Nihon M&A Center Holdings Inc. · TSE:2127
Nihon M&A Center — Q2 FY2023 Earnings Presentation
67 slides from Nihon M&A Center's earnings presentation, Oct 27, 2023
Slide 1: IR Report: Financial Results Report for Q2 FY2023
Celebration of our 30th anniversary - April 25, 2021 IR Report Financial Results Report for Q2 FY202３ Year to March 202４ TSE code ２１２７ The information included in this presentation, such as industry trends and analysis, future plans and forecasts, is based on data available at the time of release. A
Slide 2: Table of Contents
Table of Contents Nihon M&A Center Holdings Purpose P1 Company Overview P３7～P60 Q2 FY2023 Results Review P2～P１3 Our Vision P３8 Q2 Results Review P３～P4 (Reference) 14-year Results Record P３9 (Reference) Last Three Mid-term Management Targets and The Trend in Ordinary Profit P40 Income Statement Key D
Slide 3: Nihon M&A Center Holdings Purpose
Nihon M&A Center Holdings Purpose To connect hopes and dreams for the best M&A experience in Japan and then the world Best M&A ＝ Top level compliance, client satisfaction, quality Copyright©2023 Nihon M&A Center Holdings Inc. All rights reserved. 1
Slide 4: Q2 FY2023 Results Review
Q2 FY2023 Results Review IIIANihon Ma.A Center HD
Slide 5: Q2 Results Review (QoQ comparison)
Q2 Results Review (QoQ comparison) Vivid recovery between Q1 and Q2 Q2 (Jul-Sep) profit margin recovered to over 40.9％ ２Q results １Q results FY2023 1Q / ２Q comparison （Jul-Sep） （Apr-Jun） QoQ Transactions closed (Counting sell-side and buy-side mandates separately) 266 230 +15.7％ Large-scale transact
Slide 6: Q2 Results Review (YoY comparison)
Q2 Results Review (YoY comparison) Sales exceeded expectations, helped by contribution from measures to improve average revenue per transaction Ordinary profit impacted by Q1 underperformance and fell short of budget H1 results FY2023 FY2022 YoY FY2023 % reached （Apr-Sep） H1 forecasts Sales (¥mn) 19
Slide 7: Income Statement Key Data
Income Statement Key Data Profit margin improvement QoQ Ordinary profit margin Q1(Apr-Jun)：19.9% → Q2（Jul-Sep）：40.9% FY2023 FY2022 FY2023 Q2 results (Apr-Sep) YoY Q2 results (Apr-Sep) full-year forecasts (¥mn, ％) Total % % Total % Total % Sales 19,171 100.0 -4.6 20,099 100.0 44,000 100.0 (o/w M&A sa
Slide 8: Review of Q2: Sales
Review of Q2 Q2 supported by successful implementation of various measures, demonstrated by increase in average revenue per transaction due to midcap＊ related measures ＊Companies with sales of over ¥1bn or profit of over ¥50mn Q2 results YoY Cause/results Initiatives/current progress (Apr-Sep) Lar
Slide 9: Review of Q2: Costs
Review of Q2 Q2 results YoY Cause/results Initiatives/current progress (Apr-Sep) Increase in referred transactions for Cost of sales 8,625 +5.3% both sell-side and buy-side mandates → Higher referral fees （￥mn） 1Q：4,124 → 2Q：4,501 Increase in personnel costs （cost of sales） Cost of sales 45.0 +4
Slide 10: Developments from Q3 onwards
Developments from Q3 onwards As we implement our measures for gaining mid-cap mandates expect an increasing trend versus a year ago in volume of new large-scale sell-side mandates Status of new transaction Expectation of success fees in excess of ¥100mn negotiations* between sellers and buyers Curre
Slide 11: Record of Transactions Closed, M&A Sales, New Mandates
Record of Transactions Closed, M&A Sales, New Mandates Big improvement in average revenue per transaction １Q 2Q ¥33.5mn→¥40.0mn Continuously implementing measures to strengthen ability to gain large mandates and handle small mandates by a group company FY2020 FY2021 FY2022 FY2023 （Units: Full Full F
Slide 12: Balance Sheet Key Data
Balance Sheet Key Data Maintaining a healthy balance sheet Share buy-backs (¥7bn) lead to higher level of treasury stock Asset （¥mn, ％） End-Sep 2023 % Change End-Mar 2023 Ⅰ Current assets 47,697 79.5 -5,301 52,99８ Cash and deposits 43,117 71.9 -2,457 45,575 Accounts receivable 2,438 4.1 -559 2,998 O
Slide 13: Number of Employees
Number of Employees Continually active recruitment drive Implementing 2in1 (selling in pairs) development system, early staff training and measures to reduce the ratio of leavers Number of employees (consolidated) End of End of End of End of End-Sep FY2019 FY2020 FY2021 FY2022 2023 Number of employe
Slide 14: Announcement of vision to all employees
7 October | Announcement of vision to all employees Review of first 30 years nl New vision PP Employee engagement Ex< Yj ete Second foundation phase RHOASERR & — all employees playing a part
Slide 15: With a unified workforce, targeting recovery in company value
With a unified workforce Now targeting a recovery in our company value 5 ４ Expenses review Cost optimisation processes Assessment of ratio of client-facing employees Stock market ３ related activity Revive level of direct mandates ratio Promote various measures for gaining direct mandates R
Slide 16: Dividend Policy Shareholder Breakdown
Dividend Policy Shareholder Breakdown
Slide 17: Dividend per Share
Dividend per Share Expecting ￥23 dividend level in FY2023 Share buy-backs of ¥7bn in May 2023, expectation of total return to shareholders of around 132% Dividend forecast Dividend paid (¥) (¥) Actual dividend at start of year (¥) Actual interim dividends Pay-out 24.00 23.00 Dividend Breakdown Divid
Slide 18: Dividend Payments and Market Capitalization
Dividend Payments and Market Capitalization Raising dividend continuous pay-out ratio to 60% during mid-term management plan period (up to FY2027) Dividends and the pay-out ratio Market capitalization （From Apr 2017) (¥100mn) (¥mn) (百万円) (％) 7,609 14,000 8,000 配当総額 Dividends 80% Pay-out Ratio 配当性向 1
Slide 19: Share Ownership
Share Ownership <Share ownership trend by category> Ratio of individual shareholders has increased and the total number of shareholders has in parallel risen to over 100,000 March 31, 2023 September 30, 2023 Other Corporations Other Corporations Treasury stock Treasury stock 2.1％ 1.8％ ２.６％ 3.8％ Secu
Slide 20: FY2023 Forecast and Revised Mid-term Management Goals
FY2023 Forecast and Revised Mid-term Management Goals
Slide 21: FY2023 Forecast
FY2023 Forecast Forecast growth in sales and profit in the full year (H1 40％, H2 60％) FY2023 consolidated results forecast Full year FY2022 H1 Full year growth results Sales (￥mn) 17,600 44,000 +6.5% 41,315 Operating profit (￥mn) 6,800 17,000 +11.1% 15,298 Ordinary profit (￥mn) 6,800 17,000 +9.9% 15
Slide 22: Mid-term Management Plan
Mid-term Management Plan The ordinary profit target for FY2027 is ￥30.5bn (¥mn) 80,000 76,200 Consolidated sales Consolidated ordinary profit 70,000 +18.3％ 64,400 60,000 56,000 +15.0％ 48,700 +15.0％ 50,000 44,000 +10.7％ 41,315 +6.5％ 40,000 30,500 +２０.１％ 30,000 25,400 +16.5％ +16.6％ 21,800 18,700 20,00
Slide 23: Higher productivity is essential to achieve targets
Mid-term Management Plan To achieve our targets higher productivity is essential Recruitment Training of excellent Digitalisation people Work to increase productivity and reduce lead times through digital transformation Copyright©2023 Nihon M&A Center Holdings Inc. All rights reserved. 21
Slide 24: Human Resource Development Plan
Human Resource Development Plan A layered approach for thoroughness We aim to achieve fast results from the training For Senior executive officers and above. Core to strengthened training plan Senior Goal Creating and implementing growth strategies executives for our company. Executive offsites/Mana
Slide 25: What We Do for Digital Transformation
What We Do for Digital Transformation Use of Salesforce （CRM system for managing client information and marketing) Creation of database through Salesforce Firm-wide utilisation of Salesforce Management of progress of M&A mandates Introducing internal qualifications to train employees in use of S
Slide 26: What We Do for Digital Transformation
What We Do for Digital Transformation Utilising media & digital communication Digitalisation brings greater efficiency Awareness➡Lead creation to every component of the M&A process Lead Awareness creation Private company valuation system, Creation of potential buyer lists now also adopted by regiona
Slide 27: Related Activities
Related Activities IIIANihon MaA Center HD
Slide 28: Update on Related Activities
Update on Related Activities Financial Performance of M&A Sales and Other Sales QoQ comparison YoY comparison Q2 FY2023 Q2 FY2022 FY2022 FY2021 FY2020 (¥mn) Total % YoY Total % Total YoY Total YoY Total YoY M&A sales *1 18,462 100.0% 95.3% 19,372 100.0% 39,785 102.5% 38,807 115.0% 33,743 108.2% M&A
Slide 29: Update on Related Activities (1): BATONZ
Update on Related Activities (1) Online M&A matching by BＡＴＯＮＺ Over 5,000 transactions completed ※ Source for ranking No.1 in cumulative number of members and No. 1 in cumulative transactions completed: Nihon Marketing Research Organization, Inc. regional market research 25 January 2022-11 March 202
Slide 30: Update on Related Activities (2): IPO support
Update on Related Activities (2) TOKYO PRO Market （TPM）* IPO support activities Our IPO support assignments * A stock market operated by the Tokyo Stock Exchange for professional domestic and overseas investors. It provides more flexible listing criteria than the general markets TPM IPOs Pre-IPO rev
Slide 31: Features
Features IIIANihon MaA Center HD
Slide 32: Features (1): Seminars
Features （１） FY2023 seminars Target of 10,000 registrations Hosting variety of seminars covering different regions and themes Seminars held in the first half of this fiscal year H2 seminar plans Regional seminars （Hokkaido, Niigata, Kyoto, Plan to host regional seminars Osaka, Kobe, Kyushu） with
Slide 33: Features (2): Strategy for regions and industries
Features （2） New bespoke strategy for regions and industries Strategy for regions Strategy for industries Following on from the opening of our Niigata local representative office with discussion desk Niigata Prefecture (April) 2nd initiative Opening of Miyagi local representative office with Miyagi
Slide 34: Features (3): Midcap mandates structure
Features （３） Strengthening our structure and policy for gaining midcap company mandates Companies with sales of over ¥1bn or profit of over ¥50mn Creation of new specialist department for dealing with mid-cap companies to serve the whole company Sales HQ Corporate Industry Growth Alliance Large Fina
Slide 35: Features (4): Search fund exit
Features （4） Fund contributes to company value increase and regional regeneration Search Fund Japan makes first portfolio exit Fund established by Japan Private Equity （JPE) and Shikoku Railway Company (JR Shikoku） Nihon M&A Center Development Bank Holdings of Japan Funding for search and M&A, provi
Slide 36: Features (5): Guinness World Records
Features （5） Recognized by Guinness World Records for 3 consecutive years Number of transactions closed＊ Best-selling mergers and acquisitions advisory company （Unit: transaction volume） 1,200 ９８９ transactions in 2022 1,050 996 （Year of record: Jan 2022 – Dec 2022) 1,000 885 886 800 770 600 400 200
Slide 37: Features (6): JPX-Nikkei 400
Features （6） JPX-Nikkei 400 Reselection as constituent JPX-Nikkei Index 400 Selection body ＪＰＸ Market Innovation & Research Inc., and Nikkei Inc. A stock market index with 400 constituents, “companies which are attractive for investment”, fulfilling international investment Concept standards for cap
Slide 38: Features (7): Governance Ranking
Features （７） Forbes Japan’s “New Good Company 100” ranking Ranked in the Governance Ranking Overview of the ranking Ranking is based on a proprietary investigation Score and analysis conducted on 1,836 companies listed on TSE Prime Market 1. Recruit Holdings 78.3 Ranking is announced based on 4
Slide 39: Company Overview
Company Overview IIIANihon Ma.A Center HD
Slide 40: Our Vision
Our Vision 「 Aiming to become the top global integrated M&A company 」 Became Japan’s top M&A intermediary company 1991 2001 2011 2021 (year) Aiming to become the Start-up phase Becoming Japan’s top M&A intermediary company top global integrated M&A company TSE 1st Section listing in 2007 Transition
Slide 41: 14-year Results Record
(Reference) 14-year Results Record 13th consecutive period of higher sales (¥mn) 45,000 Sales 売上高 41,315 40,401 Ordinary profit 経常利益実績 40,000 34,795 35,000 Compound annual growth rate of ordinary profit 32,009 30,000 in the last 14 years ＝ + 20.5% 28,463 24,625 25,000 20,000 19,069 15,468 16,864 15,
Slide 42: Last Three Mid-term Management Targets
(Reference) Last Three Mid-term Management Targets and The Trend in Ordinary Profit All three of the last mid-term management targets have been reached early As the industry leader in SME Ｍ＆Ａ we have displayed steady growth and established a unique position Period 3 mid-term target (¥mn) Consolidate
Slide 43: To Become the Top Global Integrated M&A Company
To Become the Top Global Integrated M&A Company Number of transactions closed Number of mandated projects, number of transactions closed Customer satisfaction ◆Recognized by Guinness World Records Optimal matching and post-merger integration for 3 consecutive years ◆ Best-selling mergers and acquisi
Slide 44: Corporate Profile
Corporate Profile Leading company in M&A intermediary services with a track record of over 8,000 completed transactions Company name Nihon M&A Center Holdings Inc. Established April 1991 *Transition to a holding company structure taken place in October 2021 Business outline Group management function
Slide 45: Corporate History
Corporate History ★We have been profitable since the second year of our history and have continuously paid a dividend Chairman Yasuhiro Wakebayashi and President Suguru Miyake worked at Olivetti Japan. They Prior to had responsibility for sales of computers nationally to accounting firms and regio
Slide 46: Business Model: A Platform for the M&A Market
Business Model A Platform for The M&A Market Top M&A information network Collaboration agreement figures as of end-Sep 2023 Network Information Accounting firms …1,026 Regional M&A centers Regional banks Information …Collaboration agreements with 95 (out of a total of 99) Information Shinkin banks …
Slide 47: The Strengths of Nihon M&A Center
The Strengths of Nihon M&A Center Never let any competitor catch up Differentiation through service, superiority without competing on price 1. Strong systems for developing Very strong network for M&A information valuable information Regional financial institutions, accountants, large financial in
Slide 48: Our Workflow as An M&A Intermediary
Our Workflow as An M&A Intermediary Seller Buyer Consultation Retainer Signing of fee advisory agreement Arrangement of support team Provision of materials Strategic planning and Valuation search for target Production of blind teaser and Discussion on non-name basis specialist review Matching Signin
Slide 49: Becoming An Integrated M&A Company
Becoming An Integrated M&A Company Nihon M&A Center becoming a hub for specialized high quality group companies Business succession, Introductions PMI Information growth strategy consulting Start of Company Negotiation /dialogue services project valuation with principals /closing Market research Pri
Slide 50: Nihon M&A Center Inc. Organization Structure
48 Administration Copyright©2023 Nihon M&A Center Holdings Inc. All rights reserved. General Affairs Dept. HQ Document Mgmt. Dept. Accounting Dept. Quality Control HQ Process Management Dept. Legal Advisory Dept. Internal Audit Office Compliance Division Corporate Advisory 2 Dept. Corporate Advisory
Slide 51: Sales Headquarters divisional structure
Sales Headquarters divisional structure （As of 1 Apr 2023） Sales HQ Networks Direct sales Alliance Large Financial Corporate Growth International Industry Focus Div. Management Div. Institutions Div. Institutions Div. Strategy Div. Div. Collaboration with Collaboration with accountants/regiona secur
Slide 52: Human Resources Training
Human Resources Training Subsidy system for training of new recruits and further development of key employees Internal training External training Step up training Training for new recruits Regular training for each level Understanding of our company Analysis of case studies for Monthly training
Slide 53: Sustainability Initiatives
Sustainability Initiatives Enabling the continual growth of society through sustaining and increasing employment Also committing to provide safe and fair M&A Our M&A intermediary activities provide Contributing to the improvement of quality of economic benefits M&A intermediary industry 1 Number of
Slide 54: Sustainability Initiatives: Healthy development of M&A industry
Sustainability Initiatives Initiatives towards healthy development of M&A industry Obtained Ph.D. of research on legal aspects of SME M&A Initiatives towards development of M&A industry Mr. Yokoi, Head of Legal Advisory Department, obtained Ph.D. in his research on legal aspects of SME M&A at Gradua
Slide 55: Sustainability Initiatives: Broadening the base of M&A
Sustainability Initiatives Initiatives to broadening the base of M&A The pupils reaction Commencement of talks nationwide at high schools Previously the image of “Who knows about M&A“ – broadening the base M&A was negative - a poor thing for a company. Themed “How does M&A link companies and protect
Slide 56: METI SME Policies
（Reference） METI SME Policies 22 September Revised edition of “SME M&A guidelines”, the first in about 3 years Outline of the revised SME M&A guidelines Background SME M&A is endorsed by recognition of public and private initiatives. However, there remains a lack of clarity over the contractual basi
Slide 57: Transactions closed in FY2022
Transactions closed in FY2022 What size sellers does Nihon M&A Center support ？ Calculated from deals closed in FY2022 Sales in a seller (¥mn) Number of employees in a seller More than 2,000 ５.３％ More than 100 employees 6.0％ 5 employees More than 100 or less or less More than 50 to 1,000 to 2,000 ７.
Slide 58: Transactions closed in FY2022
Transactions closed in FY2022 What size sellers does Nihon M&A Center support ？ Industries of companies sold Nihon M&A Center matching results Same Different Total Other sector sector Construction 2３.７％ 23.７％ Same region 8.2 ％ 20.0 ％ 28.2 ％ Retail ４.０％ Metal and Different Machinery, electronics plas
Slide 59: Number of Transactions Closed in Q2 (1/4)
Number of Transactions Closed in Q2 (1/4) 13６ transactions closed, 266 by number of companies Selling company Acquiring company Industry classification Region Industry classification Region 1 Beauty salon Kanto Food retail Tokai, Hokuriku 2 Security firm Kanto Security firm Kanto 3 Resin parts proce
Slide 60: Number of Transactions Closed in Q2 (2/4)
Number of Transactions Closed in Q2 (２/4) Selling company Acquiring company Industry classification Region Industry classification Region 29 Pipe contractor Kanto Pipe contractor Kanto 30 Interior finish work Hokkaido, Tohoku Interior finish work Hokkaido, Tohoku 31 Exterior finish work Kanto Exteri
Slide 61: Number of Transactions Closed in Q2 (3/4)
Number of Transactions Closed in Q2 (３/4) Selling company Acquiring company Industry classification Region Industry classification Region 65 Food manufacture Chugoku, Shikoku Food manufacture Kanto 66 Food wholesale Kansai Food wholesale Kansai 67 Other retails Kanto Food wholesale Kanto 68 Metals p
Slide 62: Number of Transactions Closed in Q2 (4/4)
Number of Transactions Closed in Q2 (4/4) Selling company Acquiring company Industry classification Region Industry classification Region 101 Truck transportation Kansai Truck transportation Kanto 102 Customised software development Kyushu, Okinawa Customised software development Kanto 103 Printing
Slide 63: Business Environment
Business Environment IIIANihon MaA Center HD
Slide 64: Strong Increase in Succession Outside Family
（Reference） Strong Increase in Succession Outside Family Succession outside family has increased to over 65% Shift in background of company presidents viewed by length of term of office 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 35 - 40 years 83.5 9.2 3.7 3.7 30 - 35 years 82.5 7.4 6.5 3.7 25 – 30
Slide 65: Distribution of the Age of Owners and Retirement Age
（Reference） Distribution of the Age of Owners & Changes in the Average Age of Retirement Increase in per centage of SME owners aged over 70 Divide between companies with and without succession plan Age distribution of SME owners (in 5-year categories) Changes in owners average retirement age In 1995
Slide 66: SME Owner Age in 2025
（Reference） SME Owner Age in 2025 There could be circa 600,000 companies to go out of business by 2025, Even though they are profitable. SME owner ages in 2025 (number of people) of which half have not yet got a successor Circa 1.27mn Companies And half these are profitable Under 70 Over 70 Circa 60
Slide 67: Lastly
Lastly Ⅰ. Corporate ethos Corporate ethos Corporate Purpose To connect hopes and dreams for the best Assisting companies to continue and prosper through M&A M&A experience in Japan and then the world Ⅱ. To investors Increase market value Return profits to shareholders We aim to increase market value
Nihon M&A Center Holdings — Q2 FY2023 Earnings Presentation on 6ix