We would think that the business succession of SMEs is usually to pass it to his next generation in his family. That is still the majority of the cases but it is not always true. These days, there are more successions to directors or employees who are not from his family or selling to a total third party.
If you would like to leave your business to your heir, you will have to worry about the inheritance tax. You would like to know how to lower the tax.
If you would like to pass it to your employees or directors who have been working in your company, he must know the business and its relations like important suppliers and clients. It will be easier to carry on the day to day operation than heirs who can be new to the business. The typical issue is cash he has. If your company is big enough, the valuation can be easily higher than the amount a normal personal can afford to buy its shares. In typical situation, the person will set up a company and borrow money through the company, with security of the company assets backing the loan. If you have been the guarantor of the company loan, the employee successor has to guarantee the loan to replace you. That can be very difficult for him and you may need to negotiate with banks.
These days, M&A is becoming more common. You will get cash in return and that will probably be the most important advantage. Also, buyers should know that business or they are already in the same business industry. They will benefit from a synergy. There are many private companies that provide M&A consultation and matching service such as Nihon M&A Center or Strike. There is also a public sector service provider such as 事業引継ぎ支援センター. Japanese government is interested in keeping SMEs running and operating.