How to find SME succession cases using data

According to the Institute for SME Research (IfM Bonn), around 600,000 small and medium-sized enterprises (SMEs) will need a successor by 2026. Almost three million jobs across Germany depend on a successful search for successors. The figures show that the search for a successor is often unsuccessful at present: only around 50% of planned successions are actually completed. This low rate points to major problems in the traditional way succession cases are identified – problems that data-driven approaches can solve from the outset by detecting succession cases early and in a targeted way.

Why succession cases often go undetected

One of the core problems in business succession is a lack of early planning. Many business owners only start to think about their own succession when the handover is already imminent. Studies show that the average lead time is just two to three years – well below the five to ten years recommended by experts. As a result, there is often not enough time to get the company ready for a handover.

On top of this, succession within the family has lost much of its importance. Whereas children or other relatives once took over the running of the business as a matter of course, this route is now chosen in only around 30% of cases.

The main problem is that many companies only make their need for a successor public once it becomes acute – for example due to illness, a sudden decision to step back or imminent retirement. In such cases the pressure is enormous, there is not enough time to onboard the successor thoroughly, and long-term joint planning is no longer possible.

As a result of the problems outlined above, succession cases become public too rarely and too late, and are therefore not accessible to the broad pool of interested parties. Data-driven research, however, makes it possible to approach SMEs proactively when the available data suggests that succession problems within the company are likely.

Which data helps identify potential succession cases?

For a long time, identifying succession cases depended on personal conversations or chance contacts. Growing digitalisation, however, opens up new ways of detecting potential handovers using data – and therefore with far greater precision. Certain indicators can be derived from publicly available sources and give investors and business owners important clues to an upcoming generational change.

Demographic factors

The age of the managing directors and shareholders is one of the most important indicators. An age threshold of 60 is often taken as a sign that a succession could be due within the next five years – although the age of 55 is also relevant, since tax relief on the sale of a business becomes available from that age. The managing directors’ age is particularly relevant where no second tier of management has been established.

Shareholder and ownership structures

Sole proprietorships and owner-managed companies without a clear succession plan are particularly likely to run into problems when looking for a successor. Companies with several owners, by contrast, are less vulnerable, as there is a larger pool of potential successors – for example from among the shareholders themselves or the wider management team.

Financial metrics

Stagnating revenue, falling capital expenditure or a heavy dependence on individual customers can point to impending pressure to sell. Combined with the owner’s age, this increases the likelihood of a succession case.

Industry-specific data

Some industries are more affected than others. According to IfM Bonn, skilled trades, services and manufacturing in particular struggle to find a successor more often than average.

Public registers and M&A databases

Data from the commercial register (Handelsregister) can reveal changes of managing director, shareholder structures or liquidity problems. Annual financial statements and balance sheet data can also be used as early indicators.

The real skill lies in processing the available data efficiently and interpreting it correctly. Only then does it become genuinely valuable for identifying succession cases.

Data-driven identification methods

The mere availability of data is not enough – what matters is how this information is analysed intelligently and translated into concrete recommendations for action. Modern methods use artificial intelligence, algorithms and predictive analytics to identify potential succession cases systematically.

AI-powered analysis of registers and company data

Platforms such as ProxDeal can automatically search millions of commercial register entries, annual financial statements and websites. AI models pick up all publicly available data that points to an upcoming handover – such as older managing directors with no successor, declining investment, or signs of restructuring and special situations on the balance sheet.

Automated longlists and shortlists

Instead of laborious manual research, data-driven systems can produce structured lists of companies likely to face succession questions soon – within just a few minutes. Investors can export these lists and feed them straight into their deal flow or due diligence process. Sellers, in turn, benefit from becoming visible to relevant investors more quickly.

Match scores

Match scores show how well a company fits your own search criteria. Particularly relevant on the buy-side, they enable a targeted search for companies facing succession in suitable industries. The match score can be integrated directly into the automatically generated longlist, where it serves as an important guide.

Benefits for investors and business owners

Data-driven approaches to identifying succession cases offer tangible benefits for business owners, advisors and investors.

Investors benefit above all from the higher quality of matches. Algorithms that take into account criteria such as the owner’s age, financial position or shareholder structure produce precise matches – both strategically and financially. The risk of investing time in unsuitable targets falls. At the same time, the chances of identifying attractive targets early increase – often before they officially come onto the market.

Business owners benefit primarily from considerable savings in time and cost. Instead of depending on a search for suitable buyers that can drag on for years, they can reach potential investors much faster with data-driven solutions. The automated preparation of company information also reduces the effort involved in preparing and presenting their own business.

Another advantage is greater discretion. Whereas traditional succession processes often require sensitive information to be disclosed at an early stage, data-driven systems allow a discreet pre-selection. Only genuinely relevant interested parties gain access to further details.

Figures and market potential

The figures show the considerable market potential of data-driven platforms: as of January 2025, 215,000 businesses across Germany were planning to find a successor by the end of the year. The average age of their owners was a remarkable 65.4 years. Moreover, many succession plans fail – often due to a lack of planning or a failure to identify suitable routes. Estimates frequently cited in the debate put the failure rate at up to 30% of all successions – a clear sign that action is needed. Data-driven platforms such as ProxDeal can help address all of these problems at an early stage.

Conclusion: why the future of successor search is data-driven

Business succession in the German Mittelstand (the small and mid-sized, often family-owned companies at the heart of the economy) has long ceased to be a side issue and has become a central economic challenge. Hundreds of thousands of SMEs face a generational change in the coming years – with massive implications for jobs, regional value creation and innovative strength. At the same time, the figures clearly show that many successions fail or are never even tackled, because potential cases are identified too late or not at all.

This is precisely where data-driven approaches open up new perspectives. By intelligently analysing register data, financial metrics and demographic information, you can identify succession cases early and address them in a targeted way. As a result, investors gain access to attractive companies before they officially appear on the market. Business owners, in turn, benefit from more efficient outreach, greater transparency and a realistic assessment of their succession situation.

ProxDeal combines all of these advantages in a single platform: AI-powered longlist and shortlist creation, real-time data from registers and M&A databases, and an automated outreach system. This makes ProxDeal the ideal solution for ensuring that business succession in the Mittelstand is successful, efficient and future-proof.

Frequently asked questions