Nihon M&A Center Holdings Inc. · TSE:2127
Nihon M&A Center — FY2022 Earnings Presentation
73 slides from Nihon M&A Center's earnings presentation, Apr 28, 2023
Slide 1: IR Report: Financial Results Report for FY2022
Celebration of our 30th anniversary - April 25, 2021 IR Report Financial Results Report for 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. As t
Slide 2: Table of Contents
Table of Contents Nihon M&A Center Holdings Purpose P1 Features P38～P41 Actions taken in FY2022 P2～P4 Features（1）～（3） P39～P41 FY2022 Results P5～P8 Company Overview P42～P65 FY2022 Results P6 Our Vision P43 Q4 Results P7～P8 Nihon M&A Center 30 years P44 Review of FY2022 P9～P20 (Reference) 14-year Resu
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: Actions taken in FY2022
Actions taken in FY2022 IIIANihon Ma.A Center HD
Slide 5: Actions taken in FY2022
Actions taken in FY2022 1 Prevent reoccurrence Creation of Compliance Division with externally hired CCO position and Head of Internal Audit Office Inauguration of effective compliance training and education Introduction of new HR system including ethical considerations; improvements to incent
Slide 6: Progress in compliance-centric management
Actions taken in FY2022 Progress in compliance-centric management FY2022 FY2023～ Prevention of reoccurrence Becoming a trusted company The incident Establishing Further development and foundation raising of awareness Formulation of group compliance basic direction Organisation of compliance system
Slide 7: FY2022 Results
FY2022 Results IIIANihon Ma.A Center HD
Slide 8: FY2022 Results
FY2022 Results Sales growth and profit ｄｅｃｌｉｎｅ in FY2022, though fell short of our original forecast Sales were 98.4% of the forecast and ordinary profit 86% We apologize profoundly to investors that we were unable to meet expectation Full year results compared with prior year actuals and original f
Slide 9: Q4 Results
Q4 Results Unusually large increase in profit in Q4 follows successful strategic actions Q4 actuals compared with prior year Q4 Quarterly ordinary profit FY2022 FY2021 YoY results results (￥mn) 4Q 3.6x in Q4 Sales (¥mn) 11,439 6,128 186.7％ 18,000 3Q 2Q Ordinary profit 16,000 1,220 1Q (¥mn) 4,427 1,2
Slide 10: Q4 Results
Q4 Results In second half transactions closed were +32.2% yoy Recovery following the incident with unity among employees Record quarterly transactions Number of transactions closed +32.2％ 291 296 286 270 258 243 226 176 Dec 2021 Oct 2022 Discovery of incident Review of management strategy Implementa
Slide 11: Review of FY2022
Review of FY2022 IIIANihon Ma.A Center HD
Slide 12: Review of FY2022
Review of FY2022 Transactions closed reached a historic high But a lower average transaction value meant slim sales growth Results YoY Cause Planned solution • Higher number of consultants Transactions • Restart of planning activity to closed 1,050 105.4 % • Employee unity return, higher strengthen
Slide 13: Issues are lower M&A sales/employee and average transaction value
Review of FY2022 Issues are lower M&A sales/employee and lower average transaction value 4 reasons for lower level of M&A sale/employee 1 People Impact on training and supervision, following reduction of middle management 2 Productivity Reduction in transactions closed per person 3 Transaction value
Slide 14: Review of FY2022: People
Review of FY2022 1 People Impact on training and supervision, following reduction of middle management Accelerated training programme for group leaders to create appropriate employee structure in FY2023 １ Cause ２ Planned solution Based on past experience, the optimal average Training for middle
Slide 15: Review of FY2022: Productivity
Review of FY2022 2 Productivity Reduction in transactions closed per person Strengthening and building HR development system １ Cause ２ Planned solution In H1 middle managers departed Establish improved development system With the 2in1 system （selling in pairs) reduce ratio of In H2 the ratio of
Slide 16: Review of FY2022: Transaction value
Review of FY2022 3 Transaction value Drop in number of large transaction led to lower average transaction value Focus on mid-cap mandates １ Cause ２ Planned solution Pause in business development for mid-caps Restart planning activity for mid-caps, improve （companies with sales of over ¥1bn or pr
Slide 17: Review of FY2022: Mandates
Review of FY2022 4 Mandates Drop in new mandates following voluntary reduction in seminars and direct marketing Review how to improve effectiveness of direct marketing strategy More activation of network １ Cause ２ Planned solution Large-scale seminars stopped in the period Network December 2021 to
Slide 18: Exceptional circumstances in FY2022
Review of FY2022 Exceptional circumstances in FY2022 1 Short period of employee unity for sales activity （started in Q2） 1 Sales activity 1Q 2Q 2Q 3Q 4Q 2 Seminars restart 2 New direct sales activity (restart of seminars) not possible until November In particular, mid-cap company planning activity w
Slide 19: Income Statement Key Data
Income Statement Key Data 2.3% increase in sales, 8.2% decline in profit （falling short of targets set at start of year) FY2022 FY2022 YoY FY2021 full-year forecasts (¥mn, ％) Total % % Total % Total % Sales 41,315 100.0 2.3 40,401 100.0 42,000 100.0 (o/w M&A sales) 39,785 96.3 2.5 (38,807) (96.1) Co
Slide 20: Balance Sheet Key Data
Balance Sheet Key Data Maintaining a healthy balance sheet Assets End-Mar （¥mn、％） 2023 % Change FY2021 Ⅰ Current assets 52,99８ 80.6 3,023 49,975 Cash and deposits 45,575 69.3 -1,728 47,303 Accounts receivable 2,998 4.6 1,538 1,460 Others 4,425 6.7 3,212 1,212 Ⅱ Fixed assets 12,766 19.4 3,822 8,943 T
Slide 21: Record of Transactions Closed
Record of Transactions Closed Annual transactions closed: Exceeded 1,000 for first time 4Q transactions closed： +68.2％ 4Q sell-side mandates： +10.3％ FY2019 FY2020 FY2021 +68.2％ FY2022 （Units: no. of transactions, Full Full Full Full １Q 2Q ３Q 4Q １Q 2Q ３Q 4Q １Q ２Q ３Q 4Q million yen） Year Year Year Yea
Slide 22: Number of Employees
Number of Employees Resumption of active recruitment campaign last summer, increased headcount by 111 since end of prior period Number of employees (consolidated) End of End of End of End of End of Number of employees as of 10 Apr FY2018 FY2019 FY2020 FY2021 FY2022 including newly hired and yet to s
Slide 23: Dividend Policy / Shareholder Breakdown
Dividend Policy Shareholder Breakdown
Slide 24: Dividend per Share
Dividend per Share Annual dividend of FY2022 is ¥23 as expected (payout ratio: 77.3%) Expected to continue ￥23 level in FY2023 Dividend forecast Annual dividend *2 Dividend paid (¥) (¥) at start of year (¥) 中間配当実績 Actual interim dividends 23.00 Pay-out 24.00 Dividend Breakdown Dividend Breakdown rat
Slide 25: Dividend Payments and Market Capitalization
Dividend Payments and Market Capitalization Raising dividend continuous pay-out ratio to 60% during new 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
Slide 26: Shareholder Return Contribution
Shareholder Return Contribution Share Repurchase to be implemented （up to：￥7.0bn） Total payout ratio expected to be about 132％ Implementation of share repurchase, decided on 28 April 2023 Total number of shares Up to 10,000,000 shares that may be purchased Ratio to total number of shares issued 3.0%
Slide 27: Share Ownership
Share Ownership Foreign share ownership 42.7％ September 30, 2022 March 31, 2023 Treasury stock Treasury stock Other Corporations Other Corporations 1.8％ 1.8％ 5.0％ 3.8％ Individuals Individuals 18.5％ 22.1％ Foreign Foreign 48.0％ Financial institutions 42.7％ Financial institutions 28.0％ 28.4％ Number of
Slide 28: IR Activity
IR Activity More emphasis on IR activity, respecting the importance of shareholder communication 1 Completion of Integrated Report Released in FY2022. Plan simultaneous Japanese and English publication in FY2023 2 Extensive overseas IR President Miyake overseas roadshows （plans for America in Ju
Slide 29: FY2023 Forecast and Revised Mid-term Management Goals
FY2023 Forecast and Revised Mid-term Management Goals
Slide 30: 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 31: Revised Mid-term Management Goals
Revised Mid-term Management Goals Mid-term management goals have been revised to take account of the current operating environment The ordinary profit target for FY2027 is now ￥30.5bn (￥mn) 80,000 Consolidated sales The original plan has been 80,000 put back by roughly 2 years 76,200 Consolidated or
Slide 32: Mid-term Management Plan
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. 30
Slide 33: 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 34: 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 35: Related Activities
Related Activities IIIANihon MaA Center HD
Slide 36: Financial Performance of M&A Sales and Other Sales
Financial Performance of M&A Sales and Other Sales BＡＴＯＮＺ and ＴＰＭ IPO support drive other sales FY2022 FY2021 FY2020 FY2019 (¥mn) Total % YoY Total % Total YoY Total YoY Total YoY M&A sales *1 39,785 100.0% 102.5% 38,807 100.0% 115.0% 33,743 100.0% 108.2% 31,191 111.5% M&A cost of sale *2 5,126 12.9
Slide 37: Update on Related Activities (1)
Update on Related Activities (1) Online M&A matching by BＡＴＯＮＺ Number of transactions closed increase to over double the prior year level ※ Source for ranking No.1 in cumulative number of members and No. 1 in cumulative transactions completed: Nihon Marketing Research Organization, Inc. regional mar
Slide 38: Update on Related Activities (2)
Update on Related Activities (2) TOKYO PRO Market （TPM） IPO support activities Year to March 2023 Highest ever number of IPO support assignments TPM IPOs Newly listed companies on TPM （March –April 2023） (no. of companies) 22 companies listed in 2022 25 Sun Feste Inc. ＜5881＞ IPO date 31 Mar Number o
Slide 39: Overseas Activities
Overseas Activities In FY2022 we closed 14 cross-border transactions including 3 involving Europe and the USA Transactions closed overseas in FY2022 Seller Buyer Industry classification Country Industry classification Country 1 Construction Singapore Construction Japan 2 Transportation Malaysia Logi
Slide 40: Features
Features IIIANihon MaA Center HD
Slide 41: Joint venture with JUROKU Financial Group
Features Formation of a joint venture with JUROKU Financial Group to support succession considerations for management and businesses Solution provider for business succession and growth strategy Preeminent local customer base JUROKU Financial Group※ has its main operations in Gifu and Aichi prefec
Slide 42: V-Compass company valuation system
Features V-Compass company valuation system Acceleration in adoption by financial institutions Financial institutions where it is in use Starting with The Bank of Okinawa 1 January 2022 it is now in use at 5 regional banks 8 more banks are evaluating adoption and further expansion of use is expect
Slide 43: Major relaunch of events for accountancy firms
Features Major relaunch of events for accountancy firms Host international conference for the first First large-scale national seminar series time in 3 years for accountants ▲ Satoshi Kamiebisu, General Manager of Consultants Strategic Sales Department, is the presenter at the seminar In March 202
Slide 44: Company Overview
Company Overview IIIANihon Ma.A Center HD
Slide 45: 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 46: 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 47: 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 48: 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 49: 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 50: Corporate Profile (End-Mar 2023)
Corporate Profile (End-Mar 2023) Leading company in M&A intermediary services with a track record of over 7,500 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 51: 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 52: 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-Mar 2023 Network Information Accounting firms …1,033 Regional M&A centers Regional banks Information …Collaboration agreements with 95 (out of a total of 99) Information Shinkin banks …
Slide 53: 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 54: 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 55: 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 56: Nihon M&A Center Inc. Organization Structure
54 Administration Copyright©2023 Nihon M&A Center Holdings Inc. All rights reserved. General Affairs Dept. HQ Document Mgmt. Dept. Accounting Dept. Process Management Dept. Quality Control Legal Advisory Dept. Internal Audit Office Compliance Division HQ Corporate Advisory 2 Dept. Corporate Advisory
Slide 57: 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 58: 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 59: Sustainability Initiatives (1)
Sustainability Initiatives （１） Environmental Social and Governance (ESG) practice Key activities in the year to March 2020 Establishment of voluntary Nomination Advisory Addition of ESG factors in screening new mandates Committee and Remuneration Advisory Committee Voluntary university lecturi
Slide 60: 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 61: Transactions closed in the year to March 2022: seller size
(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 100 or less More than 100 employees, 4.2％ More than 2,000 7.0％ 8.2％ 5 employees or less, More tha
Slide 62: 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 63: Number of Transactions Closed in Q4 (1/5)
Number of Transactions Closed in Q４ (1/５) 1５１ transactions closed, 296 by number of companies Selling company Acquiring company Industry classification Region Industry classification Region 1 Property development / sales Kanto Building construction Kansai 2 Building construction Kanto Building const
Slide 64: Number of Transactions Closed in Q4 (2/5)
Number of Transactions Closed in Q４ (２/５) Selling company Acquiring company Industry classification Region Industry classification Region 29 Restaurants Kansai Nursing and welfare Kansai 30 Building construction Kanto Construction materials wholesale Hokkaido, Tohoku 31 Metals parts processing Kansa
Slide 65: Number of Transactions Closed in Q4 (3/5)
Number of Transactions Closed in Q４ (３/５) Selling company Acquiring company Industry classification Region Industry classification Region 64 Agriculture Chugoku, Shikoku Pipe contractor Chugoku, Shikoku 65 Electrical and telecoms contractor Hokkaido, Tohoku Pipe contractor Hokkaido, Tohoku 66 Interi
Slide 66: Number of Transactions Closed in Q4 (4/5)
Number of Transactions Closed in Q４ (４/５) Selling company Acquiring company Industry classification Region Industry classification Region 99 Food wholesale Kanto Food wholesale Kanto 100 Restaurants Kansai Restaurants Tokai, Hokuriku 101 Services for corporate customers Kanto Apparel business Kanto
Slide 67: Number of Transactions Closed in Q4 (5/5)
Number of Transactions Closed in Q４ (５/５) Selling company Acquiring company Industry classification Region Industry classification Region 134 Agriculture, forestry and fisheries related Kyushu, Okinawa Sales promotion Kanto 135 Sport Kanto Private equity fund Kanto 136 Customised software developmen
Slide 68: Business Environment
Business Environment IIIANihon MaA Center HD
Slide 69: 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 70: 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 Age distribution of SME owners (in 5-year categories) Changes in owners average retirement age In 1995
Slide 71: 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 72: 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 companies with no transaction no successor size successor 100～300 48,673 × 48.40％ ＝ 23,558
Slide 73: 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 — FY2022 Earnings Presentation on 6ix