Japan’s Youngest Billionaire Disrupts M&A with AI

Shunsaku Sagami, founder and CEO of Tokyo-listed M&A Research Institute, has leveraged AI to give his M&A business a competitive edge. Now, at 33, he is looking to replicate this success abroad.

As an avid Mahjong player, Sagami uses risk assessment, careful observation, and strategic thinking to outmaneuver opponents—skills he also applies to business. He launched his M&A brokerage firm six years ago, targeting Japan’s small and midsized companies, many of which have older owners without successors. Sagami disrupted the market, previously overlooked by big banks.

M&A Research Institute Holdings is now one of Japan’s top four listed SME M&A firms by market cap, surpassing competitors in earnings growth and successful transactions. In the six months ending March 31, the firm nearly doubled its M&A deals to 123, outpacing larger rivals.

The company’s shares surged after its 2022 Tokyo listing, making Sagami a billionaire when they rose fourfold by April 2023. Despite reducing his stake to 53%, he remains a billionaire. The firm’s competitive edge lies in its AI algorithm for matching buyers and sellers, proprietary software for digitizing paperwork, simplified fee structure, and aggressive hiring. Sagami’s software has undergone “over 10,000 iterations,” making it hard for competitors to catch up.

M&A Research Institute’s growth also stems from hiring more advisors, expanding the team to 242 by March and aiming for 700 by September 2026. The firm identifies sellers and uses AI to match them with potential buyers in its database. Its advisors negotiate and complete transactions, targeting companies with up to ¥500 million ($3 million) in revenue.

The firm’s unique selling point is charging fees only upon deal completion, unlike competitors who charge various fees throughout the process. This policy has helped the firm grow, with revenue and net profit doubling to ¥8.6 billion and ¥2.6 billion, respectively, by September 2023. Sagami expects these figures to double again this fiscal year.

Japan’s SME sector, comprising 99.7% of all companies and two-thirds of jobs, is vital to the economy. Many SMEs face closure due to aging owners without successors. Analysts predict the M&A market for these companies will grow significantly by 2033.

Sagami is also expanding internationally, helping local firms enter foreign markets and vice versa. M&A Research Institute has begun brokering deals for U.S. and Southeast Asian SMEs seeking Japanese buyers, listing businesses like a Singapore steakhouse and a Hawaiian solar-panel installer.

With Japanese outbound M&A rising 45% to $66 billion in 2023, Sagami’s timing is strategic. The international deal activity is expected to continue, driven by Japanese companies’ strong balance sheets and need for diversification.

Sagami aims to revolutionize legacy industries through technology and expand globally, leveraging his firm’s success domestically to cross-border deals.