Invest­ment backlog in SMEs hinders compa­ny successions

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The invest­ment backlog in the middle sand hinders compa­ny succes­si­ons. This is becau­se German SMEs are getting on in years and are jeopar­di­sing their compe­ti­ti­ve­ness by holding back on invest­ments. Accor­ding to a study, only one in three entre­pre­neurs over 60 invests.

German entre­pre­neurs are ageing at an impres­si­ve rate: current­ly more than 1.3 milli­on owners of small and medium-sized enter­pri­ses are 55 or older. The Kredit­an­stalt vor Wieder­auf­bau (KfW) warns of this in a new Study under­li­ning the warning of an imminent demogra­phic trap in the German economy.

Age of compa­ny owners is rising rapidly

On avera­ge, a boss in the SME sector was last 51 years old. Compared to an avera­ge age of 45 in 2002, this is a signi­fi­cant increase. The trend - and thus the invest­ment backlog - will inten­si­fy signi­fi­cant­ly in the next five years, as the baby boomers are then slowly approa­ching retirement.

KfW warns that the willing­ness to invest, which decrea­ses with age, endan­gers the compe­ti­ti­ve­ness of German SMEs. Lower invest­ment jeopar­di­ses future business success and also reduces overall econo­mic growth, putting jobs at risk.

Invest­ment backlog reduces enter­pri­se value

At the same time, this invest­ment backlog has a very practi­cal effect on the priva­te balan­ce sheet of entre­pre­neurs: The value of your compa­ny decrea­ses becau­se the compe­ti­ti­ve strength and thus the future viabi­li­ty of the compa­ny decli­nes due to lower investments.

Axel Bergmann, a manage­ment consul­tant from Hanover who specia­li­ses in compa­ny succes­si­ons, sees this develo­p­ment very criti­cal­ly for poten­ti­al compa­ny succes­sors: ‘While on the one hand the purcha­se prices of the compa­nies are falling, finan­cing the purcha­se prices is likely to prove more diffi­cult due to the poorer earnings expec­ta­ti­ons resul­ting from an invest­ment backlog?

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