The surprising company sale of the heating manufacturer Viessmann has startled many – not only employees and business partners such as craftsmen and heating customers. There was talk of a sell-out of German medium-sized companies to large international corporations, such as “Carrier Global” in this case. But these fears seem exaggerated when you consider that Viessmann would have had completely different options as a family business.
Large medium-sized companies like Viessmann usually don’t have to sell
It’s true: as many advantages as the German economic model with a strong middle class has, there are also disadvantages. One of them is often the lack of proximity to the capital market, the lack of opportunities to quickly borrow money for growth and investments – such as issuing new shares or bonds.
If the bank or savings bank then shows reluctance and has concerns about continuing to finance a family business with additional loans, this can mean the final rejection of all expansion plans. Viessmann, a traditional Hessian company worth billions, has also complained about these circumstances.
Viessmann’s competitor Vaillant can do it alone with heat pumps
On the other hand, Viessmann’s competitor Vaillant in neighboring North Rhine-Westphalia, whose company is a good 40 years older. As a family business, Vaillant claims that it can finance its own growth in heat pumps and does not have to sell itself to a US company.
Unlike Viessmann, however, Vaillant has apparently found a way to provide itself with sufficient money and heat pumps in order to be able to cope with the impending onslaught in Germany, which the new legal regulations of the GEG suggest.
Large family companies also have many opportunities in Germany
Family groups of this size – with a turnover of three to four billion euros – can, for example, be classified by agencies in order to get a credit rating for corresponding medium-sized company bonds. You can transform yourself into a stock corporation – even without going public in order to get new shareholders on board, or get financial investors involved. And then there is the private equity scene with many contacts between entrepreneurs and other entrepreneurs who are always on the lookout for suitable investments and participations.
The “offer you can’t refuse”?
In addition, the heat pumps that are in demand could also be produced jointly, together with another company with which a joint venture might be formed – as in China. Viessmann has previously purchased and installed many other heating components, including complete control units, in China or the USA.
At first glance, there is no comprehensible reason why Viessmann is giving away most of its family business, apart from the one very obvious one: “Carrier Global” from the USA made the family an offer that they could not refuse – with a very high purchase price. Against the background of the imminent risks of the heat transition, state regulation and new competitors, this could have been lucrative.
Others could close the gap that Viessmann is now leaving behind
It remains to be seen whether the family company Viessmann can be similarly successful with its German concept in American hands, even without a family. Working as a well-paid manager in the old family business is not the same as owning the business and being able to make all the decisions yourself and later being responsible for them.
This is typically an advantage of mid-market management over that of corporations like Carrier Global. The other German competitors may now be able to exploit this strength against the local market leader.