Post-M&A Business Development and Investment Recovery Risks
First written in FY2019. 3 of 6 entries say "Materialised", first in FY2020. Latest entry: FY2026-H1.
Recomm moved to the "Worse" side of this theme in 2020, 1 year before the typical company in this theme (2021).
The whole theme swung hardest in 2020: 28 of 83 companies on the "Worse" side.
27 other companies' latest entry also says "Materialised".
- FY2026-H1MaterialisedAnnual report
「As a result of substantial growth in the Overseas Solutions Business, revenue increased 5.2% year on year to ¥6,964 million. Operating profit fell 86.3% year on year to ¥26 million, mainly because temporary M&A-related costs were recognized.」
Additional temporary costs were actually incurred after the M&A, resulting in an 86.3% year-on-year decline in consolidated operating profit. - FY2023RestatedAnnual report
「However, if problems unknown to the Group emerge after an M&A transaction or alliance, or if the expected results are not achieved, the Group may need to recognize an impairment loss on goodwill, which could adversely affect its performance.」
We have continued to disclose the risks of problems emerging after M&A or alliances, failure to achieve expected results and goodwill impairment. - FY2022RestatedAnnual report
「In conducting M&A, we proceed after fully considering market trends, customer needs, the target company's performance and financial condition, technological advantages, competitiveness, business synergies and M&A-related risk analyses. However, if problems unknown to the Group emerge after an M&A transaction or alliance, or if the expected results are not achieved, the Group may need to recognize an impairment loss on goodwill, which could adversely affect its performance.」
We have continued to disclose measures involving advance analysis and evaluation of M&A, as well as the risks of problems emerging after an acquisition, failure to achieve expected results and goodwill impairment. - FY2021MaterialisedAnnual report
「The impairment loss in the Overseas Solutions Business relates to PT.FT Group Indonesia. Operating activity declined substantially and projects involving construction-based solutions fell sharply because of overseas lockdowns and restrictions on going out associated with the spread of COVID-19. The impairment loss was recognized because, with the end of the pandemic uncertain, a rapid improvement in the business environment could not be expected.」
In the overseas business after the M&A, PT.FT Group Indonesia recognized a goodwill impairment loss of ¥54 million following a decline in operating activity and construction projects due to COVID-19. Including the impairment related to the transfer of the housing equipment sales business, total goodwill impairment losses for the fiscal year were ¥262 million. - FY2020MaterialisedAnnual report
「When we acquired the business of FTGroup（PHILIPPINES）,Inc., we recognized goodwill based on expectations of excess earnings. Following a review of future plans, earnings were no longer expected, so we recognized an impairment loss on the goodwill as an extraordinary loss in the current fiscal year.」
For the FT Group Philippines business, earnings were no longer expected following a post-acquisition review of the plan, and a goodwill impairment loss of ¥104 million was recognized. - FY2019First statedAnnual report
「Despite our prior research and consideration, significant changes in market or competitive conditions after an acquisition, failure of an acquired business to develop as planned, inability to recover invested funds, or additional costs could materially affect the Group's performance, growth and business development.」
While using M&A as a means of growth, we explicitly identified post-acquisition changes in market and competitive conditions, failure to meet plans, inability to recover investments and additional costs as separate risks.