Submitted by Thomas Kolbe
Germany faces a massive wave of business transfers. The decline in entrepreneurship and self-employment has multiple causes; blaming the young generation’s supposed obsession with work-life balance belongs more to the realm of fables.
When a productive and market-successful company exits the competition, productive capital is lost irretrievably. Jobs vanish, supply chains collapse, and established customer relationships dissolve. Often, foreign competitors step in to occupy the freed market niches. Value creation is lost for the domestic economy.
KfW Panel Shows the Numbers
A recent survey by the KfW Mittelstand Panel shows that Germany confronts exactly this fundamental problem. A demographically driven succession crisis is emerging: over 57% of Mittelstand business owners are now over 55. According to KfW, around 1.1 million business transfers or closures will occur by 2029 due to age. The survey of 13,000 firms also shows that about one in four companies at risk is considering a full shutdown because no suitable successor or buyer is available to fill the vacancy.
Mathematically, the situation is stark: in coming years, roughly 114,000 business closures are expected annually, while only about 109,000 orderly successions occur. The net balance is negative. New business formation would be required to close the gap—an endeavor naturally difficult in Germany. The succession problem spans all sectors and company sizes, from small craft shops or bakeries to classic industrial Mittelstand companies. The pool of potential business transferors grows due to demographics, while the pool of successors continues to shrink—a classic demographic gap.
The Ifo Institute paints an equally sobering picture: around 42% of family businesses cannot find an internal successor. Young people increasingly avoid taking over existing companies, preferring well-paid employment with social security and avoiding the substantial risks tied to entrepreneurship.
A New Reality
What drives the growing succession problem in Germany? Just a few years ago, aging society and rising closures could be cited alongside productivity trends and a shrinking domestic market as natural reasons for a contraction in the economy’s supply side.
Today, however, Germany’s population has grown by several million in a few years due to migration policies. With shrinking economic output, Germans are increasingly trapped in a spiral of scarcity. Alongside eroding productivity and industrial decline, massive redistribution programs benefiting those who have never contributed productively push the country’s productive class into economic tight spots.
And honestly: who wants to take entrepreneurial responsibility in such an anti-business climate? A country where leading officials, from Lars Klingbeil to Bärbel Bas, even the Chancellor, openly attack entrepreneurs depending on the day’s mood—while a compliant press gives them carte blanche for all manner of rhetorical nonsense.
It begs the question: how has self-employment, once a cornerstone for innovation, family traditions, risk capital, and breaking stagnant markets, decayed so profoundly?
In principle, anyone pursuing a serious entrepreneurial vision pays little attention to political chatter or bureaucratic whim—but in Germany, beyond demographics and a lack of successors, politically engineered realities make takeovers and sales extraordinarily difficult.
Structural Obstacles
Inheritance law, nearing another reform, targets the substance of Mittelstand firms—more than a mere deterrent. In many cases, succession becomes economically unviable. Complex, multi-heir transfers are costly, liquidity-straining, and bureaucratically labyrinthine. Potential inheritors or buyers face an entire economic crisis environment, alongside internal cultural shocks in companies tied closely to their founders.
Succession processes often end in frustration because tax, inheritance, and corporate law link transfers to complex conditions, deadlines, and exceptions monitored for years. Restructuring, investment, or personnel decisions can jeopardize tax benefits and trigger retroactive liabilities. The economy shrinks, fiscal pressures rise annually—most recently via CO₂ levies and commercial tax hikes to cover municipal deficits. No recovery is in sight. Germany is only at the beginning of deindustrialization and structural collapse.
The Green Deal looms—a future-destroying program for the next generation, who will one day see “Fridays for Future” protests and climate activists as symptoms of a severe societal illness no one restrained.
Cultural Retreat
Zooming out, the social and cultural climate reveals another key issue: society has largely abandoned family traditions. The collapse of reproduction rates reflects even in entrepreneur families. Passing a business to children and integrating them early into operations is increasingly the exception.
This is symptomatic of a deeper problem: belief in economic futures has eroded. Prosperity was once a promise for achievement; today it is often merely a state-managed allocation problem—via subsidies or a welfare apparatus consuming about a third of GDP. Society appears frozen. State institutions and parties shield themselves from criticism by framing entrepreneurs as greedy.
Current discourse demonstrates that conservative values, generational thinking, and meritocratic consensus are essential for national economic advancement. Change will occur when society realizes that wealth cannot be printed or centrally planned; it requires individuals willing to invest creativity, diligence, and courage into innovative products and services demanded by free markets.
In short: the turning point comes when Germany sheds the rotten patina of state control and recommits to bourgeois values of freedom, family, and economic ascent. That is the pivot.
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About the author: Thomas Kolbe is a Gerrman is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.
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