Quants Research Institute Holdings, Inc. · TSE:9552
Quants Research Institute — M&A Research Institute — FY2022 Earnings Presentation
61 slides from Quants Research Institute's earnings presentation, October 2022
Slide 1: FY2022/9 Financial Results Presentation
FY2022/9 FY Financial Results Presentation October 2022 M&A Research Institute（TSE：9552）
Slide 2: Table of Contents
Table of Contents 1 FY2022/9 Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Overview 5 Competitive Advantages of M&A Research Institute 6 Q&A Copyright © 2022 M&A Research Institute. All rights reserved. Highly Confidential to M&A Research Institute. 2
Slide 3: Executive summary
1. FY2022/9 Earnings Results Executive summary Performance Record net sales of 3,911 million yen (+194.5% growth rate) for FY2022/9 →Promoted the recruitment of M&A advisors and inexperienced advisors also achieved results early on The operating margin at a high level of 53.8% (42.3% in the last FY)
Slide 4: Earnings Summary
1. FY2022/9 Earnings Results Earnings Summary Operating Sales \3,911mn (FY22/9 4Q Cumulative) margin (FY22/9 4Q Cumulative) 53.8％ Operating income (FY22/9 4Q Cumulative) \2,103mn Sales growth rate (YoY) 194.5％ Number of M&A advisors Sales per M&A advisor1 Average time to M&A (for transferring compan
Slide 5: KPI Highlights
1. FY2022/9 Earnings Result KPI Highlights FY20/9 4Q FY21/9 4Q FY22/9 4Q YoY growth Cumulative Cumulative Cumulative Sales ￥376mn ￥1,328mn ￥3,911mn +194.5% Operating income ￥3mn ￥563mn ￥2,103mn +273.6% Operating margin 0.8％ 42.3% 53.8% +11.5pt Net income ￥4mn ￥368mn ￥1,326mn +260.3% Net income margi
Slide 6: Net Sales and Operating Income (Full-Year)
1. FY2022/9 Earnings Result Net Sales and Operating Income (Full-Year) Performance continues to grow remarkably. Maintained a high operating margin of 53.8% while actively recruiting employees. Sales and operating income (\mn) Sales Operating income Operating margin 53.8% 42.3% 3,911 35.1% 2,103 0.8
Slide 7: Sales, Closed M&A Deals and Fees per Deal (by quarter)
1. FY2022/9 Earnings Result Sales, Closed M&A Deals and Fees per Deal (by quarter) In this term, 61 contracts were concluded, 7 of which were large-scale deals (total fee of ￥100mn or more). The number of large-scale deals for the full year increased steadily from 1 in FY21/9 to 7 in FY22/9, and fur
Slide 8: Number of New Advisory Contracts and Deals in Progress (by quarter)
1. FY2022/9 Earnings Result Number of New Advisory Contracts1 and Deals in Progress2 (by quarter) With the increase in M&A advisors, in the recent quarter, the number of new contracts was 178, which is a record. Deals in progress, which is the base of future sales, increased by 174.8% from 139 (FY21
Slide 9: Number of Employees (by quarter)
1. FY2022/9 Earnings Result Number of Employees (by quarter) M&A brokerage is based on a labor-intensive business model, and the increase of M&A advisors is an important KPI. The number of M&A advisors is growing steadily, and post-recruitment training is achieving good outcomes. Reported +1 than th
Slide 10: Income Statement
1. FY2022/9 Earnings Result Income Statement Strong growth in all categories and the highest level of profit margins in the industry. An increase in sales due to an increase in the number of M&A advisors can be seen remarkably. (\mn) FY20/9 4Q FY21/9 4Q FY22/9 4Q YoY Sales 376 1,328 3,911 +194.5% Gr
Slide 11: Balance Sheet
1. FY2022/9 Earnings Result Balance Sheet Cash and deposits increased by 238.2% due to cash flow earned from operating activities, boasting high financial soundness. While net assets are growing as a result of profit generation, ROE is at an extremely high level due to thorough and efficient managem
Slide 12: Cash Flow Statement
1. FY2022/9 Earnings Result Cash Flow Statement Cash flow from investing is currently not significant and cash flow from operations and free cash flow are at the same level. (\mn) FY20/9 4Q FY21/9 4Q FY22/9 4Q Cash flow from operations 15 678 2,078 Cash flow from investing ▲34 ▲57 ▲79 Cash flow from
Slide 13: FY2023/9 Earnings Forecast
Table of Contents 1 FY2022/9 Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Overview 5 Competitive Advantages of M&A Research Institute 6 Q&A Copyright © 2022 M&A Research Institute. All rights reserved. Highly Confidential to M&A Research Institute. 13
Slide 14: FY23/9 Earnings Forecast
2. FY2023/9 Earnings Forecast FY23/9 Earnings Forecast While rapidly increasing M&A advisors, we will improve performance by maintaining the current fees per deal and time to conclusion. The forecast is based only on M&A brokerage business, and we would announce a revised version as needed when ther
Slide 15: FY23/9 Earnings Forecast: Assumptions
2. FY2023/9 Earnings Forecast FY23/9 Earnings Forecast Assumption of earnings forecast • Set as a conservative figure Sales • Will disclose forecast change as needed in case we have more or larger deals than expected • Set as a conservative figure 47.0%, considering 53.8% in FY2022/9 (detail in the
Slide 16: Assumption of Operating Margin in Earnings Forecast (1)
2. FY2023/9 Earnings Forecast Assumption of Operating Margin in Earnings Forecast (1) Operating margin significantly exceeded its FY2022/9 forecast which was upward revised in FY2022/9 3Q earnings announcement. This is because the additional cost is limited when sales exceed its forecast, and it cou
Slide 17: Assumption of Operating Margin in Earnings Forecast (2)
2. FY2023/9 Earnings Forecast Assumption of Operating Margin in Earnings Forecast (2) ①Sales: Forecast = Each deal fee x Expected value considering the possibility of closing the deal ②Cost: Even if sales exceed its forecast, additional costs are limited ③Margin: Structure that significantly improve
Slide 18: Recruitment Plan for M&A Advisors
2. FY2023/9 Earnings Forecast Recruitment Plan for M&A Advisors Accelerate recruiting and aim for 200 M&A advisors in FY24/9. We will hire more than planned if there is a talented person. Number of M&A advisors Prospective 31 employees to join in FY23/9 300 （Progress rate: 55.4％） ※Aim to achieve the
Slide 19: Shareholder Return Policy
2. FY2023/9 Earnings Forecast Shareholder Return Policy We will consider returning profits to shareholders while reviewing the operating performance and financial status of each term. The possibility and timing of implementing dividends and buybacks are currently undecided. Profits Retained Business
Slide 20: Increase in Liquidity
2. FY2023/9 Earnings Forecast Increase in Liquidity With a tradable stock ratio of 27.4%, we are aware that the liquidity is not high. We are considering various measures to improve liquidity for mid-long term share price formation. Ownership breakdown Consideration for each measure Increase in Foll
Slide 21: Growth Strategy
Table of Contents 1 FY2022/9 Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Overview 5 Competitive Advantages of M&A Research Institute 6 Q&A Copyright © 2022 M&A Research Institute. All rights reserved. Highly Confidential to M&A Research Institute. 21
Slide 22: Ranked No.1 in the industry in two categories
3. Growth Strategy Performance Evaluation Four years since our inception, chosen by many clients, we ranked No.1 in the industry in two categories Results of a survey conducted on M&A brokerage companies with a complete success fee system We are the only listed company to adopt a pricing system with
Slide 23: New Initiatives(1): M&A Insight Seminars
3. Growth Strategy New Initiatives(1): M&A Insight Seminars Free monthly online M&A seminars for owners of sell-side companies. Hosted "Co-sponsored seminars" and "Industry-specific seminars“ 共催セミナーの開催(TSR、PEファンド、クライアント) 各種業種特化型セミナーの開催 Copyright © 2022 M&A Research Institute. All rights reserved. Hi
Slide 24: New Initiatives(2): Airing TV Commercials and Taxi Advertisements
3. Growth Strategy New Initiatives(2): Airing TV Commercials and Taxi Advertisements Started airing TV commercials in FY2022/9 3-4Q and began advertisements in Tokyo taxis. Gained recognition from those who were hesitant to consider M&As due to the fee structure (initial fees, interim fees, monthly
Slide 25: New Initiatives(3): Proactive Search Services
3. Growth Strategy New Initiatives(3): Proactive Search Services We began offering a “Proactive Search” service for buy-side companies in the third quarter of this fiscal year. Unlike ordinary services, it searches large scale sell-side companies based on the needs of buy-side companies. Request Pro
Slide 26: KPI Improvement Measures
3. Growth Strategy KPI Improvement Measures Achieve continued high growth through initiatives to improve each indicator. Top priority Fees per advisor Number of M&A advisors (Sell-side advisors) Advisory Success Fees contracts rate per deal n Increase deal advisories: Systematic training programs an
Slide 27: Medium to Long-Term Vision
3. Growth Strategy Medium to Long-Term Visiont We will expand M&A related areas and develop business in new areas1 in parallel by leveraging M&A Research Institute's strengths of "DX/AI Technology x Sales Capabilities x Recruiting Power” Growth image Train talented personnel into Leverage “DX/AI tec
Slide 28: ESG Initiatives
3. Growth Strategy ESG Initiatives Towards the realization of a sustainable society, we aim to solve the “Social” issues facing Japan, where the declining birthrate and aging population are becoming more serious, tackling the business closure issues due to the lack of successors through our M&A brok
Slide 29: SDG Initiatives
3. Growth Strategy SDG Initiatives We aspire to be a company where employees can work in a healthy manner both physically and mentally as well as establish a sustainable employment environment. Support for Contribution to living the local infrastructure economy 魅⼒ある 雇⽤環境の実現 Realization of an attract
Slide 30: Focus Area in SDG Initiatives
3. Growth Strategy Focus Area in SDG Initiatives We will contribute to creating a base for industry and technological innovation through the M&A brokerage business. Support the business succession of SMEs based in rural areas with high- 1 quality services and technology Decrease business closures du
Slide 31: Company Overview
Table of Contents 1 FY2022/9 Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Overview 5 Competitive Advantages of M&A Research Institute 6 Q&A Copyright © 2022 M&A Research Institute. All rights reserved. Highly Confidential to M&A Research Institute. 31
Slide 32: Company Overview
4. Company Overview Company Overview Company Vision name M&A Research Institute Transforming the M&A brokerage sector by fully leveraging AI and DX Established October 12, 2018 Graduated from the Faculty of Representative Agriculture, Kobe University. In 2016, he established his first Director & CEO
Slide 33: Management
4. Company Overview Management Director, Head of Sales Division Akihiro Yabuki Director, Head of Administrative Division Hikaru Ogino (CPA) Graduated from Meiji University. Joined Keyence Corporation in 2010 and Graduated from Rikkyo University. Joined KPMG AZSA LLC in 2014 and worked in consulting
Slide 34: M&A Market in Japan
4. Company Overview M&A Market in Japan In Japan, the average age of management executives is high and more and more companies lack successors Itʼs unique that M&A brokerage is widely used for business succession. Uniqueness of M&A Market in Japan Growing need for business succession due to aging of
Slide 35: Market Size of Domestic M&A Brokerage
4. Company Overview Market Size of Domestic M&A Brokerage Many profitable companies are at risk of closure and the market size is extremely large even in the domestic market. We expect the M&A brokerage market size to be \453 bn annually and it is a “Blue Ocean”. １ Target Companies: 90,000 2 Market
Slide 36: Growing Need for Business Succession due to Aging of Business Owners
4. Company Overview Growing Need for Business Succession due to Aging of Business Owners In Japan today, the number of young people continues to decline, and the birthrate is declining and the population is aging. As a result, the average age of management executives has risen to 62% and Business su
Slide 37: Imbalance between M&A Demand and M&A Brokerage Supply
4. Company Overview Imbalance between M&A Demand and M&A Brokerage Supply Of the three types of companies that provide M&A services, M&A brokerage companies have a large presence in Japan, with more than 600 companies nationwide. However, compared to the number of the deals that M&A advisors can exe
Slide 38: Business Model
4. Company Overview Business Model The brokerage business model charges fees from both the selling and acquiring companies. Succeeded in reducing costs through streamlining and introduced a system with no start-up or interim fees. Only contingency fees for selling companies. No start-up fee No start
Slide 39: M&A Brokerage Deal Flow by Step
4. Company Overview M&A Brokerage Deal Flow by Step M&A process is divided into three phases; sourcing to sign advisory contracts, matching to search for potential buyers, and execution to support the deal completion. M&A advisors can focus on execution Sourcing Matching Execution Identifying seller
Slide 40: Earnings Structure
4. Company Overview Earnings Structure M&A brokerage earnings are structured as follows: Sales = number of M&A advisors x sales per advisor. Keys to further accelerate the increase in sales are the number of M&A advisors and increase in sales per advisor. Earnings structure Number of advisory contra
Slide 41: M&A Conclusion
4. Company Overview M&A Conclusion We have successfully brokered M&As with companies in various industries, sectors, and regions. Examples Selling companies by business Selling company Acquiring company Constructio n 2%1% 3% 2% Informa tion technology and communications Industry Region Industry Regi
Slide 42: Background of Our M&A Advisors
4. Company Overview Background of Our M&A Advisors M&A Research Instituteʼs M&A advisors come from various industries and companies. The creation of a work environment enabling younger employees to succeed has gradually lowered the average age of advisors to 29 years old. Former employers of M&A adv
Slide 43: Competitive Advantages of M&A Research Institute
Table of Contents 1 FY2022/9 Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Overview 5 Competitive Advantages of M&A Research Institute 6 Q&A Copyright © 2022 M&A Research Institute. All rights reserved. Highly Confidential to M&A Research Institute. 43
Slide 44: Four competitive advantages
5. Competitive Advantages of M&A Research Institute Four competitive advantages Data-driven management based on digital and AI technology enables M&A Research Institute with: • Pricing and speed to completing M&A transactions, creating a competitive advantage • Efficient working environment, differe
Slide 45: Pricing System with Only Success Fees
5. Competitive Advantages of M&A Research Institute(1) Pricing System Pricing System with Only Success Fees M&A Research Institute is the only one M&A brokerage company which adopts a pricing system charging only success fees, thereby lowering fee-related hurdles for M&As. The pricing system provide
Slide 46: In-House Development of Transformational System
5. Competitive Advantages of M&A Research Institute(2) Average time of 6.2 months to M&A completion In-House Development of Transformational System We have developed a sales management system specialized in M&A and have already updated it about 8,000 times We have also reduced working hours and shor
Slide 47: Unparalleled In-House Developed System
5. Competitive Advantages of M&A Research Institute(2) Average time of 6.2 months to M&A completion Unparalleled In-House Developed System History of developing in-house system and our advantages History of Development: We realized the disadvantages of an off-the-shelf system and switched to in-hous
Slide 48: Recruitment Strategy
5. Competitive Advantages of M&A Research Institute(3) Ability to recruit, train, and build organizations Recruitment Strategy M&A Research Institute is quickly expanding advisor headcount through its extensive data-driven recruitment strategy Training system focused on OJT enables employees to beco
Slide 49: Thorough Data Management of Recruitment Processes
5. Competitive Advantages of M&A Research Institute(3) Ability to recruit, train, and build organizations 3.事業の特徴 Thorough Data Management of Recruitment Processes Recruitment is conducted based on data for each recruitment channel. KPI management Number of Number of applicants Channel (1): Applicat
Slide 50: Work environment overwhelmingly streamlined by DX and AI
5. Competitive Advantages of M&A Research Institute(3) Ability to recruit, train, and build organizations Our attractiveness and culture clearly differentiated from competitors We have created the working environment where M&A advisors can work efficiently concentrating on essential work and deal wi
Slide 51: Highest Average Annual Salary in the Industry
5. Competitive Advantages of M&A Research Institute(3) Ability to recruit, train, and build organizations Highest Average Annual Salary in the Industry We have achieved a high salary level in the four years since our founding , by creating an environment where employees can maximize their performanc
Slide 52: Recruitment leads to Continuous Synergistic Growth
5. Competitive Advantages of M&A Research Institute(3) Ability to recruit, train, and build organizations Recruitment leads to Continuous Synergistic Growth In the four years since our founding, we have created a system and environment in which employees make full use of DX and AI technology to quic
Slide 53: In-House System Development and Data-driven Management
35. Competitive Advantages of M&A Research Institute(4) Data-driven management In-house System Development and Data-driven Management The company manages all business processes via data and monitors sales and recruitment KPIs in real time Monitors all processes using data via an in-house developed B
Slide 54: Improve Sales KPIs through Systemization
5. Competitive Advantages of M&A Research Institute(4) Data-driven management Improve Sales KPIs through Systemization Since our inception, we have visualized sales activities, managed KPIs, and made daily changes to improve various indicators. We have also focused on systemizing sales activities to
Slide 55: Table of Contents
Table of Contents 1 FY2022/9 Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Overview 5 Competitive Advantages of M&A Research Institute 6 Q&A Copyright © 2022 M&A Research Institute. All rights reserved. Highly Confidential to M&A Research Institute. 55
Slide 56: Q&A: Performance
Q&A Items Q A • We are focusing on the number of M&A advisors because our What KPIs are you focusing on? business model is labor-intensive • Expected to maintain around ￥60mn • While increasing M&A advisors, we will maintain the current fees per deal and implement measures to increase them What is y
Slide 57: Q&A: Market condition
Q&A Items Q A Global stock market declines and political • No outstanding impact of the macro environment on M&A of SMEs instability continue, but is there any • The demand continues to be strong because it is based on the risk of impact on the M&A brokerage industry? closing business due to the lac
Slide 58: Q&A: Business model
Q&A Items Q A Fees are cheaper than competitorsʼ • Almost the same in a complete success fee system? • We do not set the cheaper fees while we receive fees only when the deal closes successfully How do you acquire deals? • The majority are outbound, in which we provide a proposal directly • There ar
Slide 59: Q&A: Recruitment
Q&A Items Q A • We feel there has been a positive change Have there any changes in • Since before listing, we have continued to thoroughly form the recruitment activities before and organization and create attractiveness in recruitment activities, and after the listing? we believe the results are co
Slide 60: Q&A: Capital policy
Q&A Items Q A • Although we are constantly considering the gradual sale of the The floating stock ratio is low, but managementʼs ownership, we are not currently considering an what do you think about the liquidity? immediate sale after the lockup period • The 12.5% are mainly comprised of the follow
Slide 61: Disclaimer
Disclaimer This presentation was prepared by M&A Research Institute (the “Company”) solely for informational purposes. This presentation does not constitute an offer to sell or a solicitation of an offer to buy any security in the United States, Japan or any other jurisdiction. This presentation is
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