Business succession presents many medium-sized companies with a challenge. According to a KfW study, by 2025, around 465,000 medium-sized companies will face the prospect of closing their business.
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 business without seeking a succession solution. The other 199,000 owners are interested in continuing operations after their departure, but finding a suitable business successor proves difficult.
The reasons for this are diverse: Family members often lack interest in taking over the business when the owner wishes to retire, and potential buyers are currently more cautious. Additionally, the current challenging economic conditions contribute to this. According to MTR Legal, it is therefore all the more important to start planning business succession early.
Especially in family businesses, there is often interest in organizing business succession internally. If there is a suitable successor, the transition should be as smooth as possible. This usually involves securing the financial provision of the departing owner. The claims of departing heirs should also be considered. An appropriate balance generally needs to be arranged here. Moreover, provisions in the partnership agreement that might oppose the planned succession arrangements must be taken into account.
In the case of gifting business assets, it is also essential to consider the tax regulations, exemptions, and relief rules.
If there is no suitable successor within the family, selling to one’s own management or external investors is also an option. Here, the owner must thoroughly prepare the sale to achieve a fair price and minimize any liability risks arising from the sale of the business.
Business succession is a complex challenge, where, in addition to all economic considerations, particularly tax, corporate, and inheritance law aspects must be taken into account. This offers room for maneuver that can be efficiently leveraged through sound legal advice.
