Succession in medium-sized businesses: Why the generational change is no longer a sure thing today

Regionally rooted, family-run, and built for the long term: Germany’s medium-sized businesses are the backbone of the German economy. However, it is precisely this established structure that presents many companies with a central challenge today – the generational change.

By the end of 2029, over one million medium-sized companies in Germany will face the decision between handover and closure – more than 220,000 potential succession or transaction situations annually.

A narrow majority of entrepreneurs decide against continuing: around 51.5 percent of withdrawal decisions do not result in a succession solution, but in the deliberate abandonment of the business. This development is less an expression of economic weakness than the result of long-term demographic and structural shifts in the German corporate landscape.

With an average age of company management of over 54 years – more than 57 percent are already 55 years or older – the withdrawal is drawing closer for many owners, while at the same time the options for a classic handover are decreasing. The previously widespread automatism of generational change is increasingly losing its importance. Even where there is a desire for a family-internal solution, this often fails due to a lack of interest from the next generation or changed ideas about life and career.

At the same time, the search for external successors is becoming more complex. The latest surveys show that the central hurdle is not financing or transaction volume, but the identification of a suitable successor candidate. In addition, there is a growing administrative and regulatory burden, which is increasingly slowing down and complicating succession processes. The data suggest that companies without early planning and a clear succession strategy have significant difficulties in successfully implementing a handover. Companies that become active in the immediate vicinity of the withdrawal are also often confronted with limited options for action and increased implementation risk.

Overall, an environment is created in which the continued existence of medium-sized companies is no longer solely secured by their economic substance. Increasingly, organizational maturity, personnel transferability, and structured preparation for succession determine whether a company continues or leaves the market.

It is noticeable that closures are increasingly being deliberately considered – not necessarily out of economic necessity, but out of being overwhelmed by the complexity of the succession process. At the same time, the data show that where planning is carried out early and in a structured manner, succession solutions are still feasible, especially with clear owner goals and a realistic assessment of market options.

Succession is now a multi-year transformation and decision-making process. Successful handovers require early organization of structures, roles, and expectations. Without this preparation, the scope for action narrows significantly – strategically and economically.

The KfW’s assessment should therefore be understood less as a warning signal and more as a call to action: companies that actively shape and professionally prepare for succession secure their continued existence. Those who postpone the process increase the risk of losing options.

It is precisely at this interface between entrepreneurial withdrawal, structurally growing complexity, and limited succession options that professionally managed transaction and succession support becomes a central prerequisite for a successful handover.

starkpartners supports succession processes in medium-sized businesses where, in practice, they often fail due to a lack of structure, unclear objectives, or time pressure. As a specialized M&A boutique, we act as an independent intermediary and structure succession early, realistically, and implementation-oriented – from classifying personal and economic options for action to preparing the company for transactions and specifically addressing and selecting suitable successors or investors.

Our task is to translate the owner’s perspective, the life’s work, and the economic reality of the company into a resilient succession logic – with clear decision-making bases, realistic timelines, and a process that also has entrepreneurial substance.

An early exchange with starkpartners creates clarity:

• Where does the company stand today?
• Which transfer routes are realistic?
• What lead time is required –
• and which steps should already be initiated now?

If desired, we provide this classification in a structured manner as part of an Exit-Readiness-Check or an indicative company valuation – confidentially, independently, and as equals.