Unveiling the Winning Strategy: CEO Credits DX/AI Technologies for M&A Research Institute's Impressive Growth (Part 2)

Every battle is won or lost before it is ever fought.

Q: In the previous section, you talked about "reverse thinking". Was the M&A Research Institute also born from reverse thinking?

A: Yes, it was. Everything is calculated backward from the ultimate goal.

When I started M&A Research Institute Inc., I set goals for the business, including the timing of the IPO, and worked backward from there.
In the days of the Internet bubble, I think there was room to scale even for Internet-based services, but in Japan today, the number of scalable business domains is decreasing rapidly. Furthermore, IT services are at risk of being quickly imitated, which makes them difficult to sustain.

The focus of the M&A Research Institute is driven by the bottom-up approach based on my personal experience with M&A and the market challenges I have encountered. However, I decided to pursue M&A partly because I have the confidence that my goals can be achieved with a macro-level analysis of the market which involves the identification of potential entry barriers, market size, and expected market share to acquire. Particularly, I believe that understanding the principle of capitalism, i.e., the size of the market determines the size of the company, is the key to starting a business, especially for young entrepreneurs.

Q: What else should we be aware of when selecting a market?

A: When selecting a market, it is important to conduct thorough industry research. This entails understanding who your competitors are and their strategies and identifying the winning strategy.

For an investor, a venture may be considered successful if "one out of several investees achieves substantial success," but as an entrepreneur, you cannot afford to fail as it might be a once-in-a-lifetime opportunity, therefore you must have a winning strategy from the outset, otherwise you cannot win.

In my case, once I have selected a promising market, I repeat thorough research and interviews with acquaintances in my network, sometimes using business matching services. I believe this level of thoroughness distinguishes me from other entrepreneurs seeking to penetrate the same market. I managed to gain a big-picture understanding of the market landscape and identify winning strategies through repeated comprehensive market research.

Every battle is won or lost before it is ever fought, and therefore it is advisable to prepare in advance to avoid costly mistakes. If you are unable to identify a winning strategy, it may be best not to proceed. That's how important preparation is, in my opinion.

Embracing “DX Technologies” Guarantees Profit Growth

Q: You have utilized DX and AI technology as a competitive advantage in the M&A Research Institute. Can you please explain how you developed this edge?
A: I believe that the fundamental meaning of AI is to compensate for human weaknesses. For example, AI can be utilized to automate tedious tasks such as appointment scheduling and help address human limitations such as speed and oversights if done manually.

In the same way, by leveraging AI technology, we can enhance the accuracy and efficiency of the proposal-making process. In contrast to the traditional sales proposal-making process which relies on individual salesperson abilities to assess the likelihood of a successful M&A deal and observations of “the counterparty’s reactions,” we are using AI to do this with a list of the counterparty’s responses and have AI analyze those input automatically assess the potential of a client.

Q: So, the accuracy of your proposals will also improve along with that.

A: That is correct.

For example, when company A is considering selling its business sale, it will present proposals to multiple potential buyers. Instead of an inefficient manual search for past proposal records and transaction results, AI now can learn to identify patterns and undertake this process with greater accuracy. The use of AI has improved the accuracy and the speediness of the proposal-making process for our company.

Generally speaking, we excel in three areas: First, we're the only company listed on the Tokyo Stock Exchange with a highly transparent success fee structure. Second, we typically close M&A deals in just 6.6 months on average, which is a relatively shorter time frame compared to that of most other companies which can take up to 9-12 months (based on our performance results for the fiscal year that ended in September 2022). And third, we're very skilled at finding excellent matches.

With all three of these strengths combined, there is no reason not to choose us, and we have experienced rapid growth as a result.

Additionally, a survey of mid-career switchers found that our employees work 27% fewer hours than our peer companies. We also have distinct strengths and advantages when it comes to attracting top-tier candidates. Our M&A advisors earn an average of over 28 million yen annually after their second year with us. Despite these generous salaries, we still maintain one of the highest profit margins in the industry.

From day one of our founding, we have been fully committed to navigating digital transformation (DX), and this has allowed us to generate actual profits. We will continue to prove that commitment to DX is the pathway to substantial business growth.

Source (Japanese only): Link