Business Succession Guide

Who is the Right Buyer for My Company? – A Real-World Example

Driven by demographic change, German small and medium-sized enterprises (SMEs) are facing an unprecedented wave of business successions. According to recent studies, around 224,000 business owners plan to hand over their companies by the end of 2024 – roughly 6% of all SMEs. In the next five years, 11% of SMEs are expected to go through a succession process.[1] On average, this results in 100,000 to 125,000 transfers per year. The key driver is age: One in three SME owners is already over 60, which is significantly increasing demand for successors.[2]

A Tight Market: More Companies Seek a Successor, But Fewer Find One

However, not every company finds a suitable new owner. Germany’s development bank KfW warns that up to 190,000 SMEs could close by 2026 due to the lack of successors.[3] The German Chambers of Industry and Commerce (DIHK) offer a similar outlook, estimating that over 250,000 businesses are at risk of closure in the next five years for the same reason.[4] This shortage particularly affects smaller enterprises across all sectors, increasing pressure on owners to find suitable buyers. In practice, this is no easy task: Successors come from very different backgrounds and pursue diverse goals and strategies.

Buyer Types in Practice – Who Was the Right Fit for Alv Kintscher GmbH?

A recent example of a successful succession is the case of Alv Kintscher GmbH in Sachsenkam, a high-end carpentry and design company known for creating premium, custom-made interior solutions. After 47 years of success, the time had come to pass the company on to new hands. Several buyer types were evaluated throughout the process, each with different characteristics and strategic approaches.

Internal Family Successors, Founders, Employees, and Strategic Buyers Are Often Long-Term Investors

Family succession remains the most desired option. Many senior owners hope to preserve tradition and values through a generational transition. Surveys show that more than half of SME owners prefer a family solution. In reality, however, this often fails: younger generations are fewer in number, have different career goals, and are less willing to take on the responsibility of business ownership. As a result, lack of family interest is one of the most common reasons for planned business sales or closures.[5]

Start-up founders or Management-Buy-In (MBI) candidates pursue entrepreneurship not by starting from scratch, but by acquiring an existing company. While they bring fresh energy, they often require longer onboarding and must bring sufficient equity—typically around 20% of the purchase price. Financing is usually completed via a combination of bank loans, subsidies, private investors, and contributions from the current owner.

Management-Buy-Out (MBO) candidates are typically existing employees familiar with company operations and culture. They often require less onboarding time, and the level of trust is already high. Financing often still relies on banks or outside investors, but operational continuity is easier to ensure. This option depends on whether suitable employees are available and willing to assume entrepreneurial risk.

Strategic buyers include competitors or companies from adjacent parts of the value chain, as well as businesses looking to diversify their portfolio. Their goals may include acquiring know-how, expanding their market reach, or integrating complementary operations. These buyers are usually experienced in M&A processes, work with advisors, and can move quickly. Financing is generally not a problem.

Family offices are long-term investors that provide both capital and strategic support. They may acquire companies as part of a broader investment strategy or assist MBI/MBO candidates with financing. Some seek medium-term value creation, while others aim to retain businesses across generations. Sellers benefit from strong capital backing and experienced management teams who ensure continuity and growth.

Financial Investors Focus on Return on Investment

Private equity firms and financial investors follow a return-driven approach. They aim to increase value through efficiency improvements, cost reduction, and growth strategies—often intending to sell the business after a few years. This can be attractive for owners looking for a fast and financially solid exit. However, sellers should be aware that the focus here is on profitability rather than preserving company culture or structure. These buyers typically offer lower purchase prices and short holding periods. A special segment includes distressed investors, who acquire underperforming or insolvent businesses to restructure and resell at a profit.

The Alv Kintscher GmbH Chose an MBO – Now Led by Two Longstanding Employees

Ultimately, Alv Kintscher GmbH opted for a management-buy-out and is now run by two long-term employees. The owners explain their decision as follows: „Mr. Wanner presented us with a wide range of qualified and well-suited candidates. In the end, we had the choice between a driven external founder and two of our own excellent employees. We decided to keep it internal, as these individuals were best positioned to continue the company in our spirit.“[6] This outcome demonstrates that the best solution is often one that aligns both with the values of the company and the personal vision of its founder.

[1] Schwartz (2024): Nachfolge-Monitoring Mittelstand 2023: Trotz Nachfolgerengpass sind drei Viertel der Übergaben bis Ende 2024 geregelt, KfW Research, S.1

[2] Schwartz (2023): Nachfolge-Monitoring Mittelstand 2022: Knappheit an Nachfolgekandidaten nimmt zu, Misserfolge dürften häufiger werden, KfW Research, S.1

[3] Schwartz (2023), S.1

[4] DIHK-Report zur Unternehmensnachfolge 2024, S.6

[5] Schwartz (2024), S.2f.

[6] Referenzschreiben Alv und Daniela Kintscher (2025): https://wanner.gmbh/?portfolio=unternehmensverkauf-der-alv-kintscher-gmbh