Shares of M&A Research Institute Holdings have more than tripled since their debut on the Tokyo Stock Exchange in June 2022. The company's shares are up 47% year-to-date.
This surge has brought the fortune of Shunsaku Sagami, who owns 72% of the company's shares, to $950 million as of May 16, according to the Bloomberg Billionaires Index.
According to a report by M&A Research Institute Holdings in April, up to 620,000 profitable businesses in Japan are expected to close due to a lack of successors.
The government estimates that by 2025, there will be 2.5 million companies with owners over 70 years old, and about 50% of them are at risk of closing, causing 6.5 million people to lose their jobs and a loss of 22 trillion yen (nearly 3.8 trillion VND) to Japan's GDP.
AI and data monopoly
Japan’s aging population has long been a headache, but it’s an advantage that Sagami has exploited. Using artificial intelligence (AI), he has helped hundreds of clients preparing for retirement save their businesses from permanent closure.
Shunsaku Sagami founded M&A Research Institute Holdings to help retiring business owners find successors. Photo: SCMP
Unlike other M&A (mergers and acquisitions) advisory firms, which typically rely on regional banks for referrals and compete with each other for deals, Mr. Sagami’s firm uses a vast database built to do the “matchmaking,” focusing on businesses with revenues of around 500 million yen.
The firm’s advisors then negotiate to close M&A deals in 49 days to six months, powered by AI and the firm’s proprietary data. These deals typically take more than a year from request to completion, the Tokyo-based firm added.
The fee is 5% for transactions of 500 million yen or less and is collected only after the transaction is completed. The company earned an average of 60 million yen per deal in the first quarter of 2023. Other M&A advisory firms charge upfront fees that can run into tens of millions of yen even if no deal is reached, the company said.
Since its inception, M&A Research Institute Holding has grown steadily to over 160 employees, including approximately 115 advisors, and approximately 500 deals in progress.
The company also closed 62 deals in the six months to March 2023, up from 26 in the same period in 2022. Revenue also more than doubled to 3.9 billion yen, compared with 376 million yen in the year ended September 2020.
Inspiration from family
A graduate of biology and agriculture at Kobe University, he worked as a designer, software developer and marketer before becoming the owner of an e-commerce company and a tutoring company, Sagami said.
In 2016, he founded a fashion business called Alpaca, which he sold to public relations firm Vector a year later, but Sagami found the process lengthy and inefficient.
That's why M&A Research Institute Holdings was born in 2018, with the goal of using artificial intelligence to help older owners of small and medium-sized businesses find takeovers through simple yet effective procedures.
It is estimated that by 2025, Japan will have 2.5 million companies with owners over 70 years old, and about 50% of them are at risk of closing down because there is no one to take over. Photo: Japan Times
The idea for M&A Research Institute Holdings came to Mr. Sagami when he saw his grandfather close his real estate company in his hometown of Osaka at the age of 80 because he couldn't find a successor.
Sagami told Bloomberg in a recent interview that he found inspiration to start the business from his grandfather, who was forced to close his real estate company in the 1980s when he retired because he couldn't find a successor.
“In my grandfather’s office, there was a framed real estate agent’s license hanging on the wall. I felt so sad when it was taken down,” Mr. Sagami shared sadly.
“When I was a boy, I often heard him tell stories about how to become a successful businessman. He told me, ‘If you have a lottery ticket with a 1% chance of winning, even if you fail 99 times, you will win the 100th time. Just try, you will succeed,’” Mr. Sagami recalled .
Nguyen Tuyet (According to Bloomberg, CNBC)
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