Inside M&A at... Viessmann Investment

Climate Tech and a family-run business that doesn't integrate - a formula for M&A success? Timo Tauber, Managing Director at Viessmann Investment GmbH, gives us an inside look into their M&A department.
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Who are you and what’s your current job title?

My name is Timo Tauber. I am 42 years old and I’m currently a managing director for Viessmann Investment.

Tell us a bit about the team structure and competencies within the M&A / Corporate Development team?

We are not a normal or usual corporate m and a, party in the market. We are a separate business area within a corporate structure, so within the Viessmann family holding and we manage our shareholdings in a separate entity on a standalone basis.

We do not integrate. That’s why also the setup in a team is quite different from a usual corporate M&A team. So we have people working on the deal side, on the origination and execution of deals. And then we have a so-called operations value creation team, which is working with the portfolio companies on a daily basis.

And on the side, we have a legal team working with us on M&A transactions, but also on steering the portfolio. So we have basically three pillars in the team.

How does the company approach M&A activity, and what is the criteria for evaluating potential acquisition targets?

We have a very clearly defined M&A agenda, meaning we are organized in so-called six verticals, six investment platforms we invest alongside. So we have clearly done our homework prior to setting up Viessmann Investment. By establishing investment platforms where we are clearly saying that’s the areas we want to invest in.

So they’re either following megatrends or they’re closing offering gaps in the corporate structure. Alongside these six investment platforms, we invest, meaning typically we are talking to family entrepreneurs, so we take part in competitive auction processes.

So we have very, very often proprietary deal situations where we are one-on-one with the founder or the owner of a business, which is typically a family business. For us, it’s very easy to talk from one family entrepreneur to another family entrepreneur on a one-on-one basis in order to execute deals.

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Viessmann is a world leader in climate tech solutions. @Viessmann

How does the company integrate and manage newly acquired companies and assets?

We do not integrate, meaning we keep the companies in their current form. So the brand stays the same, and management stays on. I always say to the founders “day one, after the transaction, seems like the day before”, because we do not intervene. So it’s not like we are enforcing ourselves on the portfolio companies.

It’s more like, let’s go into a dialogue. What are the three to four key focus areas? Let’s focus on those and if we can bring in expertise from the Viessmann investment setup or synergies from the Viessmann group side, that’s great. If we do not find them, we try to develop the companies on a standalone basis.

We do have a very extensive value creation team consisting of functional specialists but also generalists who work with the portfolio companies, but always on an as-needed basis and in mutual consent.

I always say to the founders “day one, after the transaction, seems like the day before”, because we do not intervene. So it’s not like we are enforcing ourselves on the portfolio companies.

Can you tell us about a recent M&A transaction that the company has completed?

A recent transaction was with a company in a district heating sector, meaning the distribution of heating and cooling into buildings. It is an Austrian company based near Salzburg. The two founders started the business 15 years ago. They grew organically quite a lot.

Why did they talk to us at this time of the development of the company? In essence, they signed up as a purely Austrian company, but now they’ve ventured into other European countries. They saw that the markets, especially due to the Russian war in Ukraine, were picking up. It’s an accelerated speed of development. They see that Viessmann is a consolidator in that space. We bought three or four companies in that space before.

So they clearly made the calculation that Viessmann is a family business and a good move for them. And together, we have more possibilities than alone.

So that’s a typical kind of deal and founder for us. There are some situations where they believe a big brother can help. There’s a lot of flexibility on the yield side, so we didn’t buy them a hundred percent. They can still retain a majority position and sell it later on, with a probably increased value.

Um, and certainly they can also hand it over to the children if they want to. So it’s quite an attractive offering and they have the backing of an international company, which made it the perfect fit for both sides.

Which part of the M&A process excites you the most and why?

To me, it’s always to get to know the founder for the first time.

When we approach businesses, we have a picture in our mind of how the company is performing.

You hear a lot in the market about the company, its market positioning, its products and solutions, technology, sometimes even about the founder, what his personality is, and what his characteristics are. And then meeting this person or meeting this company for the first time is always a very nice reality check to see whether your assumptions are really true.

And very often it’s a very nice first conversation. They start off distant, because they’re selling a lifetime full of work, their baby – and they want to make sure we are the right partner for this situation. It’s a big step, and they have big questions. Who is the partner on the other side? What are their values? Is there mutual trust? To me, that’s the most exciting part – get to know them, and convince them that we’re the right partner.

Working at Viessmann is great because…

We have great deal flow. We have a unique company culture, and we can actually see the development of the portfolio companies over a very long time because we are not exit driven. So we really have a long term vision and we are in a very exciting space, I believe, which is the climate tech space. So we really operate in an exciting space, with a long-term, sustainable view. That’s a great position to be in.

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