More SMEs Plan to Close Down Upon Owner Retirement
An increasing number of German SMEs are considering closure when owners retire, with up to 114,000 businesses potentially shutting down annually. Difficulty finding successors and increased bureaucracy are key factors.
A growing proportion of small and medium-sized enterprises (SMEs) in Germany are planning to cease operations when their owners retire. KfW Research indicates that approximately 114,000 SMEs could close down each year if their owners plan to retire by the end of 2029. This compares to around 109,000 businesses seeking a successor annually, meaning for the first time, more businesses are planning to shut down.
The primary reason cited by business owners for closure is their age. In 2025, 57 percent of SME owners were 55 years or older, a notable increase over previous years. Many owners find it challenging to identify a suitable successor, with 47 percent stating no family member was interested in taking over. Increased bureaucracy was also cited by 42 percent as a reason for closure, a significant rise.
These findings highlight the critical challenge of business succession for the German economy, where SMEs form the backbone. Securing the survival of these businesses is crucial, and resolving succession issues is also seen as vital for stimulating investment within the SME sector. Studies show that businesses with identified successors tend to invest more.
Furthermore, expectations regarding the sale price of businesses have risen noticeably. Owners aiming for succession within the next five years expect an average of EUR 499,000, a substantial increase from 2019. This higher price expectation exceeds inflation and reflects a changing market dynamic for business transitions. The survey involved over 13,000 SMEs.