German Mittelstand (SMEs)

In German usage, Mittelstand is not purely a size category but describes the unity of ownership and management: the company is run by the people who own it. Quantitatively, Germany mostly uses the SME definition of the Institute for SME Research (IfM Bonn): independent companies with fewer than 500 employees and up to 50 million euros in annual turnover.

Within that group, companies with up to 9 employees and up to 2 million euros in revenue are micro enterprises, those with up to 49 employees and up to 10 million euros in revenue are small, and those with up to 499 employees and up to 50 million euros in revenue are medium-sized, excluding the smaller categories in each case. The separate EU definition draws the line for medium-sized companies at 249 employees, which is what matters for subsidies and state-aid rules.

For transaction practice the typical features of these companies shape the entire process: strong dependence on the owner, often no second management tier, accounting oriented to tax rather than management purposes, private and business assets in one balance sheet, and the high importance of personal customer and supplier relationships. The usual preparation tasks follow directly from these. For succession the Mittelstand is the core target segment, because a particularly large number of owners here are looking for a successor for age-related reasons.

For transactions this creates a particular starting position: the numbers are often shaped by commercial and tax accounting, there is usually no consolidated statement, and reporting is geared to the bank and the tax office.