The €100 billion problem nobody wants to see

The European Commission counts ~450,000 SME transfers per year, of which ~150,000 fail or stall. That is ~600,000 jobs at risk and an estimated €100 billion in destroyed economic value annually.

It plays out one owner and one company at a time. An installation business in Tilburg, an accountancy firm in Hasselt, a family-run factory in Eindhoven. Each too small to make headlines individually, but together the skeleton of the European economy. The cause is not a lack of capital, buyers, or demand.

The numbers

Europe has 26.1 million SMEs. They generate two thirds of private employment and over half of the value added in the European economy. A meaningful share are owned by people 55 and over. The silver tsunami, the boomer generation now reaching retirement, has been signalled for fifteen years. The first real waves are landing now.

The big deals survive. A €200M-revenue business with a Big Four advisor finds its way. The problem sits where the volume is: the lower mid-market, transactions between €1M and €50M. That is where most family businesses live, where most capital is locked, and where the M&A infrastructure is the weakest. The cumulative undervaluation by sector is publicly visible via the Upswitch Index, sub-segment bands showing where the value gap concentrates most.

Two broken options

Option A. Traditional brokers. Thorough, market-savvy, capable. But charge €15k to €100k in fixed fees plus success fees, and rarely engage below a certain deal size. For a €1.5M EBITDA business this is uneconomic.

Option B. Fragmented marketplaces. Cheap, fast, low-friction on the surface. But no quality control, no methodology, no defensibility. Result: 73% of businesses on these marketplaces are mispriced, usually too high. Owners linger for months, buyers walk the moment they see the numbers.

No middle path exists. No infrastructure. No standard. No shared truth.

Why this is not a price problem

The instinct is to dismiss this as a price problem: brokers too dear, marketplaces too cheap, surely something in the middle. That is a symptom, not a diagnosis.

The real issue is that there is no shared, defensible valuation basis between seller, buyer, advisor, and bank. Each is computing on different numbers, different multiples, different normalisations, different risk assumptions. Negotiations don’t fail on price. They fail on what the price actually is.

“Liquidity follows truth, not the other way around.”

The missing infrastructure layer

Every market that became liquid did so behind an infrastructure layer first. Bloomberg for public equities. MLS and Zillow for residential real estate. Carfax and Kelley Blue Book for used cars. Crunchbase and PitchBook for venture deals. None of them buy or sell the assets. They make the market visible, comparable, transparent. The brokers and marketplaces above became more efficient, not obsolete.

For European lower mid-market SME M&A, that layer doesn’t exist. Without it, every transaction stays a craft project: slower, costlier, riskier, with a punishing failure rate.

What we are building

Upswitch builds that infrastructure layer for the Benelux first, then Europe. We start where the problem is sharpest: financial normalization and defensible valuations for SMEs, distributed through accountants and M&A advisors. On top of that we add transaction matching that solves the second half of the cycle. Not as a marketplace but as a structured demand engine.

In the next article we describe the five primitives that make this layer work: financial normalization, algorithmic transparency, the trusted advisor network, shared reality, and buyer matching at scale. Each a software problem. Each solvable. Together: the basis for halting the European SME succession crisis.