At the northern Hessian privately owned heating systems manufacturer Viessmann, employees are traditionally referred to as „family members“. Accordingly, the decision to transfer a large portion of them with the sale of the Climate Solutions division, which also includes the government-supported heat pump business, was particularly difficult. „The toughest moment for me was the morning after the signing“, recalls CEO Max Viessmann in our „Corporate Finance Award - Nachgefragt“ podcast. That's when all the emotions came flooding in. „As an entrepreneur, you're used to the idea that a decision made today can be refined tomorrow. You learn from it. But here, it was clear: This is irreversible.“ Therefore, it was all the more important to have a clear set of bearings when the first options were examined more closely at the beginning of 2023.

For outsiders, however, the deal came as a surprise. Viessmann's climate division seemed to be on the verge of a golden future. Heat pumps, in which Viessmann held a leading position, have received government support. In March 2023, a draft of the Buildings Energy Act was leaked by Bild newspaper. According to this, the federal government planned that new heating systems must be operated with at least 65% renewable energy from January 1, 2024. The so-called Heating Act would amount to a quasi-ban on oil and gas heating systems.

At this point, Viessmann had been considering for six months how to best shape the future of the climate division. „We had been on many tracks for a very, very long time“, emphasizes Viessmann's investment manager Christopher Höfer. However, understandably, this was done without any public announcements. In the spring of 2023, the company was viewed a great role model and, to some extent, a beneficiary of the heating transformation envisaged by the Green Party Minister for Economic Affairs and Climate Action.

The news of the sale of the division to Carrier Global therefore came as a surprise to the public. The US corporation, in which Viessmann has also substantially invested, sought access to the emerging German heat pump market, and to the technology and know-how of the long established conglomerate. The deal was done with because it has "always been consistent in its approach“, says Viessmann. All its statements and commitments were always clear, and done in a fair manner. „There was never the kind of opportunistic retrospective reopening of issues after negotiations, to gain an advantage,“ he adds.

From the perspective of financial market participants, the timing of the transaction was perfect. The dynasty from northern Hesse probably could not have done better at any other time. Höfer also admits that the timing was certainly good from a financial strategic perspective. Nonetheless, that was almost secondary „because social responsibility is timeless at this point.“ One could also say that Viessmann was lucky with its timing. For the transaction, Viessmann receives this year's Corporate Finance Award from Börsen-Zeitung in the M&A category.

The business with environmentally friendly heat pumps could soon boom even more because of German government subsidies, and the radical switch from fossil fuel heating to heat pumps. This provides planning security for Carrier, but also for the Asian low-cost competition. Scale will become increasingly important in the future. In any case, Viessmann would have had to reposition itself. Options that were considered in addition to the Carrier deal included making acquisitions itself, or an IPO of the division.

With 12 billion euros, 80% of which is in cash, the US climate technology specialist Carrier Global paid 13 times operating profits for Viessmann Climate Solutions. For 106 years of corporate history, the 11,000 employees received a 106 million euro bonus. However, the Viessmann family could have chosen financially more attractive options that would have been less pleasant for the employees — including choosing another strategic partner, or even private equity. „Especially the latter option was strongly deprioritised“, Max Viessmann remembers. With the Carrier deal, the continued shareholding and possibility of helping set the tone going forward was a plus. Redundancies are ruled out for three years, important production and development locations are secured for five years, and Allendorf an der Eder is set as the headquarters for ten years.

The deal is not viewed as negative for Germany as a business location. Minister of Economic Affairs and Climte Action Robert Habeck raised no objections, and the competition watchdogs at the EU Commission also gave the green light. The profits of Viessmann Climate Solutions will flow to the US in the future, but they also do so with many Dax companies. Moreover, jobs will largely remain here. Within the Carrier Group, whose market value has doubled to 45 billion dollars since 2020, Viessmann now comes to the fore globally. And thanks to Carrier's stock market listing, it can invest billions with the backing of the US capital market.

With regard to the multi-billion-dollar proceeds from the sale — in addition to the shareholding in Carrier Global— the Viessmanns will largely re-invest in the other parts of Viessmann Group. Its core unit is the holding company Viessmann Invest, with 30 stakes in future-oriented companies working on sustainable solutions. Recently, the Viessmanns invested alongside private equity firm KKR. The two partners want to buy the listed Hamburg wind farm operator Encavis for a billion-dollar sum, and then delist it from the stock exchange.

In February, the Viessmann Group already expanded its investment team and brought in former CVC manager Stefan Wegener as an operating partner. CEO Max Viessmann, who also sits as a co-owner on the board of Carrier Global, described Wegener as „the perfect addition to our high-calibre team“. With more than 25 years of experience, he is viewed as an expert with global expertise in sustainable value creation. The proceeds from the sale of Viessmann's heating division, which accounted for 85% of sales, are now to be reinvested in a targeted manner, among other things with the aim of building another global champion.

Currently, they are examining a series of new partnerships with other family businesses. „We will focus on all aspects, solutions, and technologies that contribute to CO₂ avoidance, reduction, and storage“, Viessmann announced in January, after the legal close of the sale to Carrier. „There will be a few transactions where I'm already looking forward to the coverage because it will then say „they are not as credible“ in terms of sustainability, says Viessmann. „Taking a short-sighted view, it is often overlooked that a company that has a particularly negative impact on the sustainability scale today can make the greatest positive contribution through positive change. And we are not ideological in this regard, but ensure that companies are measured by their contribution, and not by the status quo.“