How M&A Research Institute is helping Japan's aging entrepreneurs
Enter Shunsaku Sagami, a 32-year-old entrepreneur with a vision and a big plan.
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The backstory: As you may know, Japan holds the title of having the world's second-highest older population, meaning a whole bunch of experienced folks ready to kick back and retire. And some of them own small to mid-sized companies. But finding successors for their businesses is no walk in the park. In fact, about half of those don’t even have a plan for what happens to their business when they step down. So entrepreneurs are scratching their heads, asking, "Where are all the successors?"
Enter Shunsaku Sagami, a 32-year-old entrepreneur with a vision and a big plan. He saw his grandpa's real estate agency close down because he couldn't find someone to take over when he retired at age 80. That sparked something in Sagami’s brain to help him come up with a solution.
More recently: In 2018, he founded M&A Research Institute Holdings and cracked the code with an AI-powered matching system. These guys are like matchmakers but for businesses. The company uses AI to connect potential buyers with businesses whose owners are about to retire but don’t have a successor. The institute has streamlined the process, making all the boring paperwork and administrative stuff a lot simpler. They say they can get deals closed in as little as 49 days, which is lightning-fast compared to traditional acquisitions. The company’s mission? To prevent perfectly profitable businesses from shutting down and save jobs along the way.
The development: Sagami made M&A Research Institute super client-friendly by only charging fees when a deal actually goes through. And the market is loving it. The company even went public in Tokyo last year and pocketed a cool US$7.1 million in net profit from US$15.7 million in revenue for 2022's fourth quarter. Not too shabby, right? After the IPO, the company’s value has shot up sevenfold, and Sagami himself has become a billionaire with a staggering fortune of around US$950 million, according to the Bloomberg Billionaires Index.
The institute has grown big-time, with its sales figures skyrocketing, going from a lousy ¥376 million (US$2.7 million) in September 2020 to a jaw-dropping ¥3.9 billion (US$28 million) in 2022. Now, it’s got a team of over 160 employees and is juggling about 500 deals at the moment. Sagami also noticed that some business owners would ask for advice on what to do with the money after selling their business, so he’s even started branching out into asset management.
“There are a huge number of small companies with aging founders with no obvious successor that are increasingly open to selling their business,” said Tim Morse, the director of Asymmetric Advisors. “Traditionally, selling out hasn’t been seen as a culturally positive thing, but that’s changing.”
“I always listened to my grandfather tell me stories about how to be successful as an entrepreneur when I was a boy,” said Shunsaku Sagami to Bloomberg, who owns 72% of M&A Research Institute. “He told me, ‘Let’s say you have a lottery ticket with a 1% but sure chance of winning. Even if you fail 99 times, you’ll win it in your 100th go. Just do it until you nail it.’”
“I want to aim for higher goals,” said Sagami. “I want our company to grow more, complete more and more deals, and if that leads to a greater market cap, then that’d really mean something.”