Serial M&A Strategies for Mature Industries -- A Guide to Roll-up Industrial Restructuring
Preface
This book is perhaps the world's first guide to serial M&A strategies for mature industries. It is written for executives and their supporters who have great ambitions to become industry leaders by amicably integrating one peer after another.
In particular, as of July 2022, when this is being written, there are no similar books that focus on the "roll-up" method.
In fact, the concept of roll-up is shared worldwide. When a senior executive of a major beer company came to Japan from northern Europe and I began to explain the industrial restructuring I had initiated, he pointed out to me before I could say anything, "That's a roll-up, isn't it? A well-known Harvard Business School professor's article on M&A also describes rollups in detail.
By the way, there are two strange arguments in industry regarding innovation.
One is a fascination with GAFAM-type IT companies.
But the largest industrial sector in any country is not the Internet or AI, but mature industry. And it is neither startups nor large companies, but ordinary small and medium-sized enterprises that account for the majority of the number of companies and employees. The situation is the same in Asia and Europe.
It is fine to chase after the phantom of a rare unicorn, but if we can bring a large chunk of mature industry in front of us into line with the times, we can call that innovation as well.
Second, there are many critics. If they stay where the bullets don't fly and only say things without acting on their own, they are "udon shop kettles" (hot water only).
This was more than 20 years ago. Small businesses in mature industries are already not in tune with the times. They were good in the past, but they are still rambling on as an extension of the past. Then I thought, "Why not do it rationally, following a theory? That theory is roll-up industrial restructuring. We actually put it into action, executing a total of 18 roll-up M&As over 16 years, and were able to demonstrate the effectiveness of the theory.
We condensed and abstracted the know-how so that it could be applied to a wide range of industries, and universalized and generalized it into this book. We have fallen into many pitfalls here and there and suffered many painful experiences, so we have included a wealth of concrete precautions to avoid them.
Based on the recognition that industrial restructuring is not necessarily undertaken only by existing players in the industry, we have structured the book in such a way that it is practical enough for those who are entering the industry from other industries. Mature industries, while already experiencing negative growth, have the advantage of an established customer base and daily cash flow.
When a medium-sized or large company from a different industry enters as a new growth opportunity, a mature industry has the advantage over acquiring an emerging technology startup because of its employees, familiarity with everyday terminology and dead technologies, and above all, its ease of understanding for the management itself. The book also includes the story of how an M&A of an industrial restructuring company, detailed in this book, enabled a modest local company to make a full-scale entry into the Tokyo market and to achieve the status of being listed on the Tokyo Stock Exchange prime market in real life.
Although this book is classified as a book on M&A, it is written from the perspective of how to make employees and other stakeholders happy, rather than from the technical aspects of M&A. A deal can be completed with money and a stamp, but if the employees and business partners are not happy, the deal is nothing more than a shell of a shell.
About the book title
The term "M&A strategy" is not a good way to use the word "M&A strategy," because it means "an overall plan for a single tool. Nevertheless, there is a reason why we chose it as the title of the book.
In the field of M&A, there are many books published by lawyers, certified public accountants, and other nationally qualified specialists that provide detailed and rigorous explanations from their own perspectives. On the other hand, there are very few books that deal with M&A from the perspective of business strategy, which answer the big-picture question that ordinary managers of business companies have: "What strategy is appropriate to achieve the company's business objectives?
Therefore, by naming the book "M&A Strategy," we emphasize the importance of positioning M&A as an integral part of the company's overall management strategy when planning M&A. Financial factors are of course important in M&A, but if a strategic perspective is lacking above all, no matter how rigorous the asset appraisal is, it will end up being It will end up being an expensive purchase.
Overall structure of this book
The first step is to start with the founding principles in mind. This is also a wake-up call to the recent trend of mass-produced M&A without a philosophy.
In order to realize this philosophy, we integrate the positioning of "what type of business to target in what industry in a wide world," and the resource discussion of "how to arrange and use various management resources" into a single roll-up strategy, which is systematically tailored to the needs of the company. The first chapter uses a variety of case studies. Chapter 1 summarizes the essentials of serial M&A using various case studies.
The planning phase of the M&A process is covered in Chapter 2, and the execution phase is explained in detail in Chapter 3. Instead, the main feature of this book is that it provides a broad and deep explanation of the work items that only the buyer and seller's management can do, in line with each stage of the practical work on the spot.
In Chapter 4, the author introduces practical methods that are useful in M&A transactions mainly targeting small- and medium-sized family-run companies, where the target company's management and successors continue to operate after the M&A. The author also explains how to deal with the management and successors of the target company after the M&A.
The author's experience and economic theory are compared, and it is found that roll-up serial M&A has the effect of accelerating the change of industrial structure. Chapter 5 clarifies when and how decisions should be made to maximize the appropriate allocation of management resources and the long-term benefits to stakeholders, including employees.
A key feature of this book is the large number of figures and tables throughout the volume. All of the more than 100 figures and tables, including several first published in journal articles written by the author, are all original, created by the author himself in a PowerPoint presentation at hand. The content also draws on perspectives not found in previous M&A practice books, such as the relevance of management strategy theory, aspects of the emotions of employees and managers of the acquiring company in M&A, and dealing with press conferences and power harassment.
This book is a collection of illustrations of "practical tips and tricks" related not only to the main topic of serial M&A for industrial restructuring, but also to M&A of small and medium-sized companies in general. Even if you only follow the figures and tables, you will be able to cover most of the important points in this book.
As for the text, we have tried to make it concrete and easy to read, taking as our starting point the facts that have occurred in the field of small and medium-sized business management. At the same time, we have tried to avoid the kind of case studies and documentaries that tend to be written about experiences, or the kind of memoirs that are full of bias.
This book is the outgrowth of the author's desire to restore confidence and pride to small and midsize business owners around the world. Although there is a vast accumulation of theory and research in business administration and economics, small and midsize business owners, who play multiple roles on their own, do not have the time to master the theory. If this book can bridge the gap and increase the number of highly profitable small and medium-sized enterprises equipped with strategic thinking, the world will become a more interesting place.
In particular, China, Taiwan and South Korea are entering a period of maturity after a period of rapid growth. This is a unique opportunity. In the history of the rise and fall of an industry, this phase usually arrives only once per industry. Here, a small or medium-sized company can dominate an industry and reign as the leader of a country. This is the optimal opportunity for the "maturity dream," not the American dream.
This report details concrete measures to maximize profits by starting earlier than anyone else in the industry and making the right decisions and taking the right actions at the right time.
We wish you the best of luck.
Translated with www.DeepL.com/Translator (free version)