M&A, sex and Aikido Part 1

This time, Inamori* shared his story of how he successfully completed the M&A deal with AVX, a US based electric manufacturing company. Superficially, people think that thorough due diligence, hard negotiations, and precise financial analysis are keys to succeed in M&A deals.

Therefore, while referring the M&A tips, I would like to share with you how other two themes, sex and Aikido have been associated with the success of M&A deal.

1　Spotlighting in shadow

First, Inamori came up with the idea of merging AVX, although it was a simple, unflashy, and modest company. Main reasons, which I assume to be the key drivers of M&A of such unflashy company, are as follows: 1 less competitive, 2 potential of profitability by improving the cost structure, 3 accumulating know-how, 4 business diversification, and 5 acquiring human resource; the true leader can be found in unflashy industry as it requires endeavor of piling small and minor efforts.

One of the objectives of sex is above: by spotlighting in shadow, to know well your counterpart, to explore the productivity and diversity, and to develop a good human resource.

In Aikido, we always must be aware of two sides: the light and the shadow. When we lead our counterpart to his shadow, which means the weak point, we can make him unbalanced. This is one of the tips of Aikido and also the philosophical features of this art.

2　With a view of universe 3  Just feel your partner

First, Mr. Lanzone, the CEO of Kyocera US met Chairman Butler of AVX. Butler was unhappy to hear Kyocera’s intention of merging AVX. However, Butler contacted Inamori to have more details and offered an OEM contract with Kyocera. Inamori conducted thorough site inspections of AVX facilities spread in the U.S and Europe. On their way to Heathrow, Inamori told Butler. “Well I think AVX is a wonderful company in terms of its business philosophy and its people. I am happy to proceed with OEM contract however, why don’t you think of unifying ourselves, which measn M&A?”

Butler answered, “This is what I am thinking now.”

Inamori always tells us the company should not grow much larger than CEO’s capability. If this is true, each factory and facility is considered as a part of the CEO’s body. Inamori appreciated the value of each of them, respected the top management and offered to be together. Butler was pleased with Inamori’s attitude and started thinking of getting unified.

In Aikido, all of us are forced to act to be united with our counterpart. We should not exist as if we are totally independent. We should feel our counterpart and take actions which make our counterpart feel comfortable.

For us to do such a very proper action towards unification, we should always keep our heart and mind clear, as if it were a mirroring surface of a quiet pound.

4  Bringing positive energy circulation

Inamori: Well, Mr. Butler, we could take the “vulture like approach”, acquiring AVX with cash at a discounted price. However, I don’t think we should do that. As to the recent relation between the United States and Japan, many Japanese companies have been acquiring prime real estates here in the U.S. American people must have a negative impression towards Japan. I don’t think this would be productive for both countries. Therefore, I would like to take “the mutual share acquisition approach”, for this M&A deal. Such Inamori’s attitudes have created positive energy streams in this M&A and drove this deal to success.

What kind of energy we should bring in making love has always been an important question.

If we have negative intentions in Aikido practice, this should be revealed and protected with your counterpart.

Tips of 5-8 wlll be explained in the next blog.

Further queries or doubts, please email to ytomizuka@abrilsjp.com

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