Time for Departure – Exit in the German Mittelstand

In recent years, we can observe an increase in the number of businesses sold by entrepreneurial groups owning and operating small and medium sized businesses. This is remarkable as previously internal succession was the modus operandi in entrepreneurial groups – mostly in terms of family internal succession, but also in terms of a key employee stepping up. This subproject thus studies the conditions under which entrepreneurial groups sell at least one of their businesses.

Adopting the perspective of new economic sociology, we view succession as undergoing severe institutional change. While internal succession marks a change in the composition of the group, business sales mark a detachment of the group from its organization. Hence, the very connection between group and organization is reconsidered. Selling the business turns the organization itself into a commodity and fosters a marketization of entrepreneurial group exit. We identify key players in this process and strive to understand the conditions under which they act upon this emerging market.

The empirical design encompasses semi-structured interviews with mediators in the selling process. These include small and medium-sized business owners considering to sell their business, trusted advisors (bankers, tax consultants) and match-makers (M&A advisors, platform operators). We further collect all relevant documents that are used in the sales process such as company ads, advertising letters of M&A agencies, bank guidelines or sales exposes. We apply a grounded theory approach to identify relevant mechanisms that may explain an increase in business sales.

Preliminary findings suggest a self-enhancing effect of the marketization of entrepreneurial group exit as sellers, buyers and matchmakers are increasingly interested in this route for very different reasons: Selling entrepreneurial groups seem to follow individualization norms, new ideals for work-life-balance and are tired of self-employment; Buying investors and private individuals identify the buying of business shares of profitable investment and/or search for an entrepreneurial adventure; M&A companies increasingly discover SME sales as a profitable market segment. In addition, we observe a constant nudging of entrepreneurial groups to consider business sales: they receive advertisement letter of M&A companies or are asked about sales as potential succession plan by their bankers. This constant nudging contributes to a new openness towards business sales among entrepreneurial groups.

This study contributes to understand ongoing institutional shifts in the collective actions of entrepreneurial groups. It further thinks through consequences of increased sales of small and medium sized businesses for the time horizon of entrepreneurial ventures and their organization.


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