M&A-Related Risks of Goodwill Impairment and Earnings Shortfalls
First written in FY2018-Q3. 2 of 5 entries say "Worsened", first in FY2023-Q3. Latest entry: FY2024-Q3.
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
- FY2024-Q3RestatedAnnual report
「With respect to segment profit, although amortization of goodwill recognized on the acquisition of Okada Midwest, Inc. and other expenses were incurred, the significant effects of higher revenue in North America and the normalization of ocean freight rates enabled the Company to secure solid profit growth to ¥855.0 million, up 195.1% year on year.」
Although amortization of goodwill was incurred in connection with the acquisition of Okada Midwest, no goodwill impairment or failure to meet earnings targets was reported. - FY2024-Q1RestatedAnnual report
「With respect to segment profit, despite incurring amortization of goodwill recognized on the acquisition of Okada Midwest, Inc. and other expenses, the Company secured higher profit of ¥173.0 million, up 24.6% year on year.」
Although amortization of goodwill was incurred in connection with the acquisition of Okada Midwest, no goodwill impairment or failure to meet earnings targets was reported. - FY2023WorsenedAnnual report
「Advisory fees and other expenses: ¥130.540 million」
The Company recognized ¥130.540 million in advisory fees and other expenses related to the acquisition of the North American business. Goodwill of ¥195.690 million was accounted for provisionally because the purchase price allocation had not been completed, giving concrete, quantified form to the uncertainty associated with the M&A. - FY2023-Q3WorsenedAnnual report
「Details and amounts of major acquisition-related expenses: Not determined as of the present date. Amount of goodwill recognized, reason for recognition, amortization method and amortization period: Not determined as of the present date.」
Following a new business acquisition, the acquisition-related expenses and the amount and amortization terms of goodwill remain undetermined, making the areas of uncertainty related to the M&A more specific. - FY2018-Q3First statedAnnual report
「The Group conducts M&A to acquire management resources for business expansion. Before carrying out M&A, it carefully considers whether stable earnings can be secured over the long term. However, if progress under a business plan falls substantially behind expectations or earnings cannot be secured as planned, the Group's operating performance and financial condition may be affected, including through the recognition of impairment losses on goodwill.」
The Company has identified as a new risk the possibility that delays in the progress of plans for businesses acquired through M&A or failure to meet earnings targets could result in goodwill impairment and affect operating performance and financial condition.