And then there was one: Two more potential Nova buyers say no

26 Responses to “And then there was one: Two more potential Nova buyers say no”

1. NOVAの解約トラブルQ&A みんなはこうして解約した。 on October 30th, 2007 11:11 am

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2. Mike on October 30th, 2007 3:35 pm

   NOVA is screwed. Unless they decide to offer themselves to a buyer for a ridiculously low figure (JPY100,000,000?), I doubt anyone would want to inherit all of the problems.

   Good coverage and good blog, btw. I found you while trying to figure out what the story is with NOVA.

3. Ken Worsley on October 30th, 2007 4:48 pm

   Agreed Mike, though I think the price would need to be even lower. The market
   puts 51% of Nova at about 500 million yen right now. There are just too many
   problems for anyone to be interested, it seems.

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5. W. Anthony Malcolm on October 31st, 2007 10:38 am

   Ken,

   The way I see it is if a company were willing to absorb all debt then spend like 20 billion yen to revamp the corporate culture NOVA might survive. You’re looking at figures that are on par with major public works projects (building tunnels, bridges and roads). This is an astronomical cost for any one company to bear. What is the possibility of a consortium of companies coming to NOVA’s rescue?

   In my most humble opinion NOVA best file for bankruptcy, as that would just end this damaging period of uncertainty. If they continue this “sponsor hunting scenario” they need a real change with the corporate culture, and basically need to convey that to possible investors. This is not a time for holding ones pride. I would say points to stick in negotiations pay the salaries of the employees. This could gain back employees who were ready to give up and go away. Regardless you owe them and it shows that you are honoring the past service. Account for losses and move on. Pay the refunds of the students. Again, this shows that you are honoring debts to the bread basket of your company. Students might stay or go, but they will at least have their money and leave with a clean slate. Again, account for losses and move on. For all the various creditors a long term payment plan would have to be worked out because lump sum payments would destroy cash flow. No easy way of getting around that. Like most debt relief programs future sponsors will have to enter this will a long term mindset. NOVA lawyers also has to enter this with the notion that control is not an arguing point. Throughout all this brand image reconstruction will have to take place simultaneously. Basically building off the refund and past salary payments NOVA (and whatever backer they have) would have to spend some serious money to show people that this is not the same old Sahashi NOVA but a new and improved NOVA that has a new set of ideals, and actually will implement them.

   Let’s just imagine that a company does soak up NOVA they are looking at least a 3 to 5 year (possibly longer) rebuilding phase where extreme fiscal responsibility will be necessary while investment in core capacities need to be the primary goal, along with brand image reconstruction. NOVA could survive but it would take a lot of faith from whoever puts up the money.

   What do you think?

   Once again, thank you Ken for this website. I like all the intelligent discussion without the anger and craziness. Oh, good going on TPR.

6. Contamination on October 31st, 2007 1:37 pm

   Great post, I’ve written about it here: Nova Bankrupt: A Blogs Eye View

7. Ken Worsley on October 31st, 2007 2:41 pm

   W Anthony, I don’t see much to gain from anyone buying the company, and I would be surprised if it happens. Given the state of the market, the fact that Nova was losing billions of yen before the METI sanctions were imposed, and the necessity of constant growth of student numbers to keep the Ponzi scheme going, it will just be bankrupt again in 2-3 years. Anyone who does take it over will have to do so without assuming Nova’s debts. I don’t see anyone walking in and paying them. This is business, not charity, and goodwill really means nothing in this case.

8. Smithers on October 31st, 2007 7:31 pm

   Would anybody buy parts of the Nova group? There was something on tonight`s news about the Ginganet section but I couldn`t follow it as my Japanese wasn`t up to it. Did JMA diversify out of just providing cover to Nova instructors? If not, presumably JMA is useless as no Nova instructor`s salaries means no money for JMA.

   Ginganet might be worth something if someone invested money and replaced the decrepit equipment. What portion of the debts would a buyer have to take on if it bought part of the company?

9. J on October 31st, 2007 8:38 pm

   I think the companies involved in talks with Nova just don’t
   understand the business and logistics. Whoever does take it
   over will have to close schools. This means that teachers will
   be let go and students may be far from the remaining schools.
   With so many students and so few schools, it will just exacerbate one of
   the original problems: not enough available lessons in the evening.

   I agree with Anthony above. Holding out hope is not good.

10. W. Anthony Malcolm on November 1st, 2007 12:46 am

    NOVA has a group of companies that might be attractive to various corporations out there. The Multi Media section could be bought out and if rebuilt properly could really add to the computer assisted language learning (CALL) community. There is a publishing wing to NOVA as well as a research and development wing that could be bought out.

    The one thing with NOVA is that it is damaged goods. The reputation of the company has been decimated, and it seems that no one really wants to take on so much debt. For NOVA to really get moving again the debts have to be relieved and cash flow has to be monitored carefully, but free flowing.

    I stated above also that the corporate culture of NOVA would have to change in order to survive. Everything from accounting to employer-employee relations have to be redefined. That takes a lot of time, discussion, implementation and most of all money. This is something, I believe, other backers will not take on.

    I do see positive for a NOVA to exist albeit with a different operations model. Maybe not this NOVA, but I’m sure another one will take its place. Hopefully they learn from the mistakes of this NOVA.

11. Ken Worsley on November 1st, 2007 1:16 am

    From what I understood, the MM center was very unprofitable and relied on fairly old technology. I don’t see how the kind of necessary IT management would have been in place there. Certainly there is a vacuum in that market now, but selling proprietary hardware is a fool’s game.

    I can’t say anything about publishing only that the name brand association, combined with the fact that I haven’t seen any of there stuff on the shelves anywhere recently, leads me to believe that there is negative brand equity here. What added value does their publishing wing offer that another publisher can’t?

    Research and development? From Nova? What are they researching or developing? That one is a bit puzzling.

    I thought the Team Super Nova racing team was the only thing that looked viable in the group, and it looks like they found a buyer for that some time ago.

12. Huth on November 1st, 2007 4:27 am

    I don’t see how anyone could be serious about rebuilding this company. If they were, I would be worried about their business ability, and possibly their mental health. A revolution in corporate culture? It’s not impossible, but at a place where the workforce rolls over so fast and feels no loyalty to the company? I hope it happens for those who work there, but I think it will just slide back into the red and stagger on as a zombie company.

13. Trev on November 1st, 2007 1:15 pm

    I don’t know about the details of the Nova MMC, but IMO (I have an MA in TESOL), CALL is often over-hyped. It’s a useful tool, but not a stand-alone magic solution. Technology changes very quickly, so any hardware the MMC has is probably worthless and it’s not clear why you would want to rent expensive office space to house it when it would be much cheaper to pay teachers to stay home and teach over a broadband connection.

    AFAIK, the Nova publishing thing was a sham, just like JMA. I believe they got caught back in the mid 1990s illegally photocopying “Streamline”, so Oxford UP forced them to buy the book. That deal expired a few years ago, and Nova really resented it (”Streamline” was a banned word from Nova schools). OUP made a fortune out of that deal, so Nova wrote their own textbook, which by all accounts was awful. The “publishing company” was probably just an office that handled the invoices from the printers. The ESL publishing market is saturated, even giants like Longman are finding things much tougher than 15 years ago, so Nova publishing is worthless.

    IMO, Nova has two assets. One is the list of students’ phone numbers. The other is the brand. I do think the brand could be resurrected, but it’s not worth the 40 billion yen it would cost to pay off the debts. If the teachers and students aren’t paid off, I don’t think the brand could be revived.

    I don’t think there’s anything there worth saving. There are plenty of other eikaiwa around, IMO the best thing for Japan is to just shut Nova down and move on.

14. Ken Worsley on November 1st, 2007 1:42 pm

    Trev,

    I agree…shut it down and move on is probably the best business decision, but probably not the best for the individuals concerned.

    IMO (I have an MA in TESOL), CALL is often over-hyped. It’s a useful tool, but not a stand-alone magic solution.

    Then again, from a business standpoint, what matters is not whether something actually works, but what the customer’s perception is and whether or not it can be marketed.

15. J on November 1st, 2007 3:15 pm

    I most of the above posts. It is ridiculous to keep it going.
    I am just trying to figure out WHY in the hell some compnay
    would try to revive it? I just can’t come up with any reason
    whether it be financial, logical, create a strategic advanatage,etc?

16. Trev on November 1st, 2007 4:09 pm

    “but probably not the best for the individuals concerned.”

    Yep, I have friends who still work there, and they are really suffering. However, I don’t think there is anything to salvage from the wreckage, so the merciful thing is to just shut it down and get the pain over with. Hopefully I’m wrong.

    “Then again, from a business standpoint, what matters is not whether something actually works, but what the customer’s perception is and whether or not it can be marketed.”

    Yep, absolutely true.

17. W. Anthony Malcolm on November 1st, 2007 4:49 pm

    I’m just being devil’s advocate here. Basically, I feel that NOVA is done, and this stringing along is ridiculous. File for bankruptcy and let the students and teachers move on.

    That said - my devil’s advocate side says if someone had a lot of confidence (and money) they could turn around this ailing company. One would have to do a lot of confidence building with teachers, students and creditors. Business is not a charity event, but things can change. History is filled with revivals and changes.

    NOVA had a supply of DVD-ROMS and other multimedia goods that were actually good in comparison to what is out there. I’m not talking about Rosetta Stone or some thing like that, but due to bad leadership various supply chains were not utilized properly. NOVA had positives and could have done some good things. Better leadership could turn things around. But it would not be an easy task to undertake. Students are hanging on to see what happens. Unfortunately teachers are basically waiting for a final paycheck. This is the most serious problem.

    In real news, according to the Japan Times Online, Sahashi wants to challenge the boards decision that ousted him. See http://search.japantimes.co.jp/cgi-bin/nn20071101a3.html. He is in contact via a lawyer. He wants back in.

    What is the validity to recent sponsors buying in? The same Japan Times article mentions meetings. NOVA is not releasing names. The article gives a positive aire to things. I find that hard to believe unless the new management team is splitting up NOVA into pieces and selling them off.

18. J on November 2nd, 2007 8:46 pm

    Last report I saw on japantoday.com said that
    the debt was about 100 billion yen. DONE.

19. Ken Worsley on November 3rd, 2007 1:06 am

    J, I agree - that is a massive sum that no one would want to take on. However, what I’m hearing from somewhat reliable sources is that a sponsor can step in, open a limited number of schools, re-employ staff and teachers while paying back pay, and take pre-existing students. All other outstanding debts and salary obligations would then become the responsibility of the old “Nova” - and it would be put to rest through liquidation. I don’t think this is an adequate solution, but there may be some who - if this can be pulled off - would claim it to be a victory and maintain that it allows METI to save some face.

20. Ron Vanden on November 3rd, 2007 1:03 pm

    I don’t have much enthusiasm for commenting on METI; so just this once. Who cares if they save face or not? To me they’re quite peripheral. The people NOT peripheral are: 1) Saruhashi, enough said on him already, 2) The board of directors who shamefully and utterly failed in their responsibility to rein in and/or fire the CEO starting years ago, as was their duty and according to their (regrettably only theoretical it seems) fiduciary responsibility, 3) the students who got sucked in and ripped off for real money with unused tickets or non-reimbursement of fees, and last, but certainly not least, 4) staff and instructors who’ve had their livelihoods taken away.

    METI officials were and are not fundamentally central to the causes and effects of the NOVA debacle. At the end of the day they collect their comfortable salaries, pensions etc. and go home to their comfortable homes. And, face saved or not, the next day they return to their offices until retirement. Truly bit players in what has gone on here.

21. Cervantes on November 4th, 2007 10:25 am

    Twelve more potential NOVA rebuilders said yes. Lets forget about a big sole NOVA buyer, there will be a few sponsors to canibalize the not so rotten NOVA parts. What would this mean to METI or who would claim victories is beyond my interest. I wanna see my excoworkers at job again.

    The link here:
    http://www.japantoday.com/jp/news/421036

    (Notice this is just what the administrators said, and they gave no names)

22. Ken Worsley on November 4th, 2007 2:03 pm

    Of course they’re not going to name the 12 firms. That made them look pretty dumb last time. Unless they name them, I see no reason to believe it’s true.

23. NOVA情� �を集めるブログ on November 6th, 2007 2:29 pm

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    NOVA関連の情� �を集めています。And then there was one: Two more potential Nova buyers say noWe heard the names Marui, Aeon, Rakuten and Yahoo tossed around as potential buyers (or ’sponsors’) for Nova. Then Marui basically said they wer…

24. 英語の学� � on November 8th, 2007 11:30 am

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25. A sponsor for Nova? The Nikkei remains doubtful : Japan Economy News & Blog on December 2nd, 2007 11:30 pm

    […] last time four firms were named as potential sponsors of Nova, three of them quickly stated that they were not interested, weren’t considering such a move, and had no idea of why their name even came up. The fourth, […]

26. The Emperor’s Old Clothes: Former Nova President Saruhashi’s office/digs on the evening news : Japan Economy News & Blog on December 2nd, 2007 11:31 pm

    […] left of Nova. The administrators claim that there are interested parties, but no names were given - giving out names didn’t seem to work so well last time. This time we might not even get to hear the denials of interest at press […]

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