Nihon M&a Center Holdings Inc. · TSE:2127
Nihon M&a Center — Q1 FY2022 Earnings Presentation
75 slides from Nihon M&a Center's earnings presentation, Jul 29, 2022
Slide 1: IR Report: Financial Results Report for Q1 FY2022
Celebration of our 30th anniversary - April 25, 2021 IR Report Financial Results Report for Q1 FY2022 Year to March 2023 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 Policy to prevent recurrence Company Overview P48～P66 Implementation and progress report P1～P10 Our Vision P49 Q1 FY2022 Results Review ・ Dividends P11～P22 Nihon M&A Center 30 years P50 Q1 Results Review P12 To Become the Top Global Integrated M&A Company P51 Income Statement Key D
Slide 3: Policy to prevent reoccurrence: Implementation and progress report
Policy to prevent reoccurrence Implementation and progress report
Slide 4: Commencement of CCO and announcement of measures taken
2 Copyright©2022 Nihon M&A Center Holdings Inc. All rights reserved. Commencement of CCO and Jul Head of Internal Audit Office Explanation at AGM Jun May Compliance management directive for all employees Apr Announcement of measures taken towards employees Mar Announcement of measures taken towards
Slide 5: Status of measures to prevent reoccurrence
Status of measures to prevent reoccurrence This is an overview of the status of the actions taken in response to the 9 recommended measures for the prevention of a reoccurrence outlined in the research report 1. Formulation of compliance-centric management principals and announcement of related mana
Slide 6: Status of measures to prevent reoccurrence
Status of measures to prevent reoccurrence 5. Strengthening system of reporting, establishing regular meetings with key sales people ➡ Whistleblowing hotline unambiguously established, Creation of zone on the intranet for clients messages 6. Strengthening of audit and supervisory departments ➡ On 1
Slide 7: Status of measures to prevent reoccurrence
Status of measures to prevent reoccurrence Declaration of compliance-centric management Nihon M&A Center Holdings Group will Transform itself for compliance-centric management Elevate consciousness of compliance so that it is core to the corporate culture Innovation Client first Inclusion Increased
Slide 8: Financial Results Recovery and Mid-term Vision Progression
Financial Results Recovery and Mid-term Vision Progression There were internal divisions and a lack of Feb-Mar sense of unity Issue Instigating a sense of unity in the company Our strength Oneness of employees based on a combined sense of purpose Response in Apr-May Teach-ins for all employees Presi
Slide 9: Status of measures to prevent reoccurrence: CCO and internal audit specialist
Status of measures to prevent reoccurrence CCO and internal audit specialist CCO （Chief Compliance Officer) Shareholders Annual General Meeting Audit and Supervisory Yasuhiro Takeda Board of Committee Senior Corporate Officer, CCO Directors and Head of Compliance Division Compliance Division Manag
Slide 10: Creation of culture for priority of ethics
Status of measures to prevent reoccurrence Creation of culture for priority of ethics Our company’s business is highly significant for society Carrying out correct work in a correct manner High High High ethical specialisation spirit of awareness cooperation (morality) (professionalism) (inclusivene
Slide 11: Nihon M&A Center Holdings Mission
Nihon M&A Center Holdings Mission ～To bring optimal M＆A ever closer～ We connect thoughts Helping create a society in which M&A can be conducted at ease In Japan, then globally Optimal M&A means Top level compliance Top level client satisfaction Top level execution quality Copyright©2022 Nihon M&A Ce
Slide 12: We shall make another quantum leap
Financial Results Recovery and Mid-term Vision Progression We shall make another quantum leap The fiscal year to March 2023 will be the springboard for the next quantum leap Quantum leap Exceed 30 Recovery Discovery of incidents Action to prevent reoccurrence Copyright©2022 Nihon M&A Center Holdings
Slide 13: Q1 FY2022 Results Review ・ Dividends
Q1 FY2022 Results Review ・ Dividends
Slide 14: Q1 Results Review
Q1 Results Review Progress towards H1 results forecast Sales: 53.3% Ordinary profit: 49.7% FY2022 FY2022 % of H1 forecasts Q1 results H1 forecasts reached in Q1 Sales (¥mn) 9,068 17,000 53.3％ Profitability Ordinary profit (¥mn) 3,579 7,200 49.7％ Copyright©2022 Nihon M&A Center Holdings Inc. All righ
Slide 15: Income Statement Key Data
Income Statement Key Data Slow start to sales activity due to the impact of the response to the incidents, as well as the new clarity and strictness of methodology for accounting for sales ＦＹ２０２2 FY2021 Q1 results FY2022 FY2021 full-year Q1 results YoY (restated) full-year forecasts results (restate
Slide 16: Quarterly Development of Ordinary Profit
Quarterly Development of Ordinary Profit Progress towards H1 results forecast Ordinary profit: around 50% Quarterly ordinary profit Results relative to H1 forecast （¥mn） 4Q 18,000 3Q （¥mn） 2Q 16,000 1,220 1Q Reached 49.7％ 1,813 14,000 1,463 4,102 FY2022 Q1 result 3,579 12,000 1,703 3,757 4,232 ▲37.9
Slide 17: Record of transactions closed
Record of transactions closed Decrease in the number of transactions closed caused by a slow start following the impact of the response to the incidents, as well as the new clarity and strictness of methodology for accounting for sales FY2019 FY2020 FY2021 ▲22.3% FY2022 Full Full Full １Q １Q 2Q 3Q 4Q
Slide 18: Record of M&A sales and number of new sell-side mandates
Record of M&A sales and number of new sell-side mandates Healthy increase in new sell-side mandates received +13.3％ YoY FY2019 FY2020 FY2021 （Units: no. of transactions, Full Full Full １Q １Q 2Q 3Q 4Q １Q 2Q ３Q 4Q １Q million yen） Year Year Year M&A sales *1 4-1 Restated 7,520 31,191 8,703 9,270 9,106
Slide 19: Balance Sheet Key Data
Balance Sheet Key Data Maintaining a healthy balance sheet Accounts receivable end-Jun 2021 ¥4.6bn➡ ¥1.5bn end-Jun 2022 End-Jun FY2021 Assets 2022 % Change (restated) （¥mn、％） Ⅰ Current assets 45,958 83.8% -4,017 49,975 Cash and deposits 43,101 78.6% -4,201 47,303 Accounts receivable 1,493 2.7% 33 1,
Slide 20: Number of Employees
Number of Employees From June 2022 proactive recruitment including referrals Number of employees (consolidated) End of End of End of End of End-Jun FY2018 FY2019 FY2020 FY2021 2022 Number of people as of 5 July including newly hired and yet to start M&A 328 390 473 568 600 1,200 1,050 consultants, +
Slide 21: Strengthening of financial position and management foundations
Change to policy of shareholder return contribution (increase in profit contribution) Strengthening of financial position and management foundations Key management priorities have always been ・ Strengthening of financial position and management foundations ・ Long-term profit contribution to our shar
Slide 22: Raising dividend continuous pay-out ratio to 60%
Change to policy of shareholder return contribution (increase in profit contribution) Mid-term management plan period (up to year ending March 2027) Raising dividend continuous pay-out ratio to 60% Hitherto Henceforth (During mid-term management plan (Year to March 2016 - Year to March 2022) up to y
Slide 23: Large dividend increase
Change to policy of shareholder return contribution (increase in profit contribution) Large dividend increase Original forecast: ¥16 ➡ Revised forecast: ¥23 (+43%) Dividend per share Dividends and the pay-out ratio Actual interim dividends 中間配当実績 (¥) 期末配当実績 Actual annual dividends 26.00 当初年間配当予想 Ori
Slide 24: Start of new growth phase
Change to policy of shareholder return contribution (increase in profit contribution) Start of new growth phase Entering mid-term management plan (¥35bn ordinary profit in year to March 2027) The management in unison with all employees and the support of all our shareholders will aim for the achieve
Slide 25: Growth Strategy
Growth Strategy 1 Strengthening of recruitment and HR development 2 Increasing productivity through digitalisation
Slide 26: Human Resource Development Plan
Human Resource Development Plan A layered approach for thoroughness We aim to achieve fast results from the training layer For Senior executive officers and above. Senior Core to strengthened training plan 5 Goal Creating and implementing growth strategies executives for our company. Executive offsi
Slide 27: Digital transformation strategy - external (1): Start of TV commercials
Digital transformation strategy - external (1) Start of TV commercials From June 2022, starting from Kanto area 「Ratio of companies without a successor - 61.5％*1」 Number of companies without a successor – 1.27 million*2」 Reporting accurately the data behind this issue facing Japanese companies. Seek
Slide 28: Digital transformation strategy - external (2)
Digital transformation strategy - external (2) Launch of joint seminars with local TV companies Gain broader recognition through Results of the activity special documentary programmes with Gain interest from regional TV companies many local business owners Also run several TV commercials Date of Hos
Slide 29: Digital transformation strategy - internal
Digital transformation strategy - internal Making the M&A process more efficient Efficiency： reduction in lead times × increased yield Valuation Project Matching Contract assessment evaluation evaluation evaluation V-compass D-compass M-compass Implementation survey structure structure V-compass Ｍ-c
Slide 30: Last Three Mid-term Management Targets and Ordinary Profit Trend
(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 31: 13-year Results Record
(Reference) 13-year Results Record 12th consecutive period of higher sales and profit (¥mn) 45,000 Sales Ordinary profit 40,401 40,000 34,795 35,000 32,009 30,000 Compound annual growth rate of ordinary profit 28,463 in the last 13 years ＝ 23.2％ 24,625 25,000 19,069 16,86４ 20,000 15,468 14,467 14,77
Slide 32: Related Activities
Related Activities IIIANihon MaA Center HD
Slide 33: Financial Performance of M&A sales and Other sales
Financial Performance of M&A sales and Other sales BＡＴＯＮＺ andＴＰＭ IPO support drive Other sales QoQ comparison YoY comparison Q1 FY2021 Q1 FY2022 (restated) FY2021 FY2020 FY2019 (¥mn) Total % YoY Total % Total YoY Total YoY Total YoY M&A sales *1 8,720 100.0% 76.7% 11,373 100.0% 38,807 115.0% 33,743
Slide 34: TOKYO PRO Market IPO support activities (1)-1
Update on related activities (1)-1 TOKYO PRO Market （TPM） IPO support activities First ever listing for an IPO consultant Record ever level of IPOs TPM listing a first for the industry TPM IPOs Company Bridge Consulting Group Inc. 11 companies (As of 28 July 2022) 13 name ＜9225＞ already listed in 20
Slide 35: Launch of GO PUBLIC pre-IPO assessment service
Update on related activities (1)-2 TOKYO PRO Market （TPM） IPO support activities Launch of new service for pre-IPO assessment called GO PUBLIC Positioning of GO PUBLIC IPO support J-Adviser IPO preparation GO PUBLIC consulting mandate and review IPO Assessment of IPO Current situation Full back up p
Slide 36: Online M&A matching by BATONZ: Over 2,000 transactions
Update on related activities (2)-1 Online M&A matching by BＡＴＯＮＺ Over 2,000 transactions completed User registrations Transactions closed (cumulative) (Unit: no. of transactions) (Unit: no. of people) 166,164 2,500 2,107 180,000 160,000 152,026 2,000 140,000 1,749 120,000 104,748 1,500 100,000 80,00
Slide 37: BATONZ cooperation agreement with Osaka Prefecture
Update on related activities (2)-2 Online M&A matching by BＡＴＯＮＺ Entered cooperation agreement with Osaka Prefecture ※ 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 Janua
Slide 38: PMI: only consulting company in Japan specialised in PMI
Update on related activities (3)-1 PMI(Post Merger Integration) The only consulting company in Japan specialised in PMI Continuous growth in mandates since establishment in 2018 The basis for the formation of Nihon PMI Consulting PMI is a general process for optimising integration to ensure that the
Slide 39: SME PMI guidelines created by SME Agency
Update on related activities (3)-2 PMI (Post Merger Integration) Small and Medium Enterprise Agency creates SME PMI guidelines for the first Released on 17 March 2022 https://www.chusho.meti.go.jp/zaimu/shoukei/download/pmi_guideline.pdf Key points in SME PMI guidelines 5 Comprehensive coverage of 3
Slide 40: Overseas activities status
Overseas activities status International Division Fast progress as pioneer in SME cross-border M&A *Sales and no. of employees as at transaction Transaction closed in Q1 ▼ Completion of domestic M&A transaction in Vietnam Seller Buyer Industry Sales Industry Sales Country Country classification No.
Slide 41: Features
Features IIIANihon MaA Center HD
Slide 42: New management structure for our second foundation phase
Features (1) New management structure for our second foundation phase Independent directors 46.6% 2 lawyers, 1 accountant <Directors> <Independent Directors> Independent Director Independent Director President and Representative Tokihiko Mori Anna Dingley Director Suguru Miyake Independent Director
Slide 43: Announcement of 10th M&A Bank of the Year awards
Features (２) Announcement of 10th M&A Bank of the Year awards M&A Bank of the Year criteria Awards are made to banks with which we collaborate and are based on factors such as overall excellence of M&A results, individual transactions and contribution to the region. Award selection criteria include
Slide 44: Investment in start-up MOON-X
Features (3) Investment in the start-up company MOON-X to accelerate support for regional regeneration Discovering regional SMEs and micro enterprises which have exceptional Hands-on support and consulting in technology and products, but suffer all fields through specialists through the lack a succe
Slide 45: Joint publication of M&A books by industry
Features (4) Industry Focus Division Joint publication of 5 M&A books covering different industries Extensive explanation of M&A strategy for each industry covering key points and changes to the operating environment Published on 22 Jun Published on 29 Jun Published on 6 Jul Published on 13 Jul Publ
Slide 46: Number of Transactions Closed in Q1 (1/4)
Number of Transactions Closed in Q1 (1/4) 116 transactions closed, 226 by number of companies Selling company Acquiring company Industry classification Region Industry classification Region 1 Electrical and telecoms contractor Kansai Electrical and telecoms contractor Koshinetsu 2 Electrical and tel
Slide 47: Number of Transactions Closed in Q1 (2/4)
Number of Transactions Closed in Q1 (2/4) Selling company Acquiring company Industry classification Region Industry classification Region 26 Food manufacture Tokai, Hokuriku Food wholesale Kanto 27 Daily goods manufacture / wholesale Kanto Food wholesale Kansai 28 Apparel design / retail Kanto Appar
Slide 48: Number of Transactions Closed in Q1 (3/4)
Number of Transactions Closed in Q1 (3/4) Selling company Acquiring company Industry classification Region Industry classification Region 56 Interior finish work Kanto Exterior finish work Kanto 57 Furniture / furniture interior manufacturing Hokkaido, Tohoku Construction materials wholesale Hokkaid
Slide 49: Number of Transactions Closed in Q1 (4/4)
Number of Transactions Closed in Q1 (4/4) Selling company Acquiring company Industry classification Region Industry classification Region 86 Pharmacy / drugstore Kansai Pharmacy / drugstore Kansai 87 Pharmacy / drugstore Chugoku, Shikoku Pharmacy / drugstore Kansai 88 Pharmacy / drugstore Chugoku, S
Slide 50: Company Overview
Company Overview IIIANihon Ma.A Center HD
Slide 51: 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 52: Nihon M&A Center 30 years
Nihon M&A Center 30 years Becoming a Rapid growth global leading Establishment IPO period M&A company period (run up) (hop) (skip) (jump) 10ｔｈ 20ｔｈ 30ｔｈ 40,000 Sales (￥mn) ＦＴＳＥ4Good Index Series October 2021 FTSE Blossom Japan Index June 2021 Transition to a holding 35,000 company structure Entry to
Slide 53: 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 ◆Nihon M&A center recognized Optimal matching and post-merger integration by GUINNESS WORLD RECORDS TM as the best-selling mergers and Broad
Slide 54: Corporate Profile (End-Jun 2022)
Corporate Profile (End-Jun 2022) Leading company in M&A intermediary services with a track record of over 7,000 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 mana
Slide 55: 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 56: 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-Jun 2022 Network Information Accounting firms …1,040 Regional M&A centers Regional banks Information …Collaboration agreements with 95 (out of a total of 99) Information Shinkin banks …
Slide 57: 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, growth strategy consulting Introductions PMI Information Start of Company Negotiation /dialogue services project valuation with principals /closing Market research Pri
Slide 58: 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 Very strong network for M&A information 1. Strong systems for developing Regional financial institutions, accountants, large financial valuable information in
Slide 59: Our Workflow as An M&A Intermediary
Our Workflow as An M&A Intermediary Retainer fee Consultation Signing of advisory agreement Buyer Provision of materials Valuation Company analysis, sector research, selection of potential buyers Preparation of teaser (anonymous) Explanation of teaser (anonymous) Preparation of investment memorandum
Slide 60: Nihon M&A Center Inc. Organization Structure
58 Administration General Affairs Dept. Document Mgmt. Dept. H.Q. Copyright©2022 Nihon M&A Center Holdings Inc. All rights reserved. Human Resources Dept. Accounting Dept. IPO Review Dept. TPM Div. IPO Promotion Dept. Nihon M&A Center Inc. Organization Structure Management Domestic Div. Mgmt of sale
Slide 61: Sales Headquarters divisional structure
Sales Headquarters divisional structure Sales Headquarters Corporate Growth Alliance Large Financial Industry Focus International Management Institutions Strategy Institutions Division Division Division Division Division Division Collaboration with Collaboration with Direct contact Mid-cap Industry
Slide 62: 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 63: Sustainability Initiatives (1)
Sustainability Initiatives （１） Environmental Social and Governance (ESG) practice Human rights Environmental policy Compliance Labor practices and Response to climate Risk management diversity change Governance Anti-corruption Social Health and safety Environment Consideration for
Slide 64: Skill matrix (Directors and Senior Corporate Officer)
Skill matrix 1 (Directors and Senior Corporate Officer at Nihon M&A Center Holdings Inc.) *As of 29 July 2022 Finance, Financing, Fund management HR development transformation Brand strategy Administration Sustainability Division head International Management Compliance HR practice Accounting Invest
Slide 65: Skill matrix (Senior Corporate Officers at Nihon M&A Center Inc.)
Skill matrix 2 (Senior Corporate Officers at Nihon M&A Center Inc.) *As of 29 July 2022 HR development transformation Brand strategy Administration Sustainability Division head International Management management HR practice Compliance Investment Accounting IOT, Digital experience Consulting Financi
Slide 66: Sustainability Initiatives (2)
Sustainability Initiatives （2） Enabling the continual growth of society through friendly M&A support, strengthening of the foundations for corporate management and sustaining and increasing employment Our M&A intermediary activities provide economic benefits Resolving social problems 1 Number of com
Slide 67: What size sellers does Nihon M&A Center support?
(Reference) Transactions closed in the year to March 2022 What size sellers does Nihon M&A Center support ？ Calculated from deals closed in FY2021 Sales in a seller (¥mn) Number of employees in a seller More than 100 employees, 4.2％ More than 2,000 7.0％ 100 or less 8.2％ 5 employees or less, More tha
Slide 68: What is Unique about Nihon M&A Center Matching Service?
(Reference) Transactions closed in the year to March 2022 What is Unique about Nihon M&A Center Matching Service? We achieve optimal matching from our broad geographical and sector reach Industries of companies sold Nihon M&A Center matching results Same Different Total sector sector Other Construct
Slide 69: Business Environment
Business Environment IIIANihon MaA Center HD
Slide 70: 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 71: Distribution of the Age of Owners & Average 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 (chart 1） Age distribution of SME owners (in 5-year categories) Changes in owners average retirement a
Slide 72: 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 73: M&A Market Potential
M&A Market Potential There is a potential market in excess of ¥20 trillion Business succession potential market estimate Ratio of Number of M&A Number of companies Sales per M&A Employees companies with market Our position/initiative companies with no transaction no successor size successor New mark
Slide 74: Lastly
Lastly Ⅰ. Corporate ethos Corporate ethos Corporate aim Management priority on adherence to compliance and Assisting companies to continue and prosper through M&A corporate social responsibility Ⅱ. To investors Increase market value Return profits to shareholders We aim to increase market value thro
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Nihon M&A Center Holdings — Q1 FY2022 Earnings Presentation on 6ix