Quants Research Institute Holdings, Inc. · TSE:9552
Quants Research Institute — M&A Research Institute — Q1 FY2023/9 Earnings Presentation
64 slides from Quants Research Institute's earnings presentation, Jan 27, 2023
Slide 1: FY2023/9 1Q Financial Results Presentation
FY2023/9 1Q Financial Results Presentation January 27, 2023 M&A Research Institute Inc. (TSE Growth: 9552)
Slide 2: Table of Contents
Table of Contents 1 FY2023/9 1Q Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Profile 5 Competitive Advantages of M&A Research Institute 6 Q&A
Slide 3: Executive summary
1. FY2023/9 1Q Earnings Results Executive summary Performance Record quarterly sales of ¥2,125 million (up 110.3% YoY) and operating profit of ¥1,398 million (up 96.6% YoY) →M&A advisors who were recruited in the previous year are showing steady results. The operating margin of 65.8% (70.4% a year e
Slide 4: Earnings Summary
1. FY2023/9 1Q Earnings Results Earnings Summary Operating Sales ¥1,010mn (FY22/9 1Q→FY23/9 1Q) →¥ 2,125mn margin (FY23/9 1Q) 65.8％ Operating income (FY22/9 1Q→FY23/9 1Q) ¥711mn →¥1,398mn Sales growth rate (YoY) 110.3％ Number of M&A advisors Sales per M&A advisor1 Average time to M&A (for transferri
Slide 5: KPI Highlights
1. FY2023/9 1Q Earnings Results KPI Highlights FY21/9 1Q FY22/9 1Q FY23/9 1Q YoY growth Sales ￥249mn ￥1,010mn ￥2,125mn +110.3% Operating income ￥110mn ￥888mn ￥1,398mn +96.6% Operating margin 44.3％ 70.4% 65.8% ▲4.6pt Net income ￥75mn ￥486mn ￥958mn +97.2% Net income margin 30.1％ 48.1% 45.1％ ▲3.0pt Num
Slide 6: Net Sales and Operating Profit (Full Year)
1. FY2023/9 1Q Earnings Results Net Sales and Operating Profit (Full Year) Performance continues to grow significantly. Progress against the full-year budget as of 1Q was 31.7%. Net sales and operating profit (¥ million) 売上高 Net sales 営業利益 Operating Profit 営業利益率 Operating margin 65.8% 6,700 70.0% 60
Slide 7: Sales, Closed M&A Deals, and Fees Per Deal (by quarter)
1. FY2023/9 1Q Earnings Results Sales, Closed M&A Deals, and Fees Per Deal (by quarter) In this term, 33 contracts were concluded, 4 of which were for large-scale deals (total fee of ¥100 million or more).The number of large-scale deals increased steadily: 4 as of FY2023/9 1Q compared with 7 in FY22
Slide 8: Number of New Advisory Contracts and Deals in Progress (by quarter)
1. FY2023/9 1Q Earnings Results 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 208, which is a record. Deals in progress, which is the base of future sales, increased by 11.5% from 382 (F
Slide 9: Number of Employees (by Quarter)
1. FY2023/9 1Q Earnings Results Number of Employees (by Quarter) The M&A brokerage business is based on a labor-intensive business model, and an increase in the number of M&A advisors is an important KPI. The net increase in the number of M&A advisors as of January was 59, including those who accept
Slide 10: Income Statement
1. FY2023/9 1Q Earnings Results 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) FY21/9 1Q FY22/9 1Q FY23/9 1Q YoY Sales 249 1,010 2,125 +110.3
Slide 11: Balance Sheet
1. FY2023/9 1Q Earnings Results Balance Sheet While net assets are growing as a result of profit generation, ROE is at an extremely high level due to thorough and efficient management. FY22/9 4Q (¥mn) FY23/9 1Q (¥mn) Current liabilities, 1050 (Ref.) ROA¹ Current liabilities, 1205 FY21/9 FY22/9 Fixed
Slide 12: FY2023/9 Earnings Forecast
Table of Contents 1 FY2023/9 1Q Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Profile 5 Competitive Advantages of M&A Research Institute 6 Q&A
Slide 13: 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 14: Assumption of earnings forecast
2. FY2023/9 Earnings Forecast FY23/9 Earnings Forecast(Supplemented by upward revision of hiring plan) 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
Slide 15: 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 16: 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 17: M&A Advisor Recruitment Plan (upward revision)
2. FY2023/9 Earnings Forecast M&A Advisor Recruitment Plan (upward revision of previously announced forecast) As a result of steady progress in recruitment, we have revised upward the planned figures announced in October 2022: From 130 to 154 advisors for FY23/9; and from 200 to 254 advisors for FY2
Slide 18: 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 19: Increase in Liquidity
2. FY2023/9 Earnings Forecast Increase in Liquidity With a tradable stock ratio of 27.6%, 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 20: Growth Strategy
Table of Contents 1 FY2023/9 1Q Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Profile 5 Competitive Advantages of M&A Research Institute 6 Q&A
Slide 21: Medium- to Long-term Vision
3. Growth Strategy Medium- to Long-term Vision Leveraging the M&A Research Institute’s strength of DX/AI Technologies x Sales Capabilities x Recruiting Power, we aim to expand and develop businesses in M&A-related areas and new areas.1 The most recent developments are the establishment of a subsidia
Slide 22: Overview of a Newly Established Subsidiary
3. Growth Strategy Overview of a Newly Established Subsidiary Establish a new subsidiary to support the asset management of the owner of the transferor after the transfer. For details, please refer to “Notice Concerning Establishment of Subsidiary” announced on January 13, 2023. (1) Name Asset Manag
Slide 23: Background to the Establishment of the Subsidiary
3. Growth Strategy Background to the Establishment of the Subsidiary In the course of many M&A deals, as the asset management needs of owners after the transfer are increasing, we decided to start consulting on asset management as a business in order to meet the same needs in the future. Provision o
Slide 24: Purpose and Structure of the Corporate Group after the Demerger
3. Growth Strategy Purpose and Structure of the Corporate Group after the Incorporation-type Demerger From March 17, 2023, we will shift to a system in which each business is managed on a company-by-company basis, with a view to various future business developments. Before the incorporation-type Aft
Slide 25: Performance Evaluation
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 26: 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総合研究所. All rights reserved. Highly Confident
Slide 27: New Initiatives (2): Airing TV Commercials and Taxi Advertisements
3. Growth Strategy New Initiatives (2) : Airing TV Commercials and Taxi Advertisements In FY22/9 Q3 and Q4, TV commercials for the TBS affiliate’s “News Feature” program began. A commercial was also aired on taxis in Tokyo. Started to gain recognition among those who cannot consider M&A because of t
Slide 28: 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 29: 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 ◼ Increase deal advisories: Systematic training programs an
Slide 30: 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 31: 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 32: 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 33: Company Profile
Table of Contents 1 FY2023/9 1Q Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Profile 5 Competitive Advantages of M&A Research Institute 6 Q&A
Slide 34: 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 35: 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 36: Three Strengths in Management
4. Company Overview Three Strengths in Management Here are three key factors for a company to grow profitably. High data-driven management capabilities ・Manage all data numerically to increase sales reproducibility ・All rational, numerically based decision-making Three important factors for manageme
Slide 37: In-house System Development and Data-driven Management
34. Company Overview 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 BI tool for daily improvement. M&A advisory M&A Recruitment
Slide 38: Uniqueness of 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 It’s 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 39: 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 40: 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 41: 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 42: 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 43: 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(DX) Matching(AI) Execution Identifyin
Slide 44: 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 45: 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 Construction 2%1% 3% 2% Information technology and communications Industry Region Industry Region
Slide 46: Background of Our M&A Advisors
4. Company Overview Background of Our M&A Advisors M&A Research Institute’s 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 47: Competitive Advantages of M&A Research Institute
Table of Contents 1 FY2023/9 1Q Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Profile 5 Competitive Advantages of M&A Research Institute 6 Q&A
Slide 48: Competitive advantages(1) Advantages over customers
5. Competitive Advantages of M&A Research Institute Competitive advantages(1) Advantages over customers 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 The only listed
Slide 49: Pricing System with Only Success Fees
5. Competitive Advantages of M&A Research Institute：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 provides a
Slide 50: In-House Development of Transformational System
5. Competitive Advantages of M&A Research Institute：Average time of 6.6 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 shorten
Slide 51: Unparalleled In-House Developed System
5. Competitive Advantages of M&A Research Institute：Average time of 6.6 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-house d
Slide 52: Work environment overwhelmingly streamlined by DX and AI
5. Competitive Advantages of M&A Research Institute Competitive advantages(2) Advantages in Recruitment We have created the working environment where M&A advisors can work efficiently concentrating on essential work and deal with other work on system through promoting DX and AI technology. We are di
Slide 53: Recruitment Strategy
5. Competitive Advantages of M&A Research Institute： Recruitment 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 become immediately work-ready and retention r
Slide 54: Thorough Data Management of Recruitment Processes
5. Competitive Advantages of M&A Research Institute： Recruitment 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 Channel (1): Applications Number of scouting Number of messages Number of applicant
Slide 55: Highest Average Annual Salary in the Industry
5. Competitive Advantages of M&A Research Institute： Recruitment 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 performance. Division 2nd year~ (1 year~ experience
Slide 56: Recruitment leads to Continuous Synergistic Growth
5. Competitive Advantages of M&A Research Institute： Recruitment 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 quickly produce results. We are continuing sy
Slide 57: Q&A
Table of Contents 1 FY2023/9 1Q Earnings Results 2 FY2023/9 Earnings Forecast 3 Growth Strategy 4 Company Profile 5 Competitive Advantages of M&A Research Institute 6 Q&A
Slide 58: Q&A (updates from the previous announcement are shown in red)
Q&A (updates from the previous announcement are shown in red) Items Question Answer We are focusing on the number of M&A advisors because our business What KPIs are you focusing on? model is labor-intensive. Expected to remain around ¥60 million. We will expand the number of staff but maintain the c
Slide 59: Q&A
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 impact on • The demand continues to be strong because it is based on the risk of closing the M&A brokerage industry? business due to the lac
Slide 60: Q&A
Q&A Items Q A Fees are cheaper than competitors’ in a • Almost the same 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 61: Q&A
Q&A Items Q A Have there any changes in recruitment • We feel there has been a positive change activities before and after the listing? • Since before listing, we have continued to thoroughly form the organization and create attractiveness in recruitment activities, and we believe the results are co
Slide 62: Q&A
Q&A Items Q A Although we always consider the gradual reduction of the management’s The floating stock ratio is low. What do you think shareholding ratio, the shares are not sold immediately after the lockup about securing the liquidity? period. The 12.5% mainly comprises the following: (1) 7.5%: Or
Slide 63: Q&A Group Company Structure
Q&A Group Company Structure Items Q A M&A Research Institute Holdings What do you plan to do? Only executive officers are enrolled and mainly manage the group company. Inc. We do not expect any negative impact on the M&A brokerage business. M&A Research Do you expect any impact on the businesses fro
Slide 64: 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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