Germany’s unloved Mittelstand
Medium-size, family-owned companies may be the mainstay of the German economy, but they have been ignored by equity investors seduced either by smaller, riskier high-growth stocks or restructuring corporate giants. Now Mittelstand companies cannot even rely on their traditional banks for funding. And those that finally accept the need to go public often meet a frosty reception. Nigel Dudley reports
Germany's Mittelstand companies are the backbone of the country, comprising something like 60% to 70% of the economy's gross national product. But a large number of them are starting to feel persecuted by their government, their bankers and their potential investors, as they are squeezed between, on one side dynamic, high-technology businesses and on the other, by large, blue chip companies.
These traditional mainly family-run firms, which thrived in the conservative, protected post-war German market, are finding modern life much harder. They believe that the government, far from safeguarding their interests as it has done in the past, has betrayed them. They accuse ministers of introducing tax reforms, which, they insist, treat them less well than the country's major blue chip corporations. This happens because private family Firms do not get the advantages available to joint stock companies.
And this downturn in their fortunes comes at a time when they are already finding it hard enough to meet the demands of global markets.