Skilled workers in need: company succession as a lifeline for the economy?

Skilled workers in need: company succession as a lifeline for the economy?

In today's economic situation, new opportunities are opening up for specialists and managers. Economics Minister Nicole Hoffmeister-Kraut emphasizes that the workforce reductions in industry affect many experienced people who are now being considered as potential successors for companies. She said this before the two-day conference of economic ministers of the federal states in Stuttgart, which aims to simplify and accelerate takeover processes. In addition, special attention should be paid to the topic of company succession, including through greater consideration in placement offers from regional hubs. The desire is to send a strong signal to the federal government to find long-term solutions.

A look at the KfW Succession Monitoring for SMEs 2024 shows that 54% of company owners in Germany are 55 years of age or older. Between 2024 and 2028, 14% of medium-sized companies will face company succession, which affects around 106,000 companies per year. These figures underline the urgency of the issue at a time when many companies are faced with handover issues.

Statistical developments

In Baden-Württemberg in particular, where the conference is taking place, according to the State Statistical Office, a total of 5,986 company transfers were registered in 2022, and the following year there were 6,088. The importance of business succession is reinforced by the fact that not all entrepreneurs with retirement plans intend to actively continue their business. As KfW Research reports, a total of 231,000 companies are considering decommissioning by the end of 2025, which further exacerbates the challenges in the market.

However, a clarifying succession plan has a positive impact on the willingness to invest. With secured succession, investments increase by an average of 40%. In contrast, lack of clarity about successor outcomes leads to a decline in investment. One of the biggest hurdles in business successions is the lack of suitable successor candidates, which is mentioned by 72% of the affected entrepreneurs, followed by agreement on the purchase price (32%) and bureaucratic and legal complexities (31%).

Focus on startups and entrepreneurship

The ministerial conference will also address the promotion of entrepreneurship and improving the conditions for founders. The department heads are calling on the federal government to reduce bureaucracy and improve the framework conditions for private venture capital. A central concern is the elimination of obstacles to starting a business in Germany, with women's start-up activities in particular being intensified. Federal Minister of Economics Katherina Reiche will be connected to the conference digitally to support the discussion.

Overall, the signs point to changes in German medium-sized businesses. The professional transition of companies is crucial to ensure economic stability and give new talent the opportunity to take on responsibility. The coming days in Stuttgart will show to what extent these challenges are being addressed.

For more information you can read the articles from Time online and KfW Research read.