Credential Arbitrage Through Acquisition

"President Masayoshi Son gained worldwide fame in 1995. That year, the president purchased COMDEX, the world’s largest computer fair, for $800 million (80 billion yen at that time). At that time, SoftBank was just a company with an annual turnover of 200 billion yen. Even within Japan, it was merely a not-so-well-known venture capital company. Therefore, acquiring COMDEX seemed a bit overreaching for SoftBank back then. However, the president believed that no matter what, he had to acquire COMDEX because he was convinced that acquiring COMDEX was the stepping stone that could make him famous worldwide."

"In fact, after acquiring COMDEX, as long as he claimed to be “COMDEX President Masayoshi Son,” everyone was willing to interact with him. This also allowed the president to quickly strengthen his network with Bill Gates of Microsoft and other business leaders and industry figures in the IT world."

"Acquiring COMDEX was undoubtedly a proclamation to the world—“SoftBank’s Masayoshi Son is here!”"

"The surest way I know to create immense shareholder value is to buy businesses at valuations well below our own, and then drive revenue…"

"If an industry isn’t ripe for consolidation, optimization, and organic growth—the trifecta of my M&A strategy—I look elsewhere. I also stay away from sectors where private company valuations sit too close to public company multiples. What I look for here is meaningful multiple arbitrage—acquiring businesses at valuations…"

"The value-creation model doesn’t work unless each part of the puzzle is locked in: We’re paying a reasonable price, we can expand margins through continuous operational improvement, and we can grow the top line organically at a rate that outpaces the market. The purchase price is the invested capital (IC) in return on invested capital (ROIC), with the…"