Taking Over Instead of Starting: The Underestimated Entrepreneurship
8 min. reading time
Every year, around 109.000 mid-sized companies look for a successor, and a growing number find none. Taking over a healthy business with customers, cash flow, and a seasoned team isn’t starting a startup, but it demands just as much drive. This bet preserves far more economic substance than it receives in public attention.
Key Takeaways
- Acquisition is a founding decision in its own right. An existing operation generates revenue from day one, whereas a new venture takes years-if it ever does.
- Four paths lead to entrepreneurship through acquisition. Search funds, management buy-ins, management buy-outs, and direct succession purchases differ in capital requirements, risk, and speed.
- Capital is rarely the bottleneck. Valuation gaps, trust, and access to information slow the market far more than a lack of funding.
RelatedSuccession as a Process: Why So Many Mid-Market Owners Give Up / When a Life’s Work Finds No Successor
The Gap Rarely Discussed
For some time now, an uncomfortable truth has been emerging from the startup and entrepreneurship scene: while attention is almost entirely focused on new ventures, substance is quietly disappearing on the other side. For the first time, more owners are planning to shut down their businesses than to arrange an orderly handover. The reason is rarely a lack of underlying value. Quite simply, no one steps up to take over.
The numbers back this up. According to the KfW Succession Monitoring 2025, around 109.000 mid-sized companies aim to find a successor annually through 2029, while roughly 114.000 per year plan a deliberate business closure. The average age of owners is over 54. The IfM Bonn expects 186.000 handovers between 2026 and 2030, with well over half remaining within the family.
When a profitable business closes, it takes more than just its owner with it. Customers who have been ordering for years. Suppliers counting on the next contract. Employees with specialized knowledge that exists nowhere in documentation. Whoever takes over here isn’t building from scratch, yet still creates something new.
Four Ways to Take Over a Company
Acquisition encompasses several models that clearly differ: in terms of who provides the capital, how much risk the buyer takes on, and how quickly they take over management.
1. Search Fund. One or two searchers first raise capital from investors, then deliberately seek out a profitable business and manage it themselves after the purchase. This model originated in the U.S. and has gained noticeable attention in German-speaking regions in recent years. Platforms like New Mittelstand consolidate active searches, with target sizes typically ranging between one and five million euros in EBITDA.
2. Management-Buy-in (MBI). A leader from outside buys into a company where they previously did not work. Attractive for experienced managers who prefer to be in control rather than taking the next job. Challenging because the buyer must first get to know the industry and team.
3. Management-Buy-out (MBO). The existing leadership team takes over the business from the outgoing owner. The advantage is clear: the buyers already know the numbers, customers, and weaknesses. This reduces risk and makes financing easier for banks to calculate.
4. Direct Succession Purchase. A single entrepreneur buys a business, often within their own regional or professional environment. The classic approach that doesn’t require a fund structure but can fail at financing and valuation if both sides are unprepared for the discussions.
Why Substance Often Provides the Better Lever
A new startup begins with an idea and a long list of open questions: Does the market exist, will someone pay for it, will the team stay together. An acquisition begins with answers. Revenue is already there, processes are running, and the balance sheet can be reviewed. This fundamentally changes the risk curve.
| Dimension | Startup | Acquisition |
|---|---|---|
| Revenue | uncertain, often only after years | available from day one |
| Team | must be built from scratch | already established, with experience |
| Funding | equity or venture capital | bank loan against existing cash flow |
| Main Risk | product finds no market | transition and employee retention |
This does not mean that an acquisition is easier. It is simply differently difficult. The real bet lies in the transition: Do key personnel remain, do customers trust the new face, can the predecessor’s tacit knowledge be secured before he leaves? Those who underestimate this buy only a shell.
What is Holding Back the Market in Germany
Capital is rarely the real bottleneck. For healthy businesses, there is bank financing available, and the KfW ERP grant loan takes on part of the credit risk for the house bank during acquisitions, making credit approval easier. While financing remains a dealbreaker if both sides are unprepared, the bigger hurdles lie elsewhere.
Firstly, valuation. According to KfW, sellers’ price expectations have risen by about 34 percent since 2019, while buyers are more cautious. This gap causes many discussions to fail before they even get serious.
In practice, there are bridges over this gap that are too rarely used. An earn-out ties part of the purchase price to the business performance after the handover, so the seller shares the risk if his numbers hold up. A seller loan spreads out the payment over several years and signals that the seller believes in the future of the business. Both instruments shift risk to where better information resides, turning a stalemate into a negotiable situation. Those who bring this up from the start lead a different conversation than someone who only haggles over the final amount.
Secondly, trust. An owner is handing over their life’s work, not just a balance sheet. Anonymous fund structures feel foreign to many senior entrepreneurs. Thirdly, access to information. Those who really want to sell rarely appear on public lists. The market is hidden, and that’s precisely what makes the search the real work.
Search Funds target exactly this third point: the search is organized, funded, and planned for months, not as a side activity. That’s why the model, despite its slow start, is growing.
The First Step for Serious Buyers
If you’re considering it, you should start with your own profile long before thinking about financing. Which industry can I lead, which business size fits my experience, which location is feasible. Only then does a conversation with the house bank, the funding bank, and the relevant succession platforms make sense.
A serious search realistically takes twelve to twenty-four months, from the first profile to the signature. That sounds long. Measured against the years it takes for a new business to become viable, it’s relatively quick, and the risk remains calculable.
Frequently Asked Questions
Is an acquisition really entrepreneurship or just administration?
Those who take over a business usually transform it: new products, digitalization, new markets. The task is entrepreneurial; it just starts from a higher baseline than a greenfield project.
How much equity does a buyer need?
That depends on the model. With a search fund, investors provide the capital; with a direct purchase, banks typically expect an equity contribution. KfW promotional loans assume part of the bank’s risk, thereby facilitating loan approval.
What exactly is a search fund?
A searcher raises capital, specifically targets a profitable company, buys it, and continues to run it as managing director. In the German-speaking region, target sizes usually range from one to five million euros in EBITDA.
Why do so many healthy businesses fail to find a successor?
Intra-family solutions are becoming rarer, purchase price expectations and buyer perspectives are drifting apart, and the market is opaque. Many owners start looking too late and without organized help.
What role does KfW play in financing?
The ERP promotional loan assumes part of the default risk for the principal bank. This makes banks bolder when it comes to acquisitions and improves the terms for the buyer.
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