East Germany
Company succession: Dulig sees great challenge

Martin Dulig

Martin Dulig (SPD), Economics Minister of Saxony, speaks. Photo: Robert Michael/dpa/archive image

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In industry and trade, the generation change has been going on for years. Even in owner-managed and family businesses, this is often a problem – also due to a lack of interest from qualified specialists.

The Saxon middle class is urgently looking for successors to take over companies. According to calculations by the Institut für Mittelstandsforschung (IfM) in Bonn, around 1,000 companies are handed over each year, and by 2026 there will be more than 7,600, mostly for reasons of age. According to Saxony’s Economics Ministry, it is becoming increasingly difficult to find suitable successors. Many small and medium-sized companies threatened to disappear.

Economy Minister Martin Dulig (SPD) described the continuation of companies in East Germany as a central challenge. Numerous business people who had founded their companies during the period of reunification reached retirement age in the short and medium term, he said on Thursday during a visit to companies where the successor on the executive floor was successful. Every third owner of a craft business is older than 60. You have to motivate the owners to deal with the handover at an early stage.

“Basically, there is a lack of young people willing to start a business in Saxony‘ the ministry said. The reasons for this are the years of migration of younger qualified specialists, the general nationwide trend towards fewer business start-ups, a structural shift from stationary to digital business models and changed life plans towards a balanced work-life balance.

“Also the corona pandemic and the Ukraine war have a significant impact on company succession. Declining orders, material shortages, rising prices, declining economic forecasts and a general feeling of uncertainty mean that companies are postponing or abandoning their handovers,” emphasized Dulig. In order to plan the succession in good time, the Free State supports entrepreneurs.

According to IfM, around 14 percent of company owners plan to hand over their company within the next three years. Almost three quarters of the companies in southwest Saxony have not yet made any specific arrangements for this. From the point of view of the ministry, unclear successors are often a brake on investment, which makes the companies unattractive to potential buyers acquisitions.

The IHK Leipzig speaks of more than 20,000 companies nationwide in the next five to ten years. The main reasons are that there are no suitable successors, the equity is too low for funding and financing or the purchase price is too high, as well as the inheritance tax burden and bureaucracy.

A spokeswoman for the IHK Chemnitz reported that the corona pandemic had reduced the book values ​​of companies and companies, so that owners were waiting to sell them. “It’s attracting something again.” Often no arrangements are made for the sudden death of the boss and possible problems with several offspring. “There are 100 interested parties who want to buy a company.” Financing is not a problem.

The Saxon Crafts Day expects that in the next five years around 5,000 owner-managed businesses will have to be replaced. “The topic remains explosive, especially since the start-up dynamic is declining,” says a spokesman. In contrast to 15 or 20 years ago, the handover within the family does not succeed because the young foremen shy away from the responsibility, preferring to be employed in other companies instead of becoming self-employed. “We see that especially with bakers or butchers.”