Arranging a Succession: Putting the Handover in Order in Good Time

Arranging a succession is more than deciding who takes over. It is the orderly implementation: the transfer agreement, the amendments to the articles of association, cover for an emergency and the tax planning — in good time and aligned with one another. An owner who picks the solution but arranges nothing has not secured the succession.

How we guide owners through business succession — from the first decision to the handover — is set out on our services page.

Many owners confuse the succession solution with the succession arrangement. The solution answers the question of who takes over — family, management or an external buyer. The arrangement makes sure that solution holds up legally, works if the worst happens, and costs no more in tax than it needs to.

Which options exist in the first place is set out in succession solutions. This article goes a step further: how do you actually arrange the succession you have chosen?

Why timing decides everything

An arrangement drawn up under time pressure, or after illness has struck, is expensive and rarely optimal. Lead time creates room to shape things — in the choice of successor, in the tax structure and in the handover of responsibility. When the right moment arrives is covered in the right time for a succession. Whether and in which direction you hand over at all is settled beforehand in clarifying your succession.

In practice, all of this starts with a company valuation.

The building blocks of a succession arrangement

A durable arrangement consists of several parts that have to fit together.

Building block	What it covers
Transfer or purchase agreement	governs the transfer, price, payment and liability
Articles of association	adaptation to new shareholders, rules on joining and leaving
Emergency provisions	who represents the business if the owner suddenly drops out
Tax planning	classifying a sale, a gift or an inheritance for tax purposes
Handover of leadership	passing on responsibility, knowledge and customer relationships

The contractual and tax drafting belongs in the hands of a notary, a lawyer and a tax adviser. This article organises the building blocks; it does not replace legal or tax advice.

The emergency as a blind spot

Most arrangements plan for the orderly exit — not the unplanned one. If the owner suddenly drops out, the authority to act on the business is often missing, and the company is paralysed. Why an emergency plan belongs with every succession arrangement is set out in an emergency plan for entrepreneurs.

Factoring in tax early enough

Whether a business is sold, given away or inherited makes a considerable difference in tax terms — and that difference can only be shaped with lead time. The essentials are set out in business succession and tax; the route to a company that is ready for handover is described in preparing for succession.

Articles of association and share transfer: what form requires

For a GmbH, the assignment of shares is effective only if concluded in notarial form (section 15(3) GmbHG). The same applies to the obligation to assign; an agreement made without form becomes valid through the assignment made in the proper form (subsection 4). Under section 15(5) GmbHG, the articles may tie assignment to further conditions, in particular the company's approval. In Austria, section 76(2) GmbHG requires a notarial deed and likewise allows the articles to add further conditions, in particular the company's consent.

For succession, that means: read the articles before the transfer agreement. Consent requirements, pre-emption rights, redemption and compensation clauses decide whether a successor can become a shareholder and what departing shareholders receive. On compensation, see settlement entitlements; on coordination with a capital provider, shareholder agreement with an investor.

Inheritance-law cover: compulsory portion and gifts

An arrangement that only thinks about transfers during life overlooks death. If you appoint the successor sole heir, you exclude other descendants as well as parents and spouse from the succession; they can then claim the compulsory portion, half the value of the statutory share of the estate (section 2303 BGB). That claim is a money claim. It falls on the successor, and indirectly on the company's liquidity.

Gifts during life can trigger a supplementary compulsory-portion claim. A gift counts in full in the first year before death, one tenth less in each further year, and not at all after ten years; for a gift to a spouse, the period does not begin before the marriage ends (section 2325(3) BGB). Timing and form of the transfer (gift, sale, inheritance) therefore have to be planned together with the will or inheritance contract. Austria has different rules; there, the notary or lawyer is the one to act.

Tax on a gratuitous transfer: the key points in Germany

For qualifying business assets, section 13a ErbStG provides a relief of 85 % where the acquisition does not exceed EUR 26 million; on an irrevocable election, 100 % applies (subsection 10). Conditions include compliance with a minimum payroll (400 % over five years; 700 % over seven years for the 100 % option; reduced for small businesses and not applicable up to five employees) and a holding period of five or seven years. Under the option, administrative assets may not exceed 20 %. Statutory text per gesetze-im-internet.de, retrieved 14 October 2026. The rule is explained in detail in relief rules for business assets; the classification of sale, gift and inheritance is given in business succession and tax.

In which order to tackle the building blocks

Timing	Building block	Who
early, three to five years before	valuation, check of articles and structure, powers of attorney and emergency plan	owner, adviser, tax adviser
middle phase	decision on the route, drafting the transfer or purchase agreement, tax review, align will or inheritance contract	lawyer, tax adviser, notary
late, in the final year	notarising the share transfer, updated list of shareholders, communication to employees, customers and suppliers, onboarding	notary, owner, successor

The sequence is a pattern from practice, not a statutory requirement. The DIHK recommends starting concrete planning at the latest three years before the intended handover (quoted from KfW Fokus Volkswirtschaft No. 526, 9 January 2026).

Which mistakes are made most often when arranging a succession?

Typical mistakes in arranging a succession are starting too late, leaving the succession solution unresolved, an unsubstantiated company value, dependence on the owner, no emergency plan, and tax and contracts aligned too late. KfW figures on related hurdles exist for four of the six mistakes; how often each individual mistake occurs has not been measured.

The occasion is real: according to the KfW SME Panel, 57 percent of Germany's owner-managers of SMEs were aged 55 or older in 2025, and by the end of 2029 around 545,000 SMEs want to find a succession arrangement (source: KfW Research, press release of 9 January 2026, retrieved on 6 October 2026). How to read these figures is set out in business succession figures for Germany.

1. Starting too late. Consequence: the arrangement is made under time pressure, and the room to shape the choice of successor and the tax structure is used up. Countermeasure: plan several years of lead time with fixed milestones, see the right time for a succession. Key figure: only 26 % of SME owners planning a succession had already found a successor in 2025; KfW names starting preparations too late as a frequent cause of failed successions, and the DIHK recommends starting concrete planning and the search for a successor at the latest three years before the intended handover (KfW Fokus Volkswirtschaft No. 526, 9 January 2026, p. 8).
2. Leaving the succession solution unresolved. Consequence: the handover fails late, for example because the family member or management team assumed to take over does not want to. Countermeasure: ask about interest and suitability early and examine alternatives in parallel, see succession solutions and clarifying your succession. Key figure: 69 % of all German SMEs see finding a suitable successor as a hurdle to succession, and for 47 % of companies planning to close the business, lack of interest within the family is (part of) the decisive reason (KfW Fokus No. 526, 2025, chart 8 on p. 7 and the section on reasons for closure).
3. Not substantiating the value. Consequence: the price expectations of owner and successor drift apart, and negotiations stall. Countermeasure: a traceable company valuation using a recognised method as the basis for discussion. Key figure: 30 % of SMEs see agreeing on the purchase price and payment terms as a hurdle; the price expectations of owners planning a succession average 1.2 times annual revenue and have a median of 0.6 times (KfW Fokus No. 526, chart 8; owners' expectations, not prices achieved).
4. Remaining dependent on the owner. Consequence: a successor sees a person-related risk instead of a transferable business and values it more cautiously. Countermeasure: build a second management tier, document processes and hand over customer relationships early, see preparing for succession. Key figure: no substantiated KfW or IfM figure known (not measured).
5. Not providing for an emergency. Consequence: if the owner suddenly drops out, the authority to represent the business is missing and the company cannot act. Countermeasure: define powers of attorney and representation and draw up an emergency plan for entrepreneurs. Key figure: no substantiated KfW or IfM figure known (not measured).
6. Aligning tax and contracts too late. Consequence: the net result, the transfer agreement and the articles of association do not fit together, and little can be shaped shortly before the handover. Countermeasure: involve tax adviser, notary and lawyer early, see business succession and tax. Key figure: 32 % of SMEs see the legal and tax complexity of a succession as a hurdle, and 45 % the administrative burden (KfW Fokus No. 526, chart 8).

Mistake	Key figure (share of companies, 2025)	Reference in the KfW survey
Starting too late	26 % of owners planning a succession have already found a successor	State of preparation, chart 9
Leaving the succession solution unresolved	69 % see the search for a successor as a hurdle	Hurdles to succession, chart 8
Not substantiating the value	30 % see agreeing on price and payment terms as a hurdle	Hurdles to succession, chart 8
Remaining dependent on the owner	not measured	no KfW/IfM figure substantiated
Not providing for an emergency	not measured	no KfW/IfM figure substantiated
Aligning tax and contracts too late	32 % legal and tax complexity, 45 % administrative burden	Hurdles to succession, chart 8

Source: KfW Research, Fokus Volkswirtschaft No. 526, 9 January 2026 (KfW SME Panel, 2025 survey, multiple answers possible), retrieved on 7 October 2026.

The list arranges typical patterns of mistakes along the building blocks of a succession arrangement and is not a survey. The key figures are shares of companies naming related hurdles, not frequencies of mistakes; frequency per mistake: not measured. The numbering is not a ranking. Mistakes when selling to external buyers are covered in mistakes when selling a company; how IGCP supports owners through the handover is described under business succession advisory. Status of the details and sources: 7 October 2026.

If you want to arrange your succession, talk to IGCP Capital Partners GmbH in confidence — independent and discreet.

FAQ

What is a succession arrangement?

The orderly implementation of a business succession. It covers the transfer or purchase agreement, the amendment of the articles of association, emergency provisions and tax planning — not merely the choice of successor.

When should a succession be arranged?

As early as possible. Practitioners recommend several years of lead time, because tax, the handover itself and the choice of successor can only be structured cleanly with time. Without lead time the arrangement is made under pressure — usually more expensive and worse.

What is the difference between a succession solution and a succession arrangement?

The solution answers who takes over: family, management or an external buyer. The arrangement makes sure that solution is implemented and secured legally, organisationally and fiscally.

Does an emergency plan belong in a succession arrangement?

Yes. An arrangement that only covers the planned exit leaves the biggest risk open — the sudden loss of the owner. Rules on representation and an emergency plan close that gap.

Why does the articles of association need amending?

Because new shareholders change the ownership structure. The articles have to reflect that and set out the rules on joining and leaving, so the arrangement holds together rather than conflicting with the transfer agreement.

Who should draft the documents?

The contractual and tax drafting belongs with a notary, a lawyer and a tax adviser. An independent M&A adviser organises the building blocks, the valuation and the process around them.

Does the tax treatment differ between a sale, a gift and an inheritance?

Yes, considerably — which is exactly why it has to be considered early. The differences can only be shaped with lead time, not retrospectively.

Does a share sale or gift have to be notarised?

For a GmbH, yes: in Germany the assignment of shares requires a notarially concluded contract (section 15(3) GmbHG), in Austria a notarial deed (section 76(2) GmbHG). The articles may add further conditions such as the company's approval.

What claims do relatives have if only one person takes over the company?

Under German law, descendants, parents and spouses excluded from the succession are entitled to the compulsory portion, half the value of the statutory share of the estate (section 2303 BGB). Gifts during life can trigger a supplementary compulsory-portion claim that tapers off over ten years (section 2325(3) BGB). Individual structuring belongs with a notary and lawyer.

What tax relief exists for a gratuitous transfer in Germany?

A relief of 85 % on qualifying business assets, 100 % on election, each with payroll and holding periods (section 13a ErbStG, acquisition up to EUR 26 million). Whether and to what extent it applies depends on the structure and the conditions in the individual case; the tax adviser checks this before the transfer.