The Silent Shutdown

I. Three Hundred a Day

Germany has 3.87 million small and medium-sized firms. By the end of 2029, 545,000 of their owners want to hand over the business. 569,000 want to close it. For the first time, more owners are planning an end than a handover. That is the finding of KfW’s succession monitor of January 2026.

Spread over the years, the planned closures come to around 114,000 a year, more than three hundred every day. The bakery whose master cannot find a journeyman willing to take over. The electrical contractor with eight staff whose children sit in offices in Munich. The toolmaker who has supplied the same three large customers for forty years. None of these firms goes bankrupt. They simply stop. No administrator, no headline. A silent shutdown.

The first reason is age. 57 percent of owners are 55 or older; twenty years ago it was 20 percent. The generation that founded or took over firms in the eighties and nineties is retiring, and too few are following. In 2024 almost 10,000 owners looked for a successor through the chambers of commerce. There were 4,016 interested candidates.

II. What Is Lost with a Firm

Not every closure is a loss. Many micro-firms depend on their owner and would not survive without him anyway. Structural change belongs to a market economy. In fairness, a large French study found that firms that were taken over hardly survive longer than new start-ups. A takeover is no safe route.

But when a healthy firm closes, more disappears than an entry in the commercial register. Jobs disappear, mostly in small towns without alternatives. A supplier disappears that has delivered parts to a larger company for decades, parts nobody else makes in that quality. And something disappears that appears in no balance sheet: the owner’s knowledge. Which customer thinks how. Why the machine is set exactly that way. Which mistakes have already been made in thirty years. This knowledge cannot be sold. It can only be passed on, person to person, over months.

The Institute for SME Research in Bonn counts around 186,000 firms for 2026 to 2030 that are attractive enough for a successor to make a living from. Remarkably, this number is stagnating even though owners are getting older. The reason: in a weak economy a takeover pays off less often. So it is not only successors that are missing, but also the prospect that the risk will be worth it.

III. Where It Fails

Owners tell KfW their obstacles. 69 percent cannot find a suitable successor. 45 percent name bureaucracy, 32 percent legal and tax issues, 18 percent financing. Those who want to close most often cite a lack of interest in the family (47 percent), followed closely by bureaucracy (42 percent). That is twelve percentage points more than in the previous survey, a record.

Then there is the price. On average owners expect just under 500,000 euros, the median is 375,000. The chambers report that a good third of sellers have inflated price expectations and almost four in ten begin the search too late. Four in ten successors have trouble with financing. A thirty-year-old who has inherited no wealth does not easily raise half a million.

In short: the old owner wants too much too late, the young one has too little, and in between lie forms.

IV. What Already Exists

It would be unfair to claim the state does nothing. Since 2006 there has been nexxt-change, a national succession exchange run by the economics ministry, KfW, the chambers and associations. The chambers advise. BAFA subsidises consulting, in the West by at most 1,750 euros, although succession is not explicitly named and the guideline expires at the end of 2026. KfW finances takeovers with up to 500,000 euros, and a guarantee bank takes over the full default risk from the house bank. Bavaria has loans from its development bank LfA and an initiative “Unternehmensnachfolge.Bayern” run by chambers and ministry.

And yet: the guarantee banks most recently granted only 1,896 guarantees for successions nationwide, in Bavaria a mere 42. With more than a hundred thousand handovers a year, that is a drop in the ocean.

The problem is not the lack of offers but their fragmentation. An owner close to retirement would have to work through exchange, chamber, consultant, house bank, development bank and guarantee bank, each with its own forms. And the most expensive phase of a handover is funded by no one: the time when old and new work side by side and the firm pays two bosses.

V. What Others Do Better

France regulated this phase by law in 2005. The seller may accompany the buyer for two to twelve months after the handover as a tutor, paid or unpaid, and may continue to draw his pension during that time. The state development bank Bpifrance offers unsecured loans for takeovers, interest-free honour loans of up to 80,000 euros and its own exchange with more than 45,000 listings.

Britain introduced the Employee Ownership Trust in 2014: whoever sells his firm to a trust for the workforce pays less tax on the capital gain. There are now around 2,470 employee-owned companies; 681 were added in 2024 alone. In the United States more than 15 million people hold stakes in their companies through employee ownership plans. Since 1985 Italy has had a law that helps workforces take over their firm as a cooperative. By 2014, 257 firms with at least 9,500 jobs had been created this way. Austria trains successors in a dedicated programme, NextGen4Austria.

Germany, by contrast, lets employees acquire shares in their own firm tax-free up to 2,000 euros a year. The company with bound assets (GmgV), in which capital stays in the firm and succession does not have to be bought, has existed since March 2026 as a framework concept of two ministries. There is no draft law. We described it in “Europa und die Megamaschine”.

VI. The University

Anyone who wants to take over a firm needs two things: he must understand the technology and be able to run a business. He must value a firm, finance a takeover, win over a workforce that was loyal to the old owner, and read a purchase agreement. Universities of applied sciences already combine technology and practice. They are the natural place for such training.

What exists is little. The Berlin School of Economics and Law had its own bachelor’s degree in founding and succession. From the winter semester 2026/27 it is being replaced by a general programme in “Entrepreneurship”, in which succession is only one topic among many. Beyond that there are certificates and add-on modules in Koblenz, Nordhausen and Frankfurt (Oder), a part-time MBA in Deggendorf and a private master’s for children of business families in Friedrichshafen for nearly 25,000 euros. With more than a hundred thousand handovers a year, that is nothing.

Our proposal: a specialisation in “Business Succession” within industrial engineering, mechanical engineering, electrical engineering and business administration at universities of applied sciences. With company valuation, acquisition finance, company and tax law, leadership in a taken-over firm. And with a practical semester that is a tandem: half a year at the side of an owner who wants to hand over. Some tandems will become handovers.

VII. A Succession Agency

Alongside this we need an institution that accompanies a handover from beginning to end. So that it does not become the next authority, it would have to be built differently from the existing ones.

A pilot instead of another counter. Every handover gets a fixed contact who coordinates exchange, chamber, bank and funding for the owner. He does not replace the existing bodies; he connects them.

A tandem wage. For up to two years, funding covers part of the future successor’s salary while he learns at the owner’s side. The French tutorat shows that this phase can be regulated. We would not merely allow it but pay for it.

Secured vendor loans. If the old owner defers part of the purchase price, a guarantee secures this loan. The successor needs less equity, the seller has security, and both remain interested in success.

A route for the workforce. 28 percent of owners can imagine handing over to their employees. That needs a model contract, financing and a suitable legal form. Italy and Britain show how it is done. The company with bound assets would be the German answer, if it finally became law.

Peace for the newcomer. In the first two years after a handover, reporting obligations are limited to the legal minimum. Someone who has just taken over a firm should be allowed to run it instead of filling in forms.

Measured by results. The agency is measured not by consultations, listings or loans, but by the number of firms still in business five years after the handover. Publicly, every year.

With an expiry date. The agency is founded for ten years, the period of the great succession wave. After that it ends automatically unless its effect has been proven. This is the rule we proposed for regulations in “Heart Disease. And Nobody Operates.”, applied to a new institution. And it must be a service provider that carries a handover through, not a gatekeeper that sorts applications.

VIII. The Wrong Debate

On 12 and 13 October 2026 the Federal Constitutional Court hears the case on inheritance tax on business assets. The public debate revolves around whether heirs of large family firms pay too little. That is a legitimate question. But for most of the hundred thousand firms that close every year, it does not arise at all. They have no tax problem. They have no heir.

A closed firm pays no more tax, employs no one and trains no one. What a succession agency would cost is a bill that has to be drawn up. What doing nothing costs is booked nowhere, because a silent shutdown leaves no file.

IX. Acquire to Possess

Goethe has Faust say that one must acquire what one has inherited from one’s fathers in order to possess it. For the Mittelstand this holds literally. A firm cannot simply be inherited or bought. It has to be earned, at the side of the one who built it.

That takes time, training, money and a legal form that does not make acquiring impossible. None of this is unaffordable. Only waiting is expensive.

The Mittelstand is not running out of orders but of successors. Every year we let pass, another hundred thousand doors close, quietly.