Olympus – Caught in the Act Essay Example

Japan's corporate culture, employees place trust and depend on their superiors.

Olympus set up three bond funds in Europe, Singapore, and Japan to be deposited into banks within each country. The banks will then extend the loan duration. This arrangement aims to eliminate nonperforming assets for Olympus, leading to overpayments for acquisition deals as compensation for lost value or losses. One significant acquisition was Gyrus, purchased by Olympus for $2.2 billion, equivalent to 5 times turnover and 27 times earnings before interest, taxes, depreciation, and amortization.

The acquisition cost was split between Axes America and Axam Investments, with $17M and $670M each. Both companies were then established in the USA and Cayman Islands. This transaction is the highest Mergers and Acquisition (M) fee ever paid. Mergers and acquisitions (M) encompass the financial, managerial, and strategic aspects of acquiring or merging with other firms. In a merger, two entities join forces to create a new business entity, frequently under a new name.

The company purchased three small venture firms - Altis, Sumalabo, and NewsChef - that were not making a profit. The cost of this acquisition was $773M. In 2011, Woodford was chosen as the CEO of Olympus by Kikukawa, who believed he would be easy to control. This decision to have a foreign CEO was unusual for Japanese companies. Shortly after Woodford's appointment, his German colleagues alerted him to the company's suspicious activities, which they learned about through the magazine Facta Magazine. In response, Woodford enlisted PwC to investigate the company's documents and past actions.

PwC notified Woodford a few days later about potential misconduct at Olympus. In response, Woodford wrote letters to Kikukawa, Yamada, and Mori regarding the

matter. He then convened a board meeting to address the alleged fraudulent activities but ended up discussing his own resignation instead. After leaving, Woodford reported the misconduct to the Serious Fraud Office (SFO) in the UK. On November 24, 2011, Olympus announced that Kikukawa, Yamada, and Mori had resigned. Shuichi Takayama took over as Kikukawa's successor.