City opted to cash in ahead of the Premier League trip to Manchester United despite injuries to forwards Teemu Pukki and Josip Drmic leaving youngster Adam Idah as the only available first team striking option.
Srbeny never managed to establish himself in Farke's XI during a two year spell at Carrow Road, and a return to sender was best for all parties.
"Yes, in an ideal world you would probably have waited until after this Manchester United game but during the January transfer window they are other factors in play, like Dennis' wishes or the other club involved," said the City chief, speaking at Colney on Friday.
"To be honest it wasn't easy to give Dennis permission to go because we liked him a lot, he always worked his socks off for this for this club. The main reason we allowed it is because he wanted to leave and he made it makes it pretty clear but in a respectful way.
"He was always proud to wear the yellow shirt but it was the opportunity to be the main striker at Bundesliga level. To play many minutes. He is the record signing for Paderborn. If we're really honest, in the last two years, he was not so much involved, due to Teemu Pukki and also Jordan Rhodes and then we brought in Josip Drmic. Secondly, from the business side it was a decent deal for us for a player who didn't have much game time.
"Thirdly, Adam has done well in the recent weeks and perhaps this opens up the opportunity for him. We always want to back our young players. I would have preferred this deal next week but when a player wants to leave it is hard to say to them we need you for this one game."