs, often in regions where there are few alternatives. And it takes knowledge with it: about customers, materials, processes and people.

Much of this has been built up over decades. It cannot simply be started from scratch. Anyone who builds a company today needs years to gain customer trust, establish a team and make the business profitable. An existing company has already gone through these years.

The other side: people who want to be entrepreneurs.

At the same time, there are many people who want to work as entrepreneurs: founders, former founders, experienced managers. Most of them start from scratch, even though a business with customers and a team is waiting for someone just around the corner. The gap is therefore less a lack of people than a lack of connection.

There is also an underestimated potential: women only account for around 21 percent of successions in Germany. You can read more about this in our article Business succession: how it works.

How the succession gap can be closed.

• Plan earlier. If you start five years before your desired handover date, you have options and time.
• See a takeover as a new venture. A successor is an entrepreneur, not an administrator.
• Make external succession the norm. According to KfW, MBOs and sales to external parties are already common routes.
• Focus on fit over price. Whether values and plans align often matters more than the number on the contract.
• Support in stages. Getting to know each other, due diligence, handover and the first few months after.

How Nachfounder contributes.

Nachfounder is a programme like an accelerator, but for companies that already exist. We prepare successors for the takeover, match them with suitable businesses and support the process in stages. We are not an M&A consultancy. You can read why we do this in our manifesto.

Are you thinking about your succession? The Succession check gives you an initial assessment in just a few minutes. Do you want to take over a business? Read Take over, don't start up or contact us directly.