Acquired-Company Integration Failure and Goodwill Impairment Risk
First written in FY2016. 3 of 8 entries say "Materialised", first in FY2017-Q3. Latest entry: FY2026.
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
- FY2026MitigatedAnnual report
「To address the risk of impairment losses, the company conducts detailed reviews with third-party organizations to improve the appropriateness of valuations when considering M&A, carefully examines business succession plans after execution, strengthens PMI monitoring, and discusses improvements with management when changes arise in the recoverability of goodwill.」
Following the recognition of goodwill on the acquisition of HR CAREER, the company has specified as risk-mitigation measures the confirmation of valuations by third-party organizations, business succession planning, PMI monitoring and responses to changes in recoverability. - 2026-05-14MitigatedEarnings presentation
「Despite the continued challenging market environment, impairment testing found no need to recognize impairment.」
The company explained that impairment testing of its overseas subsidiaries found no impairment necessary for the current period. - FY2025MaterialisedAnnual report
「An impairment loss of ¥473 million was recognized on goodwill relating to a consolidated subsidiary in Australia.」
An impairment loss of ¥473 million was recognized on goodwill relating to Ethos BeathChapman Australia Pty Ltd in Australia, due to lower profitability resulting from changes in customers' transaction structures, the promotion of direct employment and reductions in outsourcing costs. - FY2021ReframedAnnual report
「We believe that, in addition to detailed due diligence, it is extremely important to properly implement the process of integrating management after an M&A transaction, known as post-merger integration (PMI), and are developing the relevant PMI plan promptly with a long-term perspective.」
The management approach to the existing risks of unsuccessful integration of acquired businesses and goodwill impairment is described in greater detail, focusing on due diligence and the PMI plan. - FY2018RestatedAnnual report
「Acquisitions of companies or businesses are one of the Group's key management strategies. This may include the possibility of failing to integrate acquired companies or businesses effectively and efficiently into our operations, failing to maintain relationships with important customers, suppliers and other stakeholders of acquired companies, or impairment of the value of acquired assets resulting in losses.」
As M&A continues to expand, the Group continues to disclose the risks of unsuccessful integration of acquired businesses, failure to maintain relationships, and impairment of acquired assets and goodwill. No new impairment loss was recognized during the fiscal year. - FY2017MaterialisedAnnual report
「Because the earnings initially expected from goodwill recognized on the acquisition of consolidated subsidiary Scientec Consulting Pte. Ltd. could no longer be expected, its carrying amount was reduced to its recoverable amount, and the reduction, amounting to ¥136 million, was recognized as an impairment loss under extraordinary losses.」
Due to lower earnings expectations for the acquired business, a ¥136 million impairment loss was recognized on goodwill. An ¥18 million impairment loss was also recognized on software for the 3D business. - FY2017-Q3MaterialisedAnnual report
「Because the earnings initially expected from goodwill recognized on the acquisition of consolidated subsidiary Scientec Consulting Pte. Ltd. could no longer be expected, its carrying amount was reduced to its recoverable amount, and the reduction was recognized as an impairment loss under extraordinary losses.」
Earnings from the acquired business fell below initial expectations, and an impairment loss of ¥135 million was recognized on goodwill relating to Scientec Consulting Pte. Ltd. in Singapore. This is described as an actual instance of the risk of impairment of acquired assets. - FY2016First statedAnnual report
「This may include the possibility of failing to integrate acquired companies or businesses effectively and efficiently into our operations, failing to maintain relationships with important customers, suppliers and other stakeholders of acquired companies, or impairment of the value of acquired assets resulting in losses.」
Risks relating to the integration of acquired companies and businesses, maintenance of relationships, the value of acquired assets and recovery of goodwill arising from the Group's core strategy of corporate and business acquisitions.