Succession & Mittelstand

Handing over to your own employees — chances and limits

Those looking for a successor often look outside. Yet the right person is sometimes already in the business — someone who knows it like almost no one else.

22 July 2026 · 4 min read

The advantage: no stranger has to learn the business first

A long-serving employee knows the processes, the customers and the culture of the house. Handing over to them preserves knowledge and trust automatically — the very things a newcomer has to build up laboriously.

For the workforce it is also a strong signal: the business stays in familiar hands, nothing is overturned overnight.

The limit: entrepreneurial responsibility is something else

A good foreman or a good department head is not automatically a good entrepreneur. Leadership, financing, liability and bearing risk are a different role from before — and not everyone wants or can fill it.

Honestly examining whether someone truly wants that role is part of respect for the person — overwhelming no one helps.

How often this actually happens

Handing over to your own staff is treated as an exception. It is not. The Institut für Mittelstandsforschung Bonn pooled 23 empirical studies spanning some forty years and arrives at this split: a good half of German family businesses resolve succession within the family, around 17 per cent go to employees, and the remaining 29 per cent to buyers from outside the company.

So one handover in six goes to somebody already working in the business. That is more common than the widespread assumption that there are only two routes — a child, or a sale.

What the figure is and is not belongs with it: it comes from a meta-analysis, pooling the results of many individual studies rather than counting a population. The IfM notes itself that the individual studies put family-internal solutions anywhere between 49.3 and 84.3 per cent — the spread is considerable. The 17 per cent is an average across four decades, not a statement about the current year.

The direction is worth noting: by the same analysis, family-internal succession has lost ground slightly in the studies of the past fifteen years. The share that has to be resolved outside the family is growing — and your own staff is part of that.

Often the middle way is best

A combination frequently works: an employee takes on responsibility, a partner brings capital and entrepreneurial experience, and the previous owner accompanies the transition. The substance is preserved without overwhelming anyone.

What matters is asking this question early — then there is time to find the right path.

Sources

Institut für Mittelstandsforschung Bonn: Unternehmensnachfolgen in Deutschland 2026 bis 2030, Daten und Fakten No. 37 (2025). The split — a good half family-internal, 17 per cent to employees, 29 per cent to external buyers — comes from its meta-analysis of 23 empirical studies covering some forty years. Available at ifm-bonn.org.

The values are pooled estimates, not a count. Anyone quoting them should carry the spread of the individual studies with them; it is stated above.

The best successor is sometimes already in the business. Whether they are the right one is decided not by proximity, but by the honest question of whether they truly want to carry the role.