There are more family businesses up for sale than many think

A recent piece of research from Germany suggests that many of the country’s powerful privately-owned and predominantly family-controlled Mittelstand businesses might be ready to sell their companies rather than to pass them onto the next generation.

The findings come from research by the professional services group KPMG on succession among German family businesses. KPMG found that more than 20% of family businesses in Germany didn’t feel that a succession plan was important. Also, at least another 20% are not using succession plans or rules at all.

“I think one interpretation of the lack of importance some German family businesses place on succession could be because some are thinking about selling the business to someone else,” says Alexander Koeberle-Schmid, a family business specialist and business coach at KPMG in Germany. “These days it is pretty essential to have a succession plan if you’re a family business transitioning to the next generation.”

The KPMG findings come at a time when there are growing questions about the longevity of the German family business model.  The head of the Witten Institute for Family Business, Dr Tom Rüsen, has highlighted the growing problem of stewardship. He has argued the tradition of stewardship in Germany’s family sector – which says to family owners that they have inherited the business, but doesn’t entitle them to sell the business – is becoming less adhered to.

“With the growth of non-operational family shareholders, the practice of stewardship is threatened with erosion in Germany,” he says. “It’s a potential scenario that many of these next generation owners think more like Anglo-Saxon owners of businesses. They have become more short-term in their outlook.”

Rüsen says that if many of them are losing the culture of stewardship then next generation owners will be more likely to sell their businesses.

So, having no succession plan might be a pretty good buy sign for those interested in acquiring family businesses in Germany…any probably elsewhere as well.