Exit in German Mittelstand

For the past two decades, we can observe a gradual shift in ownership transfer in German Mittelstand from a strong preference towards family internal succession towards selling the business externally. Adopting the perspective of a sociology of ownership, I view the configuration of transfer to undergo severe change in terms of who is seen as legitimate transfer partner, the rules and practices of transfers, and the valuation of the firm. Selling the business turns the business itself into a commodity and fosters marketization of Mittelstand firms. Using a case-study design, I identify social, institutional, and cultural conditions that foster this change. The study is based on a the analysis of qualitative interviews with intermediaries in the field of succession (bankers, tax consultants, M&A advisors, platform operators, academics, journalists, associations) as well as a large amount of documents (such as laws and parliamentary debates, news articles, documentation of chamber of commerce, publications by intermediaries, platforms). We apply a grounded theory approach to identify relevant mechanisms that may explain a legitimation of business sales and the emergence of a market for Mittelstand firms.



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