Access to bank loans as the classic form of financing for company takeovers and business successions has improved over the last twelve months. This was stated by the DIHK in a recent press release. Nevertheless, every second person who takes over a company has difficulties financing the purchase price and necessary modernisation investments. This is true even in the current low-interest phase, as the DIHK Succession Report shows. Especially in industry, the high capital requirements deter many potential new owners in advance. Here, in purely mathematical terms, there are five old owners for every possible successor.

Companies are looking for successors - successors are looking for money

More and more entrepreneurs are currently reaching “retirement age”. At the same time, many qualified people prefer a well-paid permanent position to the more risky self-employment. However, when it comes to takeover negotiations, opinions often differ on the purchase price: four out of ten former owners demand a sum that is too high from the buyer’s point of view in view of their life’s work.

Favourable financing environment provides breathing space

Even if potential successors often lack the necessary capital, the currently good financing conditions are having a positive effect. In many cases, according to the IHK reports, improved financial communication between financing partners, transferors and transferees also contributes to better financing. The CCIs also see progress in the provision of guarantees. The fairly good economic situation has reduced the risk of loan default and thus also the risk of loss for the granting of guarantees. Guarantees help to alleviate the lack of collateral, which is particularly prevalent among entrepreneurs.

Lower hurdles for financing takeovers

The additional regulations of the financial markets will successively make access to debt capital more difficult. Therefore, equity financing will also have to play a stronger role in business takeovers in the future. However, an important obstacle here lies in the restrictive regulations on the use of loss carry-forwards (§ 8c KStG, also the ban on shell company purchases). In the opinion of the DIHK be limited to cases of abuse. In addition, the federal government wants to examine taxing capital gains on free float shares of less than ten percent. This would make shareholdings unattractive for investors and thus also make the financing of company successions more difficult. When it comes to financing takeovers with equity capital, the situation has not been quite so tight recently. But two-thirds of the CCIs still report difficult access. The situation is similar when it comes to financing a takeover with equity capital. Hardly anyone can finance a business takeover predominantly from their own pocket.

Implement inheritance tax in a way that is friendly to small and medium-sized enterprises

With a view to family-internal succession, there is great uncertainty in many companies due to the inheritance tax law of the Federal Constitutional Court. Politicians are called upon to present a constitutionally sound, SME-friendly law as quickly as possible that provides legal certainty for family businesses in Germany, rules out a higher tax burden when businesses are handed over and thus secures the locational advantage of “corporate culture” in Germany.