More and more businesses are closing when the owner retires.

More and more companies are closing permanently when the owner retires. According to KfW, for the first time there are more plans for closure than for succession planning. The reasons are manifold.

More and more companies in Germany are facing closure: When owners retire due to age, there is often no successor. According to current figures from KfW, 57 percent of small and medium-sized enterprises (SMEs) are now 55 years or older. For one in four of them, closing their business is a possibility in the foreseeable or medium-term future.

According to KfW, around 114.000 companies could be shut down annually by 2029. Extrapolated, this equates to 569.000 businesses. This contrasts with 545.000 medium-sized enterprises that are seeking a succession plan by the end of 2029 – an average of approximately 109.000 per year. According to KfW, this results for the first time in a slight excess of businesses planning to close.

The figures come from a special analysis of the representative sample. KfW SME Panels, which was collected between mid-February and mid-June 2025.

These are the reasons for the closure plans.

The respondents cited their advanced age as the main reason for their closure plans. In 2025, 57 percent of medium-sized business owners were 55 years or older, three percentage points more than the previous year. Twenty years ago, this figure was only 20 percent.

Many of them find the search for a suitable one difficult. Successor as very difficult. 47 percent of those surveyed said that there was no interest in continuing the business in their family, for example through their children.

42 percent say it's too much Bureaucracy One reason for the closure plans is the number of business closures – twelve percentage points higher than last year and the highest ever recorded. Succession planning involves many legal issues, as well as tax considerations and reporting obligations.

Solving the succession problem is also crucial for investments.

"Germany's economy is fighting for its international competitiveness. Small and medium-sized enterprises (SMEs) are, as is well known, the backbone of the German economy. It is essential to ensure the continued existence of as many SMEs as possible. We therefore need..." sustainably more entrepreneurial spirit in Germany. Reducing bureaucracy is one element that can lead to more startups,” he says. Dr. Dirk Schumacher, Chief Economist of KfW"It has been proven that company leaders who have already found a successor invest more heavily in their businesses. Therefore, resolving the succession issue is also crucial for boosting investment in small and medium-sized enterprises (SMEs)."

The seller's price expectations were too high.

A difficult step on the path to a successful business succession is reaching an agreement that is acceptable to all parties involved. Purchase priceOn average, entrepreneurs are aiming for €499.000. Six years ago, the figure was €372.000. This higher asking price is significantly higher than inflation during this period; adjusted for inflation, the increase is 9,5 percent, according to KfW.

What is my company worth? Tip: The Chambers of Skilled Crafts not only advise on all aspects of business succession, but also assist entrepreneurs with price determination. The Chambers of Skilled Crafts have a tool at their disposal to find a fair solution for both parties: the valuation specifically developed for craft businesses according to the so-called [missing information - likely a specific valuation method]. AWH standardThe procedure is established nationwide and is also recognized by banks and tax offices.

On average, those planning for succession aim for a purchase price that is 1,2 times their annual revenue. Six years ago, only 18 percent of medium-sized businesses wanted to achieve a purchase price of more than €1 million; now it's 27 percent. In contrast, only five percent of entrepreneurs are willing to settle for less than €50.000; in 2019, this figure was 18 percent.

On average, company leaders plan to EUR 375.000 To take in – that is, half of the entrepreneurs' expectations are either below or above the target. In 2019, the figure was €175.000.

Source: KfW

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