Failure to Achieve the Business Plan After M&A, Recovery of Invested Capital and Impairment Risk
First written in FY2024-Q1. 2 of 3 entries say "Restated". Latest entry: FY2026-H1.
The whole theme swung hardest in 2024: 36 of 89 companies on the "Worse" side.
- FY2026-H1RestatedAnnual report
「During the interim consolidated accounting period, there were no new major risks or significant changes to the business risks described in the annual securities report that management recognized as potentially having a material effect on the financial position, operating results, or cash flows of the consolidated companies, among the matters concerning business conditions and financial matters described in this Semiannual Report.」
The company states that there have been no material changes in the major risks, including failure to achieve business plans after M&A, failure to recover invested capital and impairment risks. - FY2024-Q2RestatedAnnual report
「However, if the market environment changes significantly after an M&A transaction or the business fails to progress as planned, the Group’s business performance may be materially affected because it may be unable to recover the invested capital or may incur impairment losses on goodwill or intangible assets.」
The company reiterates the risks relating to the recovery of invested capital after M&A and the impairment of goodwill and intangible assets, which were added in the previous fiscal year. Verification by external experts and by the Board of Directors, including outside directors, continues as a countermeasure. - FY2024-Q1First statedAnnual report
「Our Group may use M&A when acquiring technologies, talent and other business foundations from external sources is considered effective in accelerating business growth. In conducting M&A, we proceed after thoroughly examining market trends, competitive advantages, financial condition, business plans and other factors. However, if the market environment changes significantly after an M&A transaction or the business fails to progress as planned, the Group’s business performance may be materially affected because it may be unable to recover the invested capital or may incur impairment losses on goodwill or intangible assets. To address these risks, when considering each M&A transaction, we verify the feasibility of the business plan and the appropriateness of the transaction value together with external experts. We then seek to minimize the risks by examining and deciding on the transaction from various perspectives at meetings of the Board of Directors attended by outside directors.」
With the expanded use of M&A, the company has, for the first time, identified changes in the post-M&A market environment, failure to achieve business plans, failure to recover invested capital, and impairment of goodwill and intangible assets as standalone risks. Countermeasures include having external experts verify the business plan and transaction value and making decisions through the Board of Directors, including outside directors.