If you've ever wondered what the world's most difficult cold call might be, Suguru Miyake claims to have the answer.
Forget classic tough nuts like life insurance or a change of gas supplier: there is nothing more daunting, he says, than phoning a grumpy, old Japanese boss out of the blue and convincing him to sell his company.
And yet, according to the president of Japan's largest independent M&A firm, the hit-rate from such calls — made by an elite salesforce — just keeps rising. Japan is on track to end the current financial year in March with a record volume of domestic M&A dealmaking behind it. And as the next starts, there is the prospect that one of the country's great business taboos — the shame of the company sale — could soon evaporate.
Four years ago, Nihon M&A's business as a matchmaker of buyers and sellers in Japan's hinterland of small and medium-sized firms was already humming. The company completed 420 deals in fiscal 2016, having done only 256 two years earlier. That surge, Miyake said at the time, pointed to the enticing opportunities being created by Japan's succession crisis — the vast number of companies where the founder is reaching old age but lacks an heir with either the capacity or will to take over.
Four years later, the situation has shifted significantly and by the end of March, Nihon should having executed almost 800 deals in sectors as diverse as construction, confectionery and wedding planning.
The driving force is yet more demographic pressure: since 2016, the largest ever generation of Japanese (born between 1947-1950), which also produced more company founders than any other, has started getting weary.
Japan has recently recalculated the implications.
Of the 2.45 million companies that will have an owner aged over 70 by 2025, the government estimates about half will have no successor. And these, says Miyake, are the people his salesforce spend their days trying to schmooze into the biggest decision of their lives.
The difficulty in this cold call is multi-layered. Not only are callers battling the predictable (often deeply irascible) resistance to a stranger's intrusion, but the "product" being sold — the whole concept of selling a business — takes a surprising amount of explaining. And worse, says Miyake, the concept itself is almost offensive to that generation.
The sales team are pushing against a psychological revulsion towards the idea of M&A and the feeling that the act of selling your business is to flee, surrender and generally fail. The Nihon M&A pitch, in other words, effectively asks proud old men to consider capitulating to capitulation, while making that sound like a wonderful thing.
And yet it is working. It certainly helps, says Miyake, that the government has formally said that consolidation in the SME sector is likely to be the best solution to the succession crisis. That official sanction removes some of the shame and can even, with the right sales intonation, make selling up sound like an act of national service.
But the greater boon is even simpler: with Nihon M&A completing deals at an average rate of about two a day (and its rivals approaching a similar clip) a consensus is building around the idea that selling a company is a sensible thing to do. The world may very soon have to look elsewhere to find its most difficult cold call.
Written by: Leo Lewis
© Financial Times