Frequently Asked Questions

At the latest five years before your planned withdrawal. The KfW SME Succession Monitoring 2025 shows that owners who actually intend to hand over within two years are, on average, already 66.5 years old. Anyone starting at 60 has room for value-driver work, balance-sheet clean-up and buyer screening. Anyone starting at 65 negotiates under time pressure. Time pressure depresses the price. Sound preparation involves one to two years of exit readiness, six to twelve months of marketing and three to six months for the contract phase.

Neither. Buyers are interested in the substance of your company, not your year of birth. What matters is presenting the business as a transferable unit with low owner dependency. From the age of 55, tax reliefs apply (a €45,000 disposal allowance under Section 16 (4) of the German Income Tax Act (EStG) and the half tax rate under Section 34 (3) EStG). At 68, buyers are more critical because the transition risk rises. The decisive factor is the condition of the company, not that of the owner.

After signing, before closing. That is market practice. Earlier, rumours of a sale lead to uncertainty, the resignation of key staff and pressure from customers. One or two confidants at C-level have to be brought in sooner because they work within the data room. The wider workforce learns of it after signing, ideally at a staff meeting together with the buyer. Section 613a of the German Civil Code (BGB) governs the transfer of business: employment relationships continue, and dismissals on the sole ground of the sale are not permitted.

Early and in writing. A succession affects spouses, children and often siblings too. First clarify internally: does anyone in the family have genuine interest, or is an external sale the realistic route? According to the DIHK Business Succession Report 2024 (p. 15), only 33 percent of the businesses advised by the Chambers of Industry and Commerce still plan a family-internal succession: „Der Anteil der angestrebten Nachfolge innerhalb der Familie ist in den vergangenen drei Jahren deutlich gesunken – von 41 auf 33 Prozent." (The share of intended within-family successions has fallen markedly over the past three years, from 41 to 33 percent.) Anyone choosing an external sale should inform the family early to order expectations around inheritance, retirement provision and the division of assets. An emergency will belongs in every drawer, regardless of any sale.

Without an emergency arrangement, a leadership vacuum looms. In owner-led mid-sized firms, day-to-day operations can in the worst case grind to a halt for days. An emergency kit contains at least: current powers of attorney, a list of access credentials, bank details, the articles of association, a will with entrepreneurial provisions, and a contact list of the key advisors. In February 2026 the Hannover Chamber of Industry and Commerce is offering a dedicated seminar on this, „Der Notfallkoffer: Ihre systematische Vorsorge für Unternehmen und Familie" (The Emergency Kit: Your Systematic Provision for Company and Family). For entrepreneurs aged 55 and over, a documented emergency plan is now standard, not optional.

This question decides the success of a succession more often than the valuation does. The DIHK Business Succession Report 2024 demonstrates it concretely: 29 percent of the senior entrepreneurs advised by the Chambers of Industry and Commerce report difficulty letting go of their life’s work emotionally, and 37 percent consequently demand an inflated purchase price. Experienced sellers report that the first six to twelve months after closing are the hardest. It makes sense to clarify, in parallel with the sale process, what your role will be after the handover. A supervisory board, an advisory board, foundation work, a second project. Anyone who sells „into retirement" without a new goal runs the risk of continuing to interfere operationally.

Through the German BAFA programme „Förderung von Unternehmensberatungen für KMU" (Support for Business Consulting for SMEs), up to 80 percent of consulting costs are eligible for funding, capped at €2,800 per consultation. The maximum eligible basis is €3,500. In the former West German states the funding rate is 50 percent (max. €1,750); in the former East German states and individual regions such as Lüneburg and Trier it is 80 percent. Up to five funded consultations per company are possible until 31 December 2026, a maximum of two per calendar year. The application runs online via the BAFA portal before the consultation begins.

Both routes have their merits. Family-internal means continuity, often a lower price and a longer commitment. Selling externally means a higher proceeds figure and a clean break, but letting go. The KfW SME Succession Monitoring 2025 (Focus No. 526, January 2026) shows that the number of family-internal handovers is falling because fewer children want to take over the company. Anyone who cannot find a suitable person within the family should actively examine the external route rather than wind the company down. 569,000 mid-sized owners are planning a closure by the end of 2029. That is frequently the worst option.

Your tax advisor knows your balance sheet, not the M&A market. Your lawyer drafts contracts but does not screen buyers. An M&A advisor handles the market approach, the valuation against completed transactions, the structured process and the negotiation. The study „Does Hiring M&A Advisors Matter for Private Sellers?" by Agrawal et al. (an analysis of 4,468 private acquisitions, 1980–2012) demonstrates: „We find that private sellers that hire professional transaction advisors receive significantly higher valuation premiums" — quantified at 25 percent higher proceeds across all deal sizes. The M&A advisor works together with your existing tax advisor and lawyer. He does not replace them, he orchestrates them.

From mandate start to closing, expect six to twelve months. With complex structures or international buyers, up to 18 months. On top of that comes a sensible preparation phase of 12 to 24 months in which the balance sheet, data room and value drivers are tidied up. KP Tech Corporate Finance and Exit-Coach report consistently that sales taking under six months are the exception. The due diligence phase alone takes four to twelve weeks. Anyone wanting to sell faster usually accepts a lower price.

In principle, the polluter-pays principle applies. The buyer engages and pays its advisors for the review; the seller bears the costs of data-room preparation and its own M&A advisor. In a vendor due diligence, the seller commissions its own review in advance to speed up the process and avoid surprises. If the deal breaks off after due diligence has begun, each side is left with its own costs. A break-up fee can be agreed in the letter of intent, but it is uncommon in the German mid-market.

Strategic buyers often pay the highest price because they can price in synergies. They integrate the company and usually no longer need the seller after 12 to 24 months. Financial investors such as private equity firms or family offices typically hold for 3 to 7 years, optimise operationally and sell on. MBO prices are generally below what external parties pay, but in return the team stays in place. Which buyer type fits depends on your objectives: maximum proceeds, continuity for employees, or speed. A parallel process with several buyer types creates competition and better terms.

Information is released in three stages. Stage 1: a blind profile with anonymised key data to a circle of buyers. Stage 2: after signing a non-disclosure agreement (NDA), the interested party receives the information memorandum, still without customer or employee names. Stage 3: after the letter of intent, the virtual data room opens with insider information. NDAs have terms of two to five years and provide for contractual penalties. An experienced M&A advisor filters buyers and ensures that competitors do not extract trade secrets under the guise of acquisition interest.

The letter of intent (LoI) is a declaration of intent signed after the initial talks and before due diligence. It contains a purchase price indication, the deal structure (share deal or asset deal), the exclusivity period (typically 4 to 8 weeks), the timetable and confidentiality. The commercial key points are not legally binding. Binding, as a rule, are the clauses on confidentiality, exclusivity and the bearing of costs. From the seller’s perspective, the LoI is the document with which you most strongly secure your negotiating power vis-à-vis a buyer. Before it you are still screening; after it you run exclusively.

With a vendor loan, the seller defers part of the purchase price, usually 10 to 25 percent, with a term of three to seven years and interest of six to ten percent per year. Banks accept the vendor loan as the buyer’s economic equity, which closes the financing gap. In the event of insolvency, the seller ranks behind senior debt. The Dealsuite DACH M&A Monitor H1/2025 reports a marked rise in vendor loans because higher interest rates have made classic bank financing more expensive. A vendor loan signals confidence in the buyer and the company.

With an earn-out, part of the purchase price is shifted into the future and tied to the achievement of defined targets, usually EBITDA thresholds over two to four years. It makes sense when buyer and seller are apart on value or when the business model carries high growth expectations. The risk: once you no longer steer the company operationally, your earn-out payment depends on the buyer’s decisions. Clear, simple metrics are a must, not complex formulas. An earn-out can account for between 10 and 30 percent of the purchase price and should be anchored in the SPA with protective clauses against manipulation of the measurement basis.

In a share deal, the buyer acquires the company shares — the GmbH or AG with all its rights and obligations. In an asset deal, the buyer acquires selected assets: machinery, contracts, customer relationships, brands and employees. For the seller, a share deal is usually more tax-efficient (partial-income method or the holding privilege under Section 8b KStG). For the buyer, an asset deal is often more attractive because it avoids inheriting hidden liabilities and allows the depreciation basis to be reset. In the German mid-market, share deals dominate. If the two sides cannot agree, the asset deal is a compromise route — usually in exchange for a price premium for the seller, who bears the additional tax burden.

The information memorandum (IM), also known as an exposé or CIM (Confidential Information Memorandum), is the central sales document. Interested parties receive it after signing a non-disclosure agreement. It covers: business model, products, customers, market position, employees and financial KPIs for the past three to five years. A good IM is not a glossy brochure but a reliable working document — factual and complete, so that an experienced buyer can decide within two hours whether to go deeper. Shortcomings in the IM — missing figures, an unclear ownership structure, absent customer data — are viewed as due-diligence risk and lead to price reductions.

Closing is not the end but the beginning of a new phase. A transition period of three to twelve months typically follows, during which you as seller are available for knowledge transfer, customer introductions and operational handover. Agreed earn-out payments run for two to four years after closing and are tied to financial metrics. Non-compete clauses are standard: two years, nationwide, for the same market segment — longer or broader restrictions are problematic under competition law. For guarantees in the purchase agreement you are typically liable for 18 to 24 months, with limitation periods for tax warranties of up to seven years. A clean SPA protects you against inflated post-closing claims.

That depends on the legal form and the structure. As a private individual selling GmbH shares, you pay effectively around 28 percent on the capital gain under the partial-income method. Through a holding company under Section 8b of the German Corporate Income Tax Act (KStG), 95 percent is tax-free and the effective burden falls to roughly 1.5 percent. From the age of 55, the disposal allowance (€45,000), the one-fifth rule and the half tax rate under Section 34 EStG are available, once in a lifetime. Mind the lock-up periods: seven years for a holding contribution, five years for conversion into a partnership. Tax structuring belongs two to three years before the sale, not at closing.

The only honest answer: it comes down to four things. Sector, size, value drivers and buyer group. In the German mid-market, EBITDA multiples range, according to the DUB SME Multiples Q1/2026, between 4.1x and 7.3x, with a cross-sector average of 5.7x. You can obtain an initial indication via our enterprise value calculator. Three minutes, no registration. For a robust value you need an adjusted EBITDA, a peer-group comparison and an assessment of the company-specific premiums and discounts. You will find a technical deep dive in our pillar article on business valuation.

Value is not price. Value is determined methodically, for example via multiple or capitalised-earnings methods. The price arises between a specific buyer and a specific seller in a specific negotiating situation. The two can be 30 percent apart, in either direction. A strategic buyer with synergy fantasies pays more than the calculated value. A financial investor with a return target pays less. Do not rely on a single valuation approach. A sound indication combines several methods and tests the achievable market price in the current buyer environment.

Usable as an initial orientation. Useless for negotiations. Online calculators work with sector multiples and an unadjusted profit. They do not capture: owner dependency, customer concentration, the order backlog, market position, the substance of the workforce. These factors determine whether you sit at the upper or lower end of the multiple range. The difference: with an EBITDA of €800,000 that can quickly amount to €1.5 to 2 million in valuation difference. Use our enterprise value calculator for the first indication. For a negotiating basis you need an individual valuation with sector benchmarks and an adjusted EBITDA.

The reported EBITDA has to be adjusted for non-transferable and one-off effects so that a buyer can recognise the sustainable earning power. Typical adjustments: bringing the owner’s salary into line with a market-standard managing-director salary (often €80,000 to €120,000 in SMEs), private car use, non-market rental terms with the property company, advisory costs for the sale, and one-off legal disputes. In the owner-led mid-market, adjustments of 10 to 15 percent are within the normal range. From 20 percent the buyer becomes critical. A complete, documented normalisation calculation belongs in the data room.

You will encounter three professions in the market: auditors (IDW S 1, accepted by tax courts and arbitration bodies, expensive and conservative), tax advisors (often for inheritance and gift tax, likewise conservative), and M&A advisors (close to the market and to transactions, comparing against completed deals). For a gift to the family, the IDW expert opinion counts. For a sale to an external buyer, the market price counts, and an experienced M&A advisor estimates that more realistically. Ideally the two work together: the M&A advisor for the market value, the tax advisor for the fiscal valuation.

Two to three years before the planned sale. That gives you time to work on the value drivers: sharpen the growth story, stabilise margins, reduce owner dependency, document processes, and keep clean reporting. A first valuation two years before the sale shows where you stand today. A second valuation six months before the marketing start provides the basis for the letter of intent. Anyone having a valuation done for the first time on the day of the sale decision typically gives away 20 to 40 percent of the value-enhancement potential.

Both. They are talking about different values. The tax advisor usually delivers a conservative value for fiscal purposes, often based on the IDW S 1 capitalised-earnings method or the simplified capitalised-earnings method. The M&A advisor delivers a market indication based on current transactions, adjusted EBITDA and sector multiples. In practice the M&A market value is often 30 to 60 percent above the tax value. Both figures have their justification. For the sale decision, the market value counts. For inheritance and gift tax, the tax value.

A growth story with a demonstrable track record, low owner dependency, a diversified customer base (no single major customer above 20 percent), recurring revenues, documented processes and a second-tier management team. Buyers pay premiums for companies in which they do not inherit an open construction site after closing. A strong market position in a niche is worth more than size in an interchangeable segment. Weak owner dependency can lift the multiple by 1.0x to 2.0x. With an EBITDA of €1 million, that quickly amounts to €1 to 2 million in added value.

Considerably less than in a structured sale. In a wind-down you realise the asset value: tangible assets at liquidation value, receivables, inventories, less liabilities and social-plan costs. Goodwill, customer relationships, the brand and know-how are valued at zero. For a healthy mid-sized firm with €1 million of EBITDA, a wind-down means roughly 0 to 30 percent of the sale value. Even so, the KfW SME Succession Monitoring 2025 (Focus No. 526, January 2026, KfW Research) states: „Betrachtet man nur die Unternehmerinnen und Unternehmer, die ihren Rückzug aus der Firma bis Ende 2029 planen, streben 569.000 keine Fortführung des Unternehmens an. Das entspricht jährlich rund 114.000 Geschäftsaufgaben." (Looking only at the entrepreneurs planning their withdrawal from the firm by the end of 2029, 569,000 are not seeking to continue the company. That corresponds to around 114,000 business closures per year.) Talk to us before this option becomes the only one.