Serial acquisitions into peripheral equipment and life science (2023)

Why buy adjacencies at the top of the cycle

Buying up unrelated fields in the middle of record profits can look like a comfortable company spreading its investments. But at the core of it is not comfort so much as memory. Revenue that ends when the machine is sold had its fragility exposed once already, in the year to February 2010, when sales fell by roughly 90% from the peak and the company slid into a recurring loss. Precisely because it knows in its bones that thinning orders thin the profit directly, it makes sense to seed revenue sources less exposed to the cycle — maintenance, contract research — while results are running hot. EIAS’s analysis and cleaning work, and Genostaff’s contract research, can both be seen in that light.

That said, it is hard to say the diversification has borne fruit yet. Life science was under 1% of consolidated revenue in the year to February 2018 and remains some distance from being a pillar that supports the parent. Nanoverse of the US is a startup founded in 2022, and whether its equipment reaches volume production is a question for later. The four acquisitions have widened the outline of the business, but nothing has grown into what could be called a second earnings pillar. Whether groundwork laid against the weakness of selling machines outright pays off may not be measurable until the next time semiconductor investment thins.