German family business owners are increasingly ageing: this is confirmed by a survey conducted by Creditreform and KfW in which 1,200 owners of small and medium-sized enterprises took part. Many family businesses are therefore facing a handover to the next generation in the coming years.

In line with the age structure, many company owners have the upcoming generation change on their agenda (43 percent); in about 25% of all companies, concrete plans for company succession are already underway. In about 24 percent of all companies, the changeover has already been initiated.

Family entrepreneurs know about the long term

Compared to studies of earlier years, many senior entrepreneurs are aware of the succession problem. This is because in only one in ten companies is the baton due to change in the next three years. Around 41 percent of all company owners are thinking of handing over their company to a successor in the next ten years. Even if the generation change is not planned for more than ten years in about half of the companies (48 percent), many German family entrepreneurs are already tackling the succession at an early stage. The desired model for around half of the respondents (52%) is to pass on the business within their own family. However, other studies point out that only a good third of all businesses are continued by a successor from within the family. Continuation by managers (management buy-out; MBO) is an issue for 40 percent of seniors, and a sale is an option for about 50% of company owners. For about one in eight companies with fewer than five employees, only shutting down the business is probably an option. One reason for this is probably the high dependence of the operative business on the personality of the owner.

Business successions are more complex and emotionally challenging

For German family entrepreneurs, business succession is a complex process: The respondents would like to see a reduction in the bureaucratic burden, and in one in five cases they expressed a desire for more advice. Many entrepreneurs now realise that the complex project of their own business succession is difficult to carry out alongside their demanding day-to-day business. “In principle, everything starts with the question of what should be handed over to whom, and when,” says Ingo Claus, a consultant in Osnabrück specialising in business succession and generational change.

In addition, the emotional factor in a generational change should not be underestimated. Markus Neuner, deputy head of the legal and tax department of the IHK Munich and Upper Bavaria at the Pfaffenhofen District Entrepreneur Day on the subject of company succession, that German family entrepreneurs should seek professional support for the change of baton: ‘Company succession is usually a unique decision in the life of an entrepreneur, accompanied by many emotions. The right communication with all those involved is an essential factor for the success of this challenging process?