Buying ZOLL Medical for $2.21 billion and entering critical care (2012)

The price of buying time

Yoshida Yasuyuki, the executive vice-president heading the new medical business project, said that “M&A too will be done without spending time” eight months before the acquisition was agreed. Health care then consisted of two areas, pharmaceuticals and blood purification, with sales of ¥116.4 billion in the year to March 2011 — less than a tenth of the group. To raise a third pillar in-house, the way the artificial kidney had been raised, would take decades to reach a scale worth calling a pillar. The $2.21 billion was the price of skipping those years. The verdict at the time that it was too expensive makes sense as an appraisal of the assets, but it left out the appraisal of time.

Buying and then growing, however, has no end point. Once inside the group ZOLL made acquisitions of its own — Cardiac Science, then Respicardia — and each time the earnings briefings turned to how much goodwill amortisation would take out of profit. As the company explained in November 2019, “the contribution will come from fiscal 2020 onward”: the effect of an acquisition does not appear in the year it is made. The decision to buy a third pillar and set it in place did not conclude at the moment of installation; it took the form of a burden carried forward into every period since.