Amber Balance

1. The Night I Decide to Sell

A conference room at two in the morning is like the inside of a living creature's belly.

When I turned off the fluorescent lights, the city's veins glowed outside the window. Rei Kuramochi is forty years old. He is going to sell this company. It is the third time.

Three times, I have done the same thing. I start a company in a place where there is nothing, grow it to a scale of a hundred people, push sales to just under 15 billion, and then—I sell it. People call it an "exit." An exit. But the word "exit" is a lie. Beyond the exit, there is only another entrance. Every time, I hand over what I have raised with my own hands, and I return to a place where there is nothing, naked once again. Three times, I have done this. I am about to decide on the fourth time now.

On the desk lies a letter of intent. This time, I am the one receiving it. The buyer is a major telecommunications infrastructure company. In the amount field, the number I spent three years building up is written in someone else's handwriting. It is not a bad amount. "Not bad" is the most troublesome thing of all. People call an amount that leaves no room for emotion "reasonable." Reasonable is what hits the bottom of your stomach the hardest.

"Are you really going to sell?"

Kai, from finance, walked in carrying two canned coffees. He placed one in front of me. It was warm. He always warms my can first. He is a man who has followed me ever since the third company. Every time I sell a company, he ends up on the street once, too. And every time, he comes back to the next company I start.

"I'm selling," I said.

"Why now? This company still has room to grow."

"Because it has room to grow," I said. "Anyone who sells after it has finished growing is an amateur."

2. The Moment It Sells for the Highest Price

There is a best moment to sell a company.

Amateurs try to sell at the peak. They aim for the moment when sales are maximized and the profit margin is at its highest. But that is a mistake. What the buyer is looking at is not the past numbers. It is how far they can grow it after they take over management for the next three years. A company bought at its peak looks like it is on a downward slope from the day after it is bought. That is why companies at their peak do not sell for as high a price as you might think.

What I always sell is the stage where "two more levels of growth are visible." A scale of a hundred people, just under 15 billion in sales. At this position, there is a story for the buyer. The story that "I am the one who will turn this company into 20 billion, 30 billion." I sell that story along with the price. I am not selling numbers. I am selling the continuation of the numbers. It is faster for a major company to write the continuation than for me to do it. They have more capital, a bigger brand, and a better sales network. All I have is the power to turn zero into one. Turning one into ten is not my job.

This is not sour grapes. It is a division of labor. In this world, there are people who can turn zero into one, and people who can turn one into a hundred. There is almost no one who can do both. I am the former. So I only do the work of the former and pass it on to the latter. Every time I pass it on, I take a little money and return to being naked again. Returning to being naked is the essence of my work.

Kai said, "Don't you think it's a waste? After raising it this far."

"I do," I said. Being hard-boiled doesn't mean not feeling. It means not showing it on your face even if you do feel it. "Every time, it feels like I'm leaving one of my internal organs behind. I've done it three times, and I feel like I don't have any internal organs left to leave behind."

"Then why?"

"If I don't leave them behind, there's no room inside my body to create the next one."

3. One-Handed Management

Eight years ago, I was counting the ceiling tiles in a hospital bed.

It was right after I sold my first company. The money had come in, but my body had broken down. It was an accident. The asphalt at the intersection glistening in the rain, and then, a long blank space. When I woke up, my right hand wouldn't move, as if it didn't belong to me. The rehabilitation specialist said, 'Mr. Kuramochi, let's remind your fingers of their meaning, one by one.' Remind them of their meaning. That was the first time I learned that human fingers could forget their meaning.

Around the same time, my son was in Hokkaido. My mother-in-law had taken him there, saying, 'You need to focus on healing your body.' It was the right decision. I couldn't raise a six-year-old with a broken body. The more correct a decision is, the deeper it hits you in the gut.

During that rehabilitation, the world stopped. People disappeared from the streets, and faces were halved by masks. In the empty hallway, while practicing pedaling my wheelchair, I was tapping on a calculator with my left hand. How much of the money from the company sale would remain? How much would taxes take? What would I build next, from nothing?

That was when I was finally able to put into words the true nature of my work.

I am bad at 'holding onto' companies. If I keep holding on, the distinction between the company and myself disappears. If the company grows, I feel great; if the company slumps, I feel like I'm dying. I have seen more than enough of those kinds of executives. They turn the company into an extension of themselves. A company that has become an extension collapses when its president collapses. My first company was just about to become that. During the two months I was in the hospital room, the company couldn't decide on anything. Because I was the only one who could make decisions.

—Management can be done with one hand. But management that can only be done with one hand will eventually break.

After I was discharged, I changed how I built my management. From the second company on, I built it from the start as a 'company that runs even without me.' I divided decision-making authority into three tiers based on amount. Up to 500,000 yen is decided immediately by the staff, up to 5 million yen by the manager, and only anything above that comes to me. The decisions coming to my desk dropped from forty a month to six. I think seriously about only those six.

And I realized: a 'company that runs without me' is also the company that sells for the highest price. What buyers fear is that the company will become empty the moment the founder leaves. So, from the beginning, I build a company that won't be empty even if I leave. I don't build it to sell it. I build it so it won't break. A company that doesn't break, as a result, sells for a high price. Many founders get this order wrong. If you organize it to sell, the company becomes thin. If you organize it so it won't break, the company becomes thick and naturally becomes valuable.

4. Due Diligence for Succession

The buyer's due diligence began. Their accountants and lawyers spent three weeks stripping our books bare. Are there any off-balance-sheet liabilities? Are there any disputes? Will key personnel quit? Is there any unpaid labor?

I didn't hide anything. There was only one figure that was difficult to explain. Two years ago, I had personally cut off a major client. They accounted for ten percent of our sales. The reason was that they were repeatedly subjecting our young employees to unreasonable deadlines and verbal abuse. Throwing away ten percent of sales is not something to be praised as a management decision. It would definitely be poked at during due diligence.

Kai said, 'Let's keep that under wraps.'
'There is no obligation to explain the reason why you cut them.'

I shook my head. 'I'll tell them first.'

Information shared upfront carries no interest. Information that comes out later carries compound interest. I have watched M&A many times—both from the selling side and the buying side—and I am certain of this one thing: hidden flaws will always surface after the contract. And when they surface, it is no longer a matter of money. It becomes a matter of trust. When trust is broken, the integration breaks. When the integration breaks, the hundred employees I am leaving behind will suffer the consequences.

I explained it directly to the buyer's executive. 'I personally cut off a client that accounted for ten percent of our sales. It was to protect our young employees. If your company thinks this decision is soft, then you should stop this acquisition. Because you are buying this company along with its culture. If you think culture has no price, then in three years, half of the employees will quit.'

The executive was silent for a long time. Then he said,
'After you cut that client, what happened to the sales?'

'Within six months, another client filled the gap. A client that doesn't make unreasonable demands.'

'Why did they fill it?'

'A workplace where unreasonable demands aren't made has a lower turnover rate. A workplace where people don't quit has higher quality. When quality rises, clients come through referrals. What I cut was ten percent of sales. What I gained was a workplace where people don't quit.'

The executive laughed for the first time. "I can't put that in the contract."

"You don't have to," I said. "Your company's books will write it in three years."

Five, one at a time

It was past one in the morning when I got home.

In the entryway, one of my daughter's three-year-old sandals was lying there. That girl with the bobbed hair. The other one is never found. My wife once laughed and said, "She lives one at a time." One at a time. I lined up the sandals and stepped into the hallway.

The first time I met my wife was when I brought that child to lunch. I only found out later that she lived one block over. When we first met, she talked about her child first. "I have a stepchild. If you're okay with that." Sincerity isn't about not hiding things. It's about saying them first. I told her why I cut off a client, and she told me about her child, first. People who speak first are strong later. This is a story about business, and it's a story about family. I live both with the same calculation. Some people call it cold. But sincerity that can be calculated lasts longer than affection that cannot.

I told my wife I was selling the company last week. She asked, "Are you starting from zero again?" I answered, "Yeah." She was silent for a moment, then said, "Well, this time, make some time to be at home." She didn't blame me. She already knows I'm the kind of person who can't keep a company. She knows I'm the kind of person who breaks if I keep holding on. She's the person who decided to live next to me knowing that.

My eight-year-old son had fallen asleep on the living room sofa. He was still clutching his school homework sheet. It said "My Dream for the Future." Below that, in pencil.

"Like Papa, build a company and sell it."

I stared at those words for a long time.

Build and sell. Not inherit. Not keep holding on. This child sees exactly what kind of person I am. I have never kept a company. I have built them all, raised them, and handed them over. My son sees that before he goes to sleep. Selling isn't running away. It's handing over. That to hand it over, you build it with your life. An eight-year-old is writing that in pencil.

I didn't gently pull the sheet away. I left it in his grip and covered him with a blanket. I didn't want him to forget the meaning.

Six, handing over with both hands

On the day of the final contract, I stood in front of my hundred employees.

I told them about the sale myself. I told the employees before writing it in the contract. Some buyers get angry that the order is reversed. But this is the one order I wouldn't budge on. I couldn't let the people I raised hear from someone else's mouth that "the parent company will change starting tomorrow."

"I didn't sell you," I said.
"I prepared a bigger ship for you."

It wasn't a lie. At our size, we were starting to see the limit of what I could pay the employees. The positions were also hitting a ceiling. If they joined a major company, someone who hit a ceiling as a department manager could become a division manager. They could handle overseas projects. The salary range would also go up. There is a limit to the height I can raise them on my own. I am a man who turns zero into one, not a man who turns one into ten. That's why I'm handing everyone over to a place where they can become ten.

This might sound like words of defeat. In fact, it is a defeat. I am admitting that I cannot raise them to the end. But for a manager, the most difficult decision isn't starting. It's quitting—or more accurately, handing over. You can start on momentum. You can only hand over with calculation and resolve.

One young employee was crying.
Two years ago, that was the kid on the front lines I protected by cutting off a client that made up ten percent of our sales.

"If the president is leaving, I'm quitting," the kid said.

I placed my right hand, which had begun to move again, on the child's shoulder.
Eight years ago, I had forgotten the meaning of these fingers. Now, they move just fine.

"Don't quit," I said.
"I'm just getting off the ship. The ship won't sink. I built it so it wouldn't. You must protect the site you've been protecting. It wasn't because I was there that you could protect it. It was because you were there. Don't you ever forget that."

The child cried for a while, and then nodded.

Outside the window, the veins of morning were beginning to glow. I drank my canned coffee.
The can that Kai had kept warm for me was still warm.

Kai said from beside me, "Boss. What are you going to build next?"

"I haven't decided yet," I said.
"I haven't decided, but there is one thing I have decided. Next time, too, I will build it to pass it on someday."

"Please call me again."

"I will. I need someone to warm up my canned coffee."

A conference room at two in the morning is like the inside of a living creature's belly. But when morning comes, it returns to being just a place where people work. From today, this place is no longer mine. It's someone else's belly. And that's fine. Every time, I empty my own belly and return to a place where there is nothing. Only in an empty belly can the next thing take root.

—Management can be done with one hand. But I've stopped living with just one hand. One hand to build, one hand to pass it on. I'll do it with both hands.

I signed the final contract. The amber-colored morning light shone on the back of my right hand. My moving fingers didn't hurt at all today.

Inside the belly where I had left my internal organs three times, the scent of the next company was already beginning to form. It wasn't kerosene. It was the scent of something yet to be named, something I would build from now on.