- 545,000 German mid-market companies are planning a succession by end of 2029; 569,000 are considering closure.
- 57% of owners are aged 55 or older. Those transferring on short notice average 66.5 years of age.
- The DIHK recorded a record 9,636 senior-owner consultations in 2024. There are 2.4 sellers for every one prospective buyer.
- Realistically, three to five years of lead time is needed for an operational handover; seven years for a tax-optimised holding structure.
- The average target purchase price is €499,000; EBITDA multiples in the mid-market range from 3.0x to 7.7x.
The market has shifted. For the first time in the history of KfW's surveys, more German mid-market owners want to close their business than hand it on to a successor. The reason is straightforward and consequential: the owner generation is ageing faster than the next generation of entrepreneurs can step in. Anyone planning to transfer within the next few years is operating in a buyer's market where there are 2.4 sellers for every prospective buyer.
This guide explains what a structured succession looks like today: which options you have, how much lead time you actually need, what your business is worth, which tax levers are available, and where the most common mistakes occur. The data comes from the KfW Succession Monitoring 2025, the DIHK Business Succession Report 2025, IfM Bonn estimates for 2026–2030, and the DUB SME Multiples Database Q1/2026.
Table of Contents
- Why you should start succession planning now
- How much lead time does a succession really need?
- What are your options? Six paths through succession
- What is my business worth? Multiples for 20 sectors
- The value drivers that matter in a sale
- The M&A process step by step
- Tax and legal considerations you need seven years to address
- The most common mistakes and how to avoid them
- Which advisors you need and when
- Three anonymised case studies
- Frequently Asked Questions about Business Succession
- Your next step
Why you should start succession planning now
Demographics is the most unassuming variable in the mid-market. It does not change overnight, but its effect is relentless. In KfW's 2025 mid-market panel, 57% of business owners are aged 55 or older. Twenty years ago, that figure was just 20%. That represents more than two million people who need to find a solution for the continuity of their business in the coming years.
By the end of 2029, approximately 545,000 mid-market business owners intend to pursue a succession, roughly 109,000 per year. At the same time, 569,000 owners are deliberately planning to close — around 114,000 annually. For the first time in the survey's history, planned closures narrowly outnumber successions.
Definition: Succession versus closure A succession refers to the transfer of the business to a specific successor — whether within the family, to employees, or externally. A closure is the deliberate winding-down of the business after the owner's retirement, often due to a lack of a suitable successor or insufficient profitability.
The DIHK Report 2025 adds practical data from Germany's chambers of commerce and industry: 9,636 senior-owner consultations in 2024, up 16% year on year and the highest figure on record. Set against this are only 4,016 prospective buyers. That means approximately 2.4 sellers for every potential buyer. In hospitality and retail, the ratio exceeds 3:1; in transport, over 4:1.
Owners planning to transfer on short notice are under particular time pressure: those with succession plans for 2026 average 66.5 years of age. A quarter of them will be over 70 by the planned transfer date. This changes the negotiating position. Buyers know time is running out, and they price accordingly.
What happens if you start too late?
Three consequences of delayed planning emerge clearly from the KfW data:
- Value erosion through declining investment. Once succession is unresolved, many owners cut back on investment. For those with short-term succession plans, annual investment volumes drop by around 32%. This weakens market position and, ultimately, the sale price.
- Closure instead of succession. One in four businesses without a timely solution ends up considering closure, even when the underlying business model is viable. KfW estimates this represents a significant loss of wealth and employment for the owners involved.
- Distressed sale on poor terms. Owners who sell under pressure due to illness or age accept valuation and structural concessions that structured preparation could have avoided. IHK studies show that 38% of senior owners are inadequately prepared at the point of first consultation.
The arithmetic is simple: lead time is the lever that determines the outcome across almost every other variable — valuation, tax structure, buyer selection, continuity for employees, personal retirement planning. Everything becomes more manageable the earlier you start.
How much lead time does a succession really need?
The short answer: three to five years for the operational transfer, seven years for tax-optimised structuring. The DIHK recommends at least three to five years; individual chambers of commerce cite three to ten. In M&A practice, a window of five to seven years has become established — not coincidentally, this matches the most important statutory lock-up period.
Definition: Lock-up period under § 22 UmwStG A business owner who transfers their sole proprietorship or partnership into a holding GmbH at book values must wait seven years before selling the shares, or a retroactive tax charge on the contribution gain is triggered. The lock-up period reduces by one-seventh for each completed year.
The table below shows which tasks should be addressed and when:
| Lead time | Key tasks |
|---|---|
| 7+ years | Holding structure, pension obligation transfer, separation of private and business assets |
| 5–7 years | Building a second management tier, reducing owner dependency, gift-splitting strategy (10-year period under § 14 ErbStG) |
| 3–5 years | Value enhancement measures, customer base diversification, building recurring revenues |
| 2–3 years | Prepare vendor due diligence, document EBITDA adjustments, review contracts for change-of-control clauses |
| 12–18 months | Valuation, buyer search, M&A process, closing |
Starting with three years of lead time enables a professionally managed handover. Starting with seven years also allows you to significantly reduce the tax burden — often by half or more. Both are legitimate. What does not work is combining 18 months of preparation with an expectation of outstanding results.
What are your options? Six paths through succession
Discussion of succession in the mid-market often centres on the family solution. In reality, completed transfers in family businesses over the past 40 years have distributed as follows according to IfM meta-analysis: 54% family-internal, 17% to employees, 29% to external buyers. The trend is clearly moving away from family solutions and towards external ones.
In the KfW 2025 panel, 55% of owners with succession intentions still prefer a family-internal solution, 42% consider an external sale, 28% think of employees, and 24% of co-owners. Multiple responses were possible. You have not one, but several realistic paths open to you.
1. Family-internal succession
The classic solution. Parents transfer to children, often in stages optimised for gift tax purposes. Advantages: strong continuity for employees and customers, emotional coherence, significant tax privileges for business assets under §§ 13a and 13b ErbStG. With the optional exemption, up to 100% tax relief can be achieved if administrative assets remain below 20% and a seven-year retention period is observed.
The difficulty is rarely in the tax law and usually in the personal dynamics. Is there genuine interest within the family? 47% of owners with closure plans cite lack of family interest as the reason. Birth rates have declined, and entrepreneurs' children often witness the less glamorous side of self-employment at close range. There are also the compulsory share claims of siblings under § 2325 BGB, which reduce by 10% per year after the gift. Those who retain a reserved usufruct (Vorbehaltsnießbrauch), however, pause this clock.
2. Management Buy-Out (MBO)
In an MBO, the existing management team takes over the business. KfW's 2025 panel shows that MBOs are being considered more frequently again after a multi-year low. 24% of owners with multiple shareholders see it as an option; among employee-participation models, 28% do.
Advantages: strong continuity, known buyer side, often swift execution. The central hurdle is financing. Managers rarely have enough equity to cover the full purchase price. Typical structures combine personal funds, bank debt, vendor loans, and occasional PE co-investment. Vendor loans in MBOs typically run three to seven years at 3–7% interest, often subordinated. KfW itself supports MBOs through its ERP-Capital for Start-ups programme.
3. Employee Buy-Out (EBO)
An extended MBO variant in which the workforce participates broadly, often via an employee company or foundation model. This form is rare in Germany but worth considering for owners with a strong commitment to their employees. The financing structure is more complex, the legal implementation more demanding. Not typically practicable for workforces below 30 people.
4. External sale to strategic buyers
Strategic buyers are competitors, customers, or suppliers pursuing an industrial rationale through the acquisition. They often pay the highest multiples because they can realise synergies. In the DACH region in 2025, strategic buyers accounted for approximately 59% of all buyers in the Sehner database; in industrials and services, as many as 69%.
What strategics value: strong market position, technological differentiation, geographic coverage, key customers, an experienced workforce. What you as a seller should know: strategics often change the business significantly after the acquisition. Relocations, consolidations, and rebranding occur.
5. Sale to family offices and private equity
Financial investors account for approximately 41% of the buyer market, and in sectors such as software and IT services up to 80%. Three profiles have established themselves within this group:
- Classic buyout funds, which take controlling stakes and develop the business over three to seven years. Levers are operational improvements, add-on acquisitions, and multiple arbitrage.
- Buy-and-build platforms, where your business becomes either the platform or an add-on. Add-ons are typically acquired at 5x–7x EBITDA; platform exits often realise 10x–14x. Around a third of all buyouts today are platform transactions.
- Search funds and Entrepreneurship Through Acquisition (ETA): individual entrepreneurial personalities seeking a business for permanent ownership, financed by investors. 2025 was the breakout year for this model in Germany, with roughly 10–15 new search funds per year and 44 European acquisitions. Typical targets: €5–50M revenue, EBIT €1.5–5M.
Family offices are often more long-term oriented than funds and attractive to owners who value continuity over maximum price.
6. Foundation models and hybrid structures
Owners without suitable heirs who do not want to sell can consider a family foundation or dual foundation. Well-known examples such as Bosch, Bertelsmann, or Mahle demonstrate this model is viable. For most mid-market businesses, however, it is too complex: establishment costs six figures, ongoing governance structures are required, and tax advantages only apply for very large estates.
Hybrid solutions combine elements: the family retains a minority stake while an external investor takes the majority; or a managing director takes over operationally while the family remains on the advisory board. These models are growing because they reflect the frequent reality that neither a pure family solution nor a pure sale is optimal.
What is my business worth? Multiples for 20 sectors
The most common question in an initial consultation. The honest answer: it depends on four things — the sector, the size, the value drivers, and the buyer group.
Definition: EBITDA multiple An EBITDA multiple is a valuation metric that relates enterprise value to earnings before interest, taxes, depreciation, and amortisation (EBITDA). A multiple of 5.0x means the buyer pays five times the adjusted annual EBITDA as enterprise value, minus debt, plus excess cash.
Valuation methods compared
Three methods are common in the German mid-market:
- Multiple method: Market-oriented, fast, comparable. Standard for transactions with revenues below €20 million.
- Earnings value method (IDW S 1): The auditor standard, accepted by financial courts and arbitration panels, methodologically rigorous.
- Discounted Cash Flow (DCF): Internationally common, appropriate for high-growth or cyclical businesses, heavily dependent on assumptions.
In practice, the two are often combined: an earnings value or DCF provides the theoretical anchor; multiples show what the market is currently paying. Asset value is rarely relevant in the mid-market context.
Current sector multiples Q1/2026
The table below shows EBITDA multiple ranges for 20 DACH sectors, separated by micro-cap (under €5M revenue) and small-cap (€5–50M). Source: DUB SME Multiples Q1/2026.
| Sector | Micro-Cap | Small-Cap |
|---|---|---|
| Software & Digital Platforms | 6.2x – 7.7x | 7.7x – 9.7x |
| IT Services & Systems Integrators | 5.2x – 6.7x | 6.1x – 8.3x |
| Medical Technology & Life Sciences | 5.9x – 7.5x | 7.0x – 9.0x |
| Healthcare / Care Services | 5.0x – 6.0x | 5.8x – 8.1x |
| Telecommunications & Infrastructure | 4.6x – 6.7x | 5.9x – 7.9x |
| Financial Services / Insurance Brokers | 5.0x – 6.5x | 6.0x – 7.7x |
| Electrical Engineering & Electronics | 4.2x – 6.0x | 5.5x – 8.0x |
| Retail: E-Commerce & Mail Order | 4.1x – 6.5x | 5.4x – 6.9x |
| Real Estate Services & Facility Mgmt. | 4.1x – 5.0x | 5.2x – 6.7x |
| B2B Professional Services | 3.7x – 5.2x | 5.0x – 6.8x |
| Food & Beverages | 4.4x – 5.7x | 5.3x – 6.5x |
| Chemicals, Plastics & Packaging | 3.6x – 4.6x | 5.2x – 6.5x |
| Mechanical & Plant Engineering | 4.0x – 4.9x | 4.5x – 5.8x |
| Media, Marketing & Agencies | 3.0x – 4.5x | 4.0x – 5.9x |
| Construction & Trades | 3.7x – 5.1x | 4.4x – 5.5x |
| Retail: Wholesale & Stationary | 3.0x – 4.5x | 4.4x – 5.5x |
| Transport, Logistics & Freight | 3.4x – 4.9x | 4.0x – 5.6x |
| Metal Processing & Manufacturing | 3.4x – 4.2x | 4.0x – 5.4x |
| Automotive & Vehicle Manufacturing | 2.7x – 4.5x | 3.8x – 5.2x |
| Consumer Goods (Non-Food) | 2.4x – 4.0x | 3.5x – 5.5x |
The cross-sector average in the SME segment is approximately 5.7x EBITDA, with a spread of 4.1x to 7.3x. Thinking at sector level ignores the most important variable: size.
Why smaller businesses receive lower multiples
The so-called size discount explains why a mid-cap business typically receives 1.5x–3.0x more EBITDA multiple than a comparable micro-cap:
- Owner dependency: In small businesses, operational substance is often tied to the owner. Buyers price in this risk.
- Concentration risk: Few key customers or a dominant supplier reduce the multiple by 0.5x–1.5x.
- Scalability: Smaller structures are less well positioned for growth, especially in buy-and-build strategies.
- Market liquidity: In the micro-cap, fewer buyers compete for the same asset.
An indication of your business value Want to know which range your business falls into? Our company valuation calculator gives you an initial indication in three minutes based on current sector multiples. No registration, no obligation. Valuation methods, EBITDA adjustments, and the nine most common valuation mistakes are explained in our business valuation guide.
The value drivers that matter in a sale
The multiple is a starting point for negotiation, not a law of nature. Within the sector range, four value drivers determine whether your business lands at the lower or upper end.
Owner independence: the biggest lever
Buyers buy a business, not an owner. If all key customers know the managing director personally, if every important decision runs through the owner, if sales contacts live on the owner's phone, then the business is a risk from the buyer's perspective. An established second management tier increases the multiple by 0.5x–1.5x. This is by far the largest single lever — and it takes two to three years of lead time.
Recurring revenues
Customers who pay on a recurring monthly or annual basis are gold from a buyer's perspective: maintenance contracts, service-level agreements, licence models, subscription structures. The premium is significant: with a full subscription model, we see multiple uplift of 2x–4x versus pure project-based revenue. An owner who increases the recurring revenue share from 20% to 50% in the 24 months before sale often lifts the enterprise value by 30–50%.
Customer diversification and growth
A rule of thumb: no single customer should account for more than 30% of revenues; the top five together no more than 60%. Above this, expect multiple discounts that increase with concentration. Growth with a compound annual growth rate (CAGR) above 10% justifies 1.0x–2.0x higher multiples.
EBITDA adjustments
Before applying a multiple, the buyer normalises EBITDA. Typical adjustments that can work in your favour:
- Adjust owner salary to market rate (often an upward correction if you pay below market)
- Remove private vehicles, personal travel, and personal insurance from expenses
- Normalise one-off effects (litigation costs, restructuring charges, exceptional items)
- Separate non-operating assets (real estate, investments)
- Benchmark family members on payroll against market rates
Clean adjustments can increase reported EBITDA by 15–30%. At a 5x multiple, that means a valuation shift of a third or more. But the adjustments must be documented and defensible — otherwise the buyer will dismantle them in due diligence.
The M&A process step by step
A professional sale process takes six to 18 months. It rarely goes faster without quality loss; going slower signals to buyers that no one is interested. The following phase structure is established in the mid-market.
Phase 1: Preparation and valuation (months 1–3)
Collection and preparation of all relevant documents, EBITDA adjustment, vendor due diligence (internal stress test), creation of the information memorandum and anonymous teaser, definition of the buyer universe, setting the valuation range. What is done well here pays dividends in every subsequent phase.
Phase 2: Buyer search (months 3–6)
Anonymous teaser to a long list of 50–150 potential buyers, NDA signing, distribution of the information memorandum, initial conversations, receipt of indicative offers (Indications of Interest, IOIs). From 100 approached parties, typically 10–20 become serious prospects and three to five submit substantive indicative offers.
Definition: Information Memorandum (IM) The information memorandum is the central sales document: 30–60 pages presenting the company, its business model, markets, financials, and growth prospects systematically. It forms the basis on which buyers submit their indicative offers.
Phase 3: LOI, due diligence, data room (months 6–10)
Selection of preferred buyers based on IOIs, negotiation of the Letter of Intent (LOI), opening of the data room, commercial, financial, legal, tax, and IT due diligence. This phase is the most intensive for the seller. The better Phase 1 was prepared, the smoother the DD.
Phase 4: SPA negotiation, earn-out, W&I (months 10–14)
Negotiation of the Share Purchase Agreement (SPA), clarification of warranty and liability framework, possible W&I insurance (standard above €10M purchase price, premium 0.8–1.5% of insured sum), definition of earn-out mechanisms and vendor loans.
Definition: Earn-Out An earn-out is a variable purchase price component linked to future business performance. Typically 10–25% of the total price over one to four years, measured against EBITDA or revenue. Earn-outs bridge valuation gaps between buyer and seller, but carry dispute potential around the calculation.
The typical purchase price structure in the mid-market: 50–70% cash at closing, 10–25% earn-out, 5–15% vendor loan. A nominal 7.0x multiple can shrink to 4.9x cash at closing in real terms.
Phase 5: Closing (months 14–16)
Fulfilment of conditions precedent, payment of purchase price, transfer of shares, regulatory clearances, employee notification. The sale is legally complete from this point.
Phase 6: Handover and post-merger integration (months 16–18 and beyond)
Operational handover, often combined with a consulting or management agreement for the seller lasting six to 24 months. Communication to employees, customers, suppliers. Earn-out conditions, if agreed, now begin. This phase determines whether the purchase price components promised in the SPA actually flow.
Tax and legal considerations you need seven years to address
The tax burden on a business sale can range from 1.5% to 50%. That is not an exaggeration — it is the spread between an optimally structured holding solution and an unstructured direct sale at a high personal tax rate. Which levers you have depends critically on how much lead time you allow.
Asset deal or share deal
The fundamental structural question. In a share deal, the equity interests are transferred; in an asset deal, the individual assets.
| Feature | Share Deal | Asset Deal |
|---|---|---|
| Subject matter | equity interests | individual assets |
| Contract transfer | automatic | consent required per contract |
| Liability | buyer assumes historical liabilities | selectively filterable |
| Seller tax | via holding approx. 1.5% (§ 8b KStG) | full disposal gain under § 16 EStG |
| Buyer step-up | no | yes, depreciation potential |
| Typical for | GmbH shares held via holding | sole proprietorships, partnerships |
Buyers often prefer the asset deal for the step-up depreciation benefit. Sellers with a holding structure prefer the share deal for the § 8b KStG treatment.
Holding structures and § 22 UmwStG
A holding GmbH that holds your operating company is the most effective tax structure for mid-market owners with a sale in mind. When the holding later sells its stake, 95% of the disposal gain is tax-free (§ 8b para. 2 KStG, less 5% non-deductible expenses). Effective tax rate: approximately 1.5%.
The catch: under § 22 UmwStG, shares contributed to a holding at book value cannot be sold for seven years without triggering a retroactive tax on the contribution gain. The lock-up reduces by one-seventh each year. Selling in year six means one-seventh of the gain is taxed retroactively; waiting the full seven years results in zero retroactive charge. This is the main reason the recommendation "structure seven years before sale" is so frequently made in practice.
Tax exemption and reduced rate for owners aged 55+
If you sell aged 55 or older, two tax privileges apply — each usable once in a lifetime:
- § 16 para. 4 EStG disposal allowance: €45,000 allowance, tapering above a disposal gain of €136,000 and eliminated above €181,000.
- § 34 para. 3 EStG reduced rate: 56% of the average tax rate (minimum 14%) on disposal gains up to €5 million.
Both privileges apply only to disposals from sole proprietorships or partnerships and only once in a lifetime. Those holding a GmbH via a holding company cannot use them, but benefit from the far more favourable § 8b KStG treatment.
Inheritance and gift tax for family-internal succession
German inheritance tax law (ErbStG) provides significant privileges for business assets:
- Standard exemption (§ 13a ErbStG): 85% of business assets are tax-exempt if the business continues for five years and a minimum payroll level of 400% is maintained.
- Optional exemption: 100% tax relief with a seven-year retention period, 700% payroll, and administrative assets below 20%.
- Personal allowances every 10 years (§ 16 ErbStG): €500,000 for spouses, €400,000 per child, €200,000 per grandchild.
For acquisitions above €26 million, the exemption is progressively reduced (§ 13c ErbStG); above €90 million it is eliminated entirely.
Compulsory share and usufruct
A frequently underestimated issue. Transferring the business to one child exposes you to supplementary compulsory share claims from other heirs under § 2325 BGB. The claim reduces by 10% per year after the gift. Where a reserved usufruct (Vorbehaltsnießbrauch) is retained, the BGH has held that the clock does not start running because the donor remains the economic owner. A 10-year strategy using outright gift can neutralise compulsory share claims; a strategy using usufruct cannot.
Note Tax law is case-specific. The mechanisms described here reflect the position as of May 2026. For your specific situation, individual advice from a tax advisor and, where necessary, specialist legal counsel is essential.
The most common mistakes and how to avoid them
In advisory practice, the same patterns recur. Most can be avoided with adequate lead time.
Starting too late
By far the most frequent mistake. Owners begin 12 months before their planned exit and discover that neither the tax structure nor owner independence nor the valuation basis will withstand a sale. The result is usually a distressed sale on terms that two years of preparation would have prevented.
The "sweat equity premium"
From DIHK practice: 37% of senior owners have, in the view of the IHK, unrealistically high price expectations. They calculate retrospectively — investment made, personal sacrifice, years of building. Buyers calculate prospectively: future cash flows, growth potential, risks. These two perspectives rarely meet. A realistic, market-based valuation anchor at the start of the process saves time, money, and frustration.
Mixing private and business assets
One of the most widespread and stubborn structural weaknesses in the mid-market: private vehicles on the GmbH, personal insurance in the business, the business premises held personally with a lease to the GmbH (Betriebsaufspaltung). Buyer lawyers will dismantle such structures in due diligence and will force valuation or structural concessions. Clean-up requires one to three years of lead time.
Pension commitments to owner-managers
A pension commitment on the balance sheet is a nightmare for buyers: difficult to quantify, often under-funded, hard to transfer. Solutions include transfer to a retiree GmbH or a pension fund — both require five to ten years of lead time and careful tax management.
Change-of-control clauses
Bank, key customer, or supplier contracts often contain change-of-control clauses that trigger a special termination right on a change of ownership. If the largest customer can terminate after closing, the closing is worthless. A full contract review 12 months before sale is mandatory.
Which advisors you need and when
A professional succession is a team effort. Four advisor profiles typically work together:
- Tax advisor: Familiar with your history, central to structuring, ongoing advice, and tax optimisation. Stays throughout, often for decades.
- M&A advisor: Leads the sale process, identifies buyers, organises competitive tension, negotiates price and terms. Engaged six to 18 months before closing.
- Specialist lawyer (corporate and tax law): Responsible for the contracts — SPA, warranties, earn-out clauses, managing director employment agreements. Engaged alongside the M&A advisor.
- Auditor: Relevant for vendor due diligence or IDW S 1 valuation opinions.
What does an M&A advisor cost?
In the €1–10M enterprise value segment, the following structures are established:
- Monthly retainer: €3,000–10,000, credited against the success fee.
- Success fee: 3–7% of transaction volume, often tiered (higher rates on lower tranches, lower rates on higher).
- Minimum fee: €100,000–150,000.
For a €5M deal, total fees typically amount to €200,000–350,000. That sounds significant, but it is regularly a fraction of the value uplift achievable through professional process management. Structured auction processes lift prices by 10–25% compared to unmanaged direct negotiations.
Co-advisory: tax advisor plus M&A advisor
The collaboration between a long-standing tax advisor and a specialist M&A advisor has become standard in the mid-market. The tax advisor retains the lead on structuring and the client relationship. The M&A advisor owns valuation, buyer identification, and process management. In Germany, referral fees between advisors are not permitted under § 9 StBerG. Value exchange occurs through genuine mandates and mutual recommendations.
Three anonymised case studies
Case 1: Mechanical engineering firm, sold to a Swedish strategic buyer
Starting point: family business in northern Germany, €4.8M revenue, 14% EBITDA margin, one of two sons in the business without succession interest. Owner aged 63, wanting to sell within two years.
Actions taken: 18 months of preparation, building a second management tier by hiring a technical managing director, EBITDA adjustment for owner costs and private vehicles with documented market salary comparison, vendor due diligence by auditors. Structured auction process with 87 approached buyers, 12 NDAs, 6 indicative offers, 3 final-round bidders.
Outcome: Sale to a Swedish strategic at 6.4x EBITDA, of which 65% cash at closing, 20% earn-out over two years, 15% vendor loan. Owner retained on a consulting agreement for 18 months.
Case 2: IT services provider, sold to a buy-and-build platform
Starting point: IT systems house, €3.2M revenue, 17% EBITDA margin, 75% recurring maintenance revenues. Owner aged 58, no family interest, second management tier established for three years.
Actions taken: Classic M&A process focused on buy-and-build platforms in the IT services sector. Narrative centred on recurring revenue, established second management tier, and geographic add-on logic for the platform.
Outcome: Sale to a PE-backed IT platform at 7.5x EBITDA, 70% cash, 15% rollover stake in the platform (for a later platform exit at a higher multiple), 15% earn-out. Owner remained operationally for two years.
Case 3: Family-internal succession with a staged model
Starting point: wholesale business, €7M revenue, one daughter in the business with succession interest, a second child not involved. Owner aged 67.
Actions taken: Holding structure established eight years before planned transfer, gradual gift of 30% of shares to the daughter using the €400,000 allowance, later a further 30% against maintenance payments. Compulsory share waiver by the second child in exchange for a cash payment from personal assets. Owner retained on a consulting agreement for three years after full transfer.
Outcome: Tax-neutral transfer of 90% of shares, owner retains 10% as a transition stake, compulsory share situation resolved, continuity for 42 employees.
Frequently Asked Questions about Business Succession
When should I start succession planning?
The DIHK recommends at least three to five years of lead time. In M&A practice, a window of five to seven years has become established, because the key statutory lock-up period (§ 22 UmwStG) is seven years. Starting with three years allows for a professionally managed operational handover. Starting with seven years also allows you to significantly reduce the tax burden.
What is my business worth?
In the German mid-market, EBITDA multiples of 3.0x–7.7x are paid, depending on sector and size. Software and healthcare businesses achieve the highest multiples; consumer goods and automotive the lowest. A first indication is available through our company valuation calculator. A reliable valuation requires professional preparation of your financials, EBITDA adjustments, and a sector comparison.
What taxes apply to a business sale?
The range runs from approximately 1.5% (holding structure with § 8b KStG) to around 50% (unstructured direct sale at a high personal tax rate). Owners aged 55 or older can use the one-time €45,000 allowance under § 16 para. 4 EStG and the reduced rate under § 34 EStG. The optimal structure depends on legal form, lead time, and personal retirement planning.
How do I find a successor when the family won't take over?
Three paths are available in practice: management buy-out (MBO), sale to strategic buyers, or sale to financial investors such as private equity, family offices, or search funds. Platforms like nexxt-change.org list prospective buyers but are often insufficient for structured sell-side processes. A systematic M&A process typically identifies 50–150 potential buyers, of whom three to five submit substantive offers.
How long does a business sale take?
A professional sale process takes six to 18 months from mandate to closing. Preparation alone takes two to three months; buyer search a further three to four months; due diligence and negotiation around four to six months; closing and handover a further two to four months. Faster is only possible in special situations; slower signals to buyers that interest is limited.
What does an M&A advisor cost?
In the sub-€10M enterprise value segment, monthly retainers of €3,000–10,000 plus a success fee of 3–7% are typical, with a minimum fee of €100,000–150,000. For a €5M deal, total fees typically fall between €200,000 and €350,000. Structured processes regularly lift prices by 10–25% versus unmanaged negotiations. If you would like to discuss your situation in a structured way, schedule a no-obligation initial consultation. 60 minutes, confidential, no commitment.
Should I sell to private equity or a strategic buyer?
There is no universally correct answer. Strategics often pay the highest multiples due to synergies, but change the business significantly after acquisition (relocations, rebranding, consolidation). Private equity pays market multiples, often keeps the business independent, and plans a resale within three to seven years. Family offices are more long-term oriented and attractive to owners for whom continuity matters more than maximum proceeds. The choice depends on your goals for the business.
What is an earn-out and is it worthwhile?
An earn-out is a variable purchase price component linked to future business performance. Typically 10–25% of the price over one to four years. Earn-outs bridge valuation gaps but carry dispute potential because the underlying metrics are controlled by the buyer from closing onwards. A well-negotiated earn-out has clear, manipulation-resistant calculation bases and protective clauses against value-reducing interventions by the buyer.
How do I prepare my business for sale?
Three levers have the greatest effect: building a second management tier to reduce owner dependency, increasing the share of recurring revenues, diversifying the customer base (no customer above 30% of revenue). Add to this the separation of private and business assets, pension obligation transfers, and holding structure. Full effect requires two to three years — ideally longer.
What happens to my employees after the sale?
In a share deal, employees are automatically protected under § 613a BGB: employment relationships transfer unchanged to the buyer, and redundancies attributable solely to the change of ownership are prohibited. In an asset deal, § 613a also applies when a business or business unit transfers as a going concern. In practice, employee matters are addressed in the SPA warranties. In structured auctions, you can also select buyers based on how they treat the workforce — not just on the highest bid.
How do I maintain control during the transition period?
Consulting or management agreements for the seller lasting 6–24 months post-closing are standard. Content: defined handover tasks (customer relationships, key contracts, knowledge transfer), remuneration, and termination provisions. Those retaining 10–25% as a rollover stake remain economically aligned with the outcome and have additional voting rights through shareholder resolutions.
What are the most common reasons for failed successions?
From KfW's 2025 mid-market panel, 69% of owners cite the search for a successor as the greatest obstacle. This is followed by legal and tax complexity (45%), bureaucracy (42%), and agreement on the purchase price (30%). Structural weaknesses in the business itself compound matters: excessive owner dependency, mixed private and business assets, unresolved pension commitments, missing EBITDA adjustments. Almost all of these problems are avoidable with three to five years of lead time.
Your next step
You now have an overview of what structured succession looks like: which options are available, how much lead time is realistic, what your business might be worth, and where the most common pitfalls lie. The next step depends on where you stand today.
If you want a first indication of your business value, use our company valuation calculator. Three minutes, no registration required. You receive a range based on current DUB sector multiples Q1/2026.
If you would like to discuss your situation in a structured way, schedule a no-obligation initial consultation. 60 minutes, confidential, no commitment. You decide afterwards whether and how we proceed.
A succession is a decision with lasting impact. It deserves the time it warrants.
This article provides an overview and does not substitute individual tax or legal advice. As of May 2026. Data sources: KfW Research Focus Economics No. 526 (January 2026), DIHK Business Succession Report 2025, IfM Bonn Data and Facts No. 37/2025, DUB SME Multiples Q1/2026, gesetze-im-internet.de.
About the author: Tobias Sutantio is the Founder and Managing Director of NORDVISORY. With extensive experience in M&A and corporate finance, he advises entrepreneurs and family-owned businesses on business sales, acquisitions, and succession planning across the DACH region. Tobias personally guides his clients through every step of the transaction.
