We are an operating company, not an investment firm. Although we are an operating company, we place M&A at the center of our strategy as same as an investment firm does, and conduct M&A based on the same judging criteria as an investment firm. However, we limit our target domain to the entertainment domain, and in reality, countless synergies are generated in the entertainment domain, and we consider ourselves an operating company, not an investment firm.

First, since it is necessary to define an investment firm and an operating company, let me provide a definition based on our ideas.

・Our definition of “investment firm”

Regardless of synergies, an investment firm will choose M&A if it comes into existence as an investment, in other words, if cash flow increases through M&A. No one asks a question about Company A and Company B, with which the investment firm has conducted M&A, “Why did the investment firm conduct M&A with each of these two companies, although they were not related in any way?” This is because it is obvious for the investment firm that there is an assumption that “Company A and Company B, each of them comes into existence as an independent investment (we can recover cash flow compared to the invested capital).

・Our definition of “operating company”

We consider a company to be in a state where it operates business in a specific area, each creating synergies and creating more value than if it existed as a stand-alone company. Although operating companies may also conduct M&A, they are not considered as an investment firm only because they conduct M&A. If an operating company continues to conduct M&A in an industry that is too unrelated to its own, it may be considered as an investment firm. However, if there are more synergies by doing business together as a group than by doing that independently, then we believe that the company can be considered as an operating company.

・GENDA is an operating company that conducts M&A based on the same judging criteria as an investment firm.

Although we are an operating company, we place M&A at the center of our strategy as same as an investment firm does, and conduct M&A based on the same judging criteria as an investment firm. However, our target domain is limited to the entertainment domain, and in reality, countless synergies are generated in the entertainment domain, and we believe that we are an operating company, not an investment firm.

When you hold several companies which are completely unrelated as an investment firm, there are cases where the value of the whole group is lower than the sum of the corporate values of each group of companies due to the usual conglomerate discount. On the other hand, GENDA will benefit from the advantages of conducting M&A as an operating company through the conglomerate premium described above. Besides, since multiple indexes such as PER are calculated based on the growth rate in theory, we would like to justify it by maintaining a high growth rate through M&A.