Succession planning presents a challenge for many medium-sized companies. According to a KfW study, approximately 465,000 medium-sized companies will face business closure by 2025.
The reasons for the impending business closures by the end of 2025 vary. According to the KfW study, around 266,000 owners plan to close their businesses without seeking a succession solution. The other 199,000 owners are interested in continuing the business after their withdrawal. However, finding a suitable business successor is challenging.
There are various reasons for this: family members often have no interest in taking over the company when the owner wants to retire, and potential buyers are currently hesitant. Additionally, current difficult economic conditions contribute to this. According to the law firm MTR Rechtsanwälte, it is therefore all the more important to start planning business succession early.
Especially in family businesses, there is often an interest in arranging the succession internally. If there is a suitable successor, the transition should be as smooth as possible. This generally includes ensuring the financial security of the departing owner. Claims of displaced heirs must also be considered, ensuring fair compensation. Additionally, provisions in the articles of association that could oppose the planned succession arrangement need to be taken into account.
In the case of the transfer of business assets as a gift, it is essential to consider tax regulations, exemptions, and relief rules.
If there is no suitable successor within the family, selling to the current management or external investors is also possible. The owner must thoroughly prepare for the sale to achieve an adequate price and minimize liability risks arising from a business sale.
Business succession poses a complex challenge, where, aside from all economic considerations, tax, corporate, and inheritance law aspects must be taken into account. There are opportunities for structuring that can be efficiently utilized through well-founded legal advice.
