ストライク（6196） – ［Delayed］Financial Results for the First Six Months of the Fiscal Year Ending September 30, 2022

April 27, 2022Financial Results for the First Six Months of the Fiscal Year Ending September 30, 2022Strike Co., Ltd.Prime Market, Tokyo Stock Exchange: 6196Disclaimers• These materials contain forward-looking statements with respect to Strike Co., Ltd.’s business trends and business content, and are based on the Company’s expectations, estimates, projections, and forecasts as of the time of publication.• Expressions related to the Company’s future outlook contain a variety of risks and uncertainties. Actual results may differ from those anticipated in expressions related to the future outlook due to known and unknown risks, uncertainties, and other factors.• The actual content and results of Strike Co., Ltd.’s future business may differ from the future outlook contained in these materials.• Expressions in these materials in relation to the future outlook are based on information available to Strike Co., Ltd. as of the date these materials were released (April 27, 2022). Expressions regarding the future outlook will not be updated or revised to reflect future events and conditions.Copyright© Strike Co., Ltd. All Rights Reserved.201 Operating Performance in 1H FY09/2202 Forecast for FY09/2203 Medium- to Long-Term Management Policy04 Company Overview05 Market Trends01. Operating Performance in 1H FY09/22Executive SummaryExternal EnvironmentNo major changes in the M&A market environment for SMEsSome M&A deals were delayed as parties involved in the deals contracted COVID-19 amid the resurgence of the pandemic, but this did not have a material impact on operating performanceOperating PerformanceBooked record-high 1H net sales of ¥5,216 million (+34% versus 1H FY09/21) and operating profit of ¥1,994 million (+35%)Net sales and operating profit came in around 93% of 1H forecast, as there were several deals where final contracts were signed with M&A execution dates set in the following quarter; as a result, we were unable to record sales for these deals in 1HFull-year forecast of ¥11,208 million in net sales and ¥4,210 million in operating profit remains unchanged from our initial planRecruitingHired 19 consultants compared to the full-year plan of 26; there were no major changes in the recruiting environment, and we made steady progress in recruitmentCopyright© Strike Co., Ltd. All Rights Reserved.401. Operating Performance in 1H FY09/22Operating Performance in 1H FY09/22In 1H, operating performance hit record highs for the period.1H net sales surpassed full-year net sales in FY08/19 (¥5,077 million).Net SalesMillions of yen12,00011,00010,0009,0008,0007,0006,0005,0004,0003,0002,0001,0000Full-year net sales1H net salesDeals closed67 3,092 1,403 3,743 1,552 88 6,916 134 151 9,034 3,508 3,899 104 5,077 2,192 Full-yearforecast11,20899 5,216 Deals1601501401301201101009080706050403020100FY08/17FY08/18FY08/19FY08/20FY09/211H FY09/22Copyright© Strike Co., Ltd. All Rights Reserved.501. Operating Performance in 1H FY09/22Operating Performance in 1H FY09/22In 1H, operating performance hit record highs for the period.1H operating profit exceeded full-year operating profit in FY08/19 (¥1,886 million).Full-yearforecast4,210Operating ProfitMillions of yenFull-year operating profit1H operating profit3,451 2,981 1,551 1,481 1,994 1,150 594 1,352 492 1,886 757 4,0003,0002,0001,0000FY08/17FY08/18FY08/19FY08/20FY09/211H FY09/22Copyright© Strike Co., Ltd. All Rights Reserved.601. Operating Performance in 1H FY09/22Operating Performance in 1H FY09/22The number of deals closed was in line with plan (98 deals).Average sales generated per deal closed fell, as the recording of sales of some large deals was pushed to the next quarter.99 │192Deals | Contracts1001H ResultsMillions of yenNet salesOperating profitDeals and contracts closed70 │1373,508 7,0006,0005,0004,0003,0002,0001,000063 │1203,899 5,216 1,551 1,481 1,994 90807060504030201001H FY08/20(Sep. 2019–Feb. 2020)1H FY09/21(Sep. 2020–Feb. 2021)1H FY09/22(Oct. 2021–Mar. 2022)Copyright© Strike Co., Ltd. All Rights Reserved.701. Operating Performance in 1H FY09/22Comparison vs. 1H FY09/21 ResultsNet sales and operating profit rose over 30% versus 1H FY09/21.Millions of yenNote:1H FY09/21 covers the period from September 1, 2020 to February 28, 2021, as FY09/21 was a transitional accounting period due to a change in fiscal year-end. Accordingly, the period for comparison differs. Copyright© Strike Co., Ltd. All Rights Reserved.8% of net sales% of net salesNet sales5,216100.0%3,899100.0%+33.8%Cost of sales1,74833.5%1,47637.9%+18.5%Gross profit3,46766.5%2,42362.1%+43.1%SG&A expenses1,47328.2%94224.2%+56.4%Operating profit1,99438.2%1,48138.0%+34.6%Non-operating income10.0%30.1%-58.7%Non-operating expenses00.0%———Ordinary profit1,99438.2%1,48438.1%+34.3%Profit before income taxes1,99438.2%1,48438.1%+34.3%Income taxes64412.4%48412.4%+33.0%Profit1,34925.9%99925.6%+35.0%1H FY09/221H FY09/21*Vs. 1H FY09/21results01. Operating Performance in 1H FY09/22Comparison vs. 1H FY09/21 ResultsOther expenses under SG&A expenses grew as a result of increases in recruiting expenses, system usage fees, and one-time expenses associated with the relocation of Nagoya and Fukuoka sales offices.Breakdown of Cost of SalesBreakdown of SG&A ExpensesMillions of yenMillions of yen1,748Personnel expensesIntroduction feesOther1,219 1,476980 415 79 410 118 2,0001,8001,6001,4001,2001,00080060040020001,473000633142189507Personnel expensesAdvertising expensesRent expenses on land and buildingsOther942424601033531,6001,4001,2001,00080060040020001H FY09/221H FY09/211H FY09/221H FY09/21Note: 1H FY09/21 covers the period from September 1, 2020 to February 28, 2021, as FY09/21 was a transitional accounting period due to a change in fiscal year-end. Accordingly, the period for comparison differs.Copyright© Strike Co., Ltd. All Rights Reserved.901. Operating Performance in 1H FY09/22Comparison of Financial Position vs. End-FY09/21We actively made investments aimed at further growth for FY09/23 and beyond.Non-current assets rose due to ¥600 million in payment of leasehold deposits and ¥200 million in purchase of investment securities.Millions of yenCopyright© Strike Co., Ltd. All Rights Reserved.10End-Q2FY09/22End-FY09/21End-Q2FY09/22End-FY09/21BalanceBalanceBalanceBalanceCash and deposits8,6778,567+110Accounts payable–trade106186-80Accounts receivable–trade3871,181-793Income taxes payable709640+68Other344233+111Other1,0801,054-177Total current assets9,4099,981-571Total current liabilities1,8961,881+26Property, plant and equipment390335+55Total non-current liabilities———Intangible assets24-1Total liabilities1,8961,881+14Investments and other assets1,456637+818Share capital823823—Total non-current assets1,850977+872Capital surplus816810+6Retained earnings8,6487,911+737Treasury shares(929)(473)-456Shareholders’ equity9,3599,072+287Valuation and translationadjustments/Share acquisitionrights35-1Total net assets9,3639,077+286Total assets11,26010,958+301Total liabilities and netassets11,26010,958+301ChangeChange01. Operating Performance in 1H FY09/22EmployeesWe are planning to hire 26 consultants for the full year, and hired 19 consultants by Q2.Employees (Fiscal Year-End)Consultants (included in cost of sales)Consultants (included in SG&A expenses)Non-consultants2114 84 2918 93 199 47 1039 200150100500211employees3726 3619 136 148 FY08/17FY08/18FY08/19FY08/20FY09/21End-Mar. 2022(Q2 FY09/22)Copyright© Strike Co., Ltd. All Rights Reserved.1101. Operating Performance in 1H FY09/22Deals and Contracts Closed140120100806040200We achieved record net sales on a three-month quarterly basis in Q2 FY09/22.Contracts, deals3,436 Millions of yenDeals closed(figures in parentheses indicate the number of large deals)Contracts closedNet sales2,701 2,860 2,026 1,937 2,355 1,664 1,481 1,470 1,197 1,365 1,220 1,698 120 1,500827 89 41 42 44 22 (0)22 (2)24 (2)36 (2)68 73 73 70 48 46 (4)24 (4)52 27 (4)37 (4)47 25 (2)38 (8)36 (1)100 52 (6)72 61 (4)38 (4)Q1FY08/19Q2 FY08/19Q3 FY08/19Q4 FY08/19Q1 FY08/20Q2 FY08/20Q3 FY08/20Q4 FY08/20Q1 FY09/21Q2 FY09/21Q3 FY09/21Q4 FY09/21(four months)Q1 FY09/22Q2 FY09/22Deals closed: Number of M&A transactions in which Strike provides brokerage or advisory services (i.e., number of deals)(Large deals are those associated with per-deal sales of ¥100 million or more)Contracts closed: Number of contracts on closed M&A deals in which Strike provides brokerage or advisory services (i.e., number of companies)In brokerage services, each deal counts as two contracts (one for the seller and one for the buyer), while in advisory services, each deal counts as one contract.Copyright© Strike Co., Ltd. All Rights Reserved.123,5003,0002,5002,0001,000500001. Operating Performance in 1H FY09/22New ContractsContracts700New contractsContract backlogsNew contracts rose sharply following revisions to our compensation structure made in July 2021. New contracts grew in Q2 as well.New Contracts (Quarterly)New contracts: New brokerage service contracts signed with sellers (or in the case of advisory services, contracts signed and services effectively commenced)650603510400332 328 334 349 358 363279254204 20457 49 97 86 117 80 57 86 88 88 109 Q1FY08/19Q2FY08/19Q3FY08/19Q4FY08/19Q1FY08/20Q2FY08/20Q3FY08/20Q4FY08/20Q1FY09/21Q2FY09/21Q3FY09/21233 182 172 Q4FY09/21(four months)Q1 FY09/22Q2FY09/22Copyright© Strike Co., Ltd. All Rights Reserved.13600500400300200100001. Operating Performance in 1H FY09/22Topics01Launch of M&A brokerage services for accounting firms in collaboration with Zeimu Kenkyukai Inc.Zeimu Kenkyukai Inc. produces the publications “Weekly Tax News” and “Weekly Report on Financial Accounting,” which boast 100,000 subscribers and are widely recognized as the leading publications for accounting firms.Going forward, we will jointly hold M&A study sessions and consultations for accounting firms.02Strengthening business partnership with M3, Inc.Launching full-scale M&A brokerage services for the medical industryM3, Inc. operates m3.com, a website specializing in medical professionals with more than 300,000 registered users, or 90% of Japan’s physicians. It provides consulting services related to third-party succession of medical institutions through this website.We will strengthen our services by leveraging M3’s database of over 20,000 potential buyers and our M&A matchmaking expertise.03S venture Lab.—new membership service to promote partnerships between startups and large companiesIn addition to M&As, many startups and large companies want to form business alliances and collaborations as a preliminary step toward an M&A deal.We aim to create new businesses and markets by bringing together startups that need funding and large companies that seek innovation.Copyright© Strike Co., Ltd. All Rights Reserved.1401. Operating Performance in 1H FY09/22TopicsLight-Right Inc. operates “relay,” a business succession matching platform.Unlike conventional M&A matching sites, relay is unique in that it publishes articles about the owner’s thoughts and feelings, including a profile of how he or she has managed the company or store, and publicly solicits successors.04Signed a capital and business partnership agreement with Light-Right Inc.Copyright© Strike Co., Ltd. All Rights Reserved.1501 Operating Performance in 1H FY09/2202 Forecast for FY09/2203 Medium- to Long-Term Management Policy04 Company Overview05 Market Trends02. Forecast for FY09/22Forecast for FY09/22Forecast assumptions and recent trendsTargeting to boost both net sales and profits compared to the 13-month FY09/21 resultsProactively implement sales measures such as advertising, proposal-based marketing, and seminars in anticipation of the end of the COVID-19 pandemic; projecting additional ¥370 million in expenses YoY, including expenditure for improvements to the sales management systemContinue actively recruiting consultants and increase headcount by 26 people⇒ Our initial forecast remains unchanged. In Q2, there were several M&A deals where final contracts were signed but associated sales were not recorded, as their M&A execution dates were set in the following quarter or later. We recorded ¥220 million in sales for M&A deals executed on April 1.⇒ Expansion and relocation of Nagoya and Fukuoka sales offices and establishment of new Hiroshima sales office were completed as planned. Hiring of consultants may exceed our plan.Copyright© Strike Co., Ltd. All Rights Reserved.1702. Forecast for FY09/22Forecast for FY09/22Our initial forecast remains unchanged.Net Sales and Average Sales Generated per Deal ClosedOperating Profit and ProfitNet salesAverage sales generated per deal closedOperating profitProfitOperating profit marginMillions of yenMillions of yen54.4 6,00043.1%Millions of yen12,00010,0008,0006,0004,0002,000059.8 51.6 11,208 9,034 6,916 FY08/20FY09/21(13 months)FY09/22(forecast)70.060.050.040.030.020.010.00.05,0004,0003,0002,0001,000038.2%37.6%3,451 2,981 2,202 2,395 2,729 4,210 FY08/20FY09/21(13 months)FY09/22(forecast)45.0%35.0%25.0%Copyright© Strike Co., Ltd. All Rights Reserved.1802. Forecast for FY09/22Forecast for FY09/22Our initial forecast remains unchanged.Millions of yenCopyright© Strike Co., Ltd. All Rights Reserved.19% of net sales% of net sales% of net salesNet sales11,208100.0%9,034100.0%8,339100.0%+2,869+34.4%Cost of sales3,92135.0%3,30936.6%3,05436.6%+867+28.4%Gross profit7,28665.0%5,72563.4%5,28463.4%+2,001+37.9%SG&A expenses3,07627.4%2,27325.2%2,09925.2%+977+46.5%Operating profit4,21037.6%3,45138.2%3,18538.2%+1,024+32.2%Ordinary profit4,21137.6%3,47538.5%3,20838.5%+1,002+31.3%Profit before income taxes4,21137.6%3,41037.8%3,14837.8%+1,063+33.8%Profit2,72924.4%2,39526.5%2,21126.5%+517+23.4%Deals closed206—151—Unadjusted+55 dealsNew contracts660—518—Unadjusted+142 contractsEmployees218—191—Unadjusted+27 employeesFY09/22FY09/2113-month resultsFY09/2112-month adjustedresultsYoY changevs. 12-month adjustedresults02. Forecast for FY09/22Planned Shareholder ReturnsDividends and Payout RatioDividend per share (left)Payout ratio (right)Yen40.0035.0030.0025.0020.0015.0010.005.000.0025.5%25.2%36.00 32.00 20.8%20.8%18.9%24.00 14.50 9.00 FY08/18FY08/19FY08/20FY09/21FY09/22 (forecast)Dividends 40%In FY09/21, we raised dividend payout ratio from 20% to 25%.30%Shareholder benefitsWe present a QUO card worth ¥1,000 to each shareholder with at least one share unit (100 shares) at fiscal year-end.20%10%0%Share repurchaseWe completed acquisition of 116,200 treasury shares for ¥500 million between February and March 2022. We will continue to look into share repurchases as part of our capital policies.Copyright© Strike Co., Ltd. All Rights Reserved.2001 Operating Performance in 1H FY09/2202 Forecast for FY09/2203 Medium- to Long-Term Management Policy04 Company Overview05 Market Trends03. Medium- to Long-Term Management PolicyResults and Targets: New Contracts, Deals Closed, Net Sales, and Operating ProfitWe aim to double our performance for FY09/21 in three years.We plan to achieve further growth by boosting the productivity (efficiency) of our consultants.Millions of yen18,810 15,620 925 Deals closedNew contractsNet salesOperating profitContracts, deals1,2001,1501,1001,0501,00095090085080075070065060055050045040035030025020015010050011,208 778 9,034 660 6,916 518 7,344 6,015 3,743 1,352 232 88 5,077 1,886 104 289 2,981 340 3,451 134 151 4,210 206 284 342 FY08/18FY08/19FY08/20FY09/21FY09/22(target)FY09/23(target)FY09/24(target)20,00018,00016,00014,00012,00010,0008,0006,0004,0002,0000Copyright© Strike Co., Ltd. All Rights Reserved.2203. Medium- to Long-Term Management PolicyAiming for Further Growth by Increasing Per-Consultant Efficiency (Deals Closed)Improve efficiency by enhancing the organizationand strengthening individual capabilitiesFor consultants under departments included in cost of sales, we aim to achieve average sales of ¥100 million per consultant within the first three years of employment (target changed from the number of deals to cash value to promote team-based approach).Enhance the OrganizationStrengthen Individual CapabilitiesNew contract sourcing1. Realign the organization by sourcing route; strengthen sourcing capabilities and streamline operations through internal collaboration2. Introduce team-based system to respond systematically to new contracts and improve project efficiencyEnhance matching capabilities1. Enhance matching capabilities by increasing personnel in the department dedicated to buyer search (reinforce division of labor) 2. Strengthen match search and proposal capabilities of all 3. Accumulate data on acquisition needs and enhance data search consultants functionalityBusiness support from specialists1. Increase the number of accounting, legal, and other specialists 2. Strengthen business support system to include basic tasks such as preparing proposal materials to specialized work such as handling complex contractsRecruit and train talented consultants1. Hire even more qualified consultants by enhancing our name recognition 2. Improve in-house training and expand training contentLeverage IT1. Streamline operations by reviewing internal systems that 2. Share deal information and manage deal progress through use IT toolsin-house systemsBoost expertise through division of labor1. Establish a department specializing in inside sales and a M&A department for specific fields; boost expertise through division of labor2. Establish and deepen individual areas of expertise by introducing cross-divisional, industry-specific team structures and team-based consultingCopyright© Strike Co., Ltd. All Rights Reserved.23At the beginning of FY09/22, we realigned operations formerly handled by the Corporate Advisory Department by sourcing route.03. Medium- to Long-Term Management PolicyOrganization (as of April 1, 2022)General Meeting of ShareholdersBoard of DirectorsAudit & Supervisory BoardRepresentative DirectorInternal Control DepartmentConsulting HeadquartersBusiness Promotion DepartmentBusiness Operation Support DepartmentGeneral Planning OfficeInnovation Support OfficePublic Relations DepartmentM&A Online Sales OfficeM&A Online Editorial DepartmentInformation Systems DepartmentAdministration DepartmentCorporate Strategy DepartmentConsulting DepartmentiBusness Corporation DepartmentCorporate Advsory Section 1iCorporate Advsory Section 2iGrowth Strategy DepartmentSapporo Saes DepartlmentNagoya Saes DepartlmentOsaka Saes DepartlmentFukuoka Saes DepartlmentTakamatsu Saes DepartlmentHiiroshma Saes DepartlmentSendai lSaes DepartmentMarketing DepartmentlSaes Support OfficeCopyright© Strike Co., Ltd. All Rights Reserved.2403. Medium- to Long-Term Management PolicyEmployeesWe will maintain our policy of hiring more than planned when we find excellent candidates.Employees (Fiscal Year-End)350300250200150100500Consultants (included in cost of sales)Consultants (included in SG&A expenses)Non-consultants3720 161 3619 136 2114 84 2918 93 199 47 Reach 300employeesin three years4524 4122 232 193 FY08/18FY08/19FY08/20FY09/21FY09/22(target)FY09/23(target)FY09/24(target)Copyright© Strike Co., Ltd. All Rights Reserved.2503. Medium- to Long-Term Management PolicyAiming to Top the Japanese M&A Market in the Number of Deals ClosedWe aim to further increase our share of the market for business succession M&A, focus on cultivating the M&A market as an exit method for startups, and achieve net sales CAGR of over 20% over the medium term.We established an Innovation Support Office in October 2021 to strengthen cultivation of M&A market for startups.Target Sales CompositionContracts other than business successionDevelop the M&A business as an exit option for startups and growth companies. In addition, actively cultivate large M&A deals that drive industry consolidation.GrowthstrategyBusinesssuccession2021Business succession M&AMarket is forecast to expand for several years, but dependence on business succession contracts is expected to decline due to an increase in contracts other than business succession.Copyright© Strike Co., Ltd. All Rights Reserved.2601 Operating Performance in 1H FY09/2202 Forecast for FY09/2203 Medium- to Long-Term Management Policy04 Company Overview05 Market Trends04. Company OverviewCompany OverviewCompany nameStrike Co., Ltd.EstablishedJuly 1997Share capital¥823 million (as of March 31, 2022)RepresentativeKunihiko Arai, President and CEOHeadquarters15th floor of Mitsui & Co. Building1-2-1 Otemachi, Chiyoda-ku, Tokyo, JapanEmployees211 (excluding temporary staff, as of March 31, 2022)Net sales, operating profitNet sales of ¥9,034 million and operating profit of ¥3,451 million (operating profit margin of 38.2%) in FY09/21BusinessMissionM&A brokerage businessCreate partnerships that change the worldCopyright© Strike Co., Ltd. All Rights Reserved.2804. Company OverviewBusiness OverviewOur earnings model is based on brokerage fees received from both sellers and buyers. While carefully considering possible conflicts of interest, we place the utmost importance on satisfying both clients.M&A Brokerage Earnings ModelPrincipal BusinessesM&A brokerage businessStrikeWe broker M&A deals between sellers and buyers and receive brokerage fees from both parties. In some cases, we only provide M&A advisory services to one of the parties.M&A brokerage agreementM&A brokerage agreementCompensation StructureSellerBuyerTransfer of shares and businessesPayment of considerationsMemorandum of understanding (MoU)Final transfer agreementSeller1. Initiation feeFreeBuyer1. Initiation feeFree2. Fee at MoU signing2. Fee at MoU signing¥1–3mn when MoU is signed¥1–3mn when MoU is signed3. Success fee (Lehmann method)3. Success fee (Lehmann method)Amount of shares or assets to be transferred RateMarket value of total assets at transferRatePortion below ¥500mnPortion below ¥500mnPortion from ¥500mn to ¥1bnPortion from ¥500mn to ¥1bnPortion from ¥1bn to ¥5bnPortion from ¥5bn to ¥10bnPortion above ¥10bnPortion from ¥1bn to ¥5bnPortion from ¥5bn to ¥10bnPortion above ¥10bn5%4%3%2%1%5%4%3%2%1%Copyright© Strike Co., Ltd. All Rights Reserved.2904. Company OverviewFlow of M&A Brokerage BusinessPotential sellerInitial consultationlEvauation of corporate vaueliSgn M&A brokerage agreementCreate company profilepropose potential buyerslAnayze industry, seect and lPotential buyerSubmit proposal to potential Submit proposal in the form of buyersan investment teaserliDscose seller company profileiSgn M&A brokerage agreementiacqusitionSubmit letter of intent for Fee at MoU signingSuccess feeIntervewi top management and negotiate termsiSgn memorandum of understandng (iMoU)Perform due diligencejMake final adustment to termsiSgn final contractlCose the dealFee at MoU signingSuccess feeCopyright© Strike Co., Ltd. All Rights Reserved.3004. Company OverviewFeature 1Sourcing (New Contract Acquisition from Seller)Direct contractscaptured through approaching customers directly51%Proposal-based marketing• Secure effective leads by organizing a dedicated marketing department• Boost efficiency by signing pre-marketing service contracts and approaching companies with a potential buyer already in place• Carry out proposal-based marketing tailored to the characteristics of each industry by organizing industry-specific teamsSeminarsActively use online seminars in light of the COVID-19 pandemicReferralsfrom business partners49%Financialinstitutions51%FY09/21New contract ratio by sourcing routeCopyright© Strike Co., Ltd. All Rights Reserved.3104. Company OverviewFeature 2Fee StructureCompensation Structure for Potential SellersNo initiation fee and low fees at MoU signing.By lowering the hurdle for sellers to consult with us, we encourage M&A deals among SMEs.Initial consultationUpon M&A brokerage agreement signingStrikeFreeFreeUpon MoU signing¥1–3mnCompany ACompany BFreePaidFreeFreeFreeIntermediate compensation10% of success feeUpon final contract signingSuccess feeSuccess feeSuccess feeCopyright© Strike Co., Ltd. All Rights Reserved.3204. Company OverviewFeature 3Matching: Proposal Flow of Pre-Marketing ServicesStandard M&A Brokerage ServicesRequestSearchStrikePotential sellerPotential buyersIn our pre-marketing services, we find potential sellers for potential buyers. We approach the seller on the buyer’s behalf.Pre-Marketing ServicesSounding outRequestStrikePotential sellersPotential buyerWe have concluded a total of over 130 contracts between the service’s launch in April 2020 and September 30, 2021.In FY09/21, we concluded 18 brokeragecontracts with seller companies from this service.Copyright© Strike Co., Ltd. All Rights Reserved.3304. Company OverviewMethods for Finding More Potential MatchesMethods used to search for potential buyersWe are expanding our selection of potential matches by going beyond in-house information and searching for more candidates over the internet and through partner companies.Over 12,000 companies with acquisition needsOur consultants utilizes Strike’s internal database of acquisition needs (which contains data on M&A needs for over 12,000 companies collected through daily sales activities) to make direct proposals to potential buyers.12,000 companiesQuick acquisition offerWe have a system in place that enables all of our consultants to propose potential acquisition targets for all projects, and we leverage information from all our employees to search for potential acquisition targets.Use of M&A Market SMARTWe receive inquiries from potential buyers interested in deals posted anonymously on M&A Market SMART.1234Copyright© Strike Co., Ltd. All Rights Reserved.34M&A Market SMARTwww.strike.co.jp/smart/Cooperation with financial institutionsWe receive introductions to customers looking to make an acquisition from partner financial institutions.04. Company OverviewFeature 4M&A Track Record in Various IndustriesWith a large number of referrals, we have a balanced track record of M&A in a variety of industries.Total number of deals from the Company’s founding through FY09/21Note: Breakdown of the number of businesses sold by industryFashion 1.7%Others 5.7%Manufacturing14.9%Building maintenance 2.2%Printing and media 2.4%Real estate 3.3%Leisure and accommodation 3.3%Services 4.7%Recruiting 5.0%Dispensing pharmacies5.1%Transportation and logistics5.3%M&A Contracts Closed by Business CategoryConstruction13.1%IT8.0%Healthcare and nursing care 5.8%Restaurants and food services 6.8%Wholesale and agency services 6.4%Retail and distribution 6.5%Copyright© Strike Co., Ltd. All Rights Reserved.3504. Company OverviewEstablishing a Nationwide Sales NetworkEight offices nationwideStrike’s base of operations extends across all of Japan.ChugokuHiroshima sales officeHokkaidoSapporo sales officeChubuNagoya sales officeTohokuSendai sales officeKantoTokyo headquartersKyushu and OkinawaFukuoka sales officeKansaiOsaka sales officeShikokuTakamatsu sales officeCopyright© Strike Co., Ltd. All Rights Reserved.36A free portal site that offers a variety of M&A-related information, such as the latest news and legal information, in a timely fashion04. Company OverviewOperation of M&A Portal SiteM&A DatabaseOur M&A database contains timely disclosures on M&A deals that can be searched by company name, securities code, scheme, and industry.Large Shareholding Report DatabaseWe released our Large Shareholding Report Database, which provides insight into indicators of M&A activity and trading trends among major investors. We are distributing all large shareholding report data submitted to EDINET.Published M&A Yearbook 2022The M&A Yearbook 2022 is a magazine-book covering data for all 880 M&A deals carried out by listed companies in 2021 with explanations from various angles such as deal values and industries.Copyright© Strike Co., Ltd. All Rights Reserved.3704. Company OverviewTokyo Stock Exchange’s New Market SegmentStrike transitioned to the Prime Market on April 4 under the Tokyo Stock Exchange’s new market segment structure.ESG-focused managementGovernance enhancementEstablish a Sustainability Promotion CommitteeComply with the Corporate Governance CodeWe will set company-wide targets and formulate specific initiatives, while focusing on addressing sustainability issues through M&A support.We are working to improve our governance with a focus on the Corporate Governance Code applicable to companies listed on the Prime Market, which calls for higher standards of governance.Copyright© Strike Co., Ltd. All Rights Reserved.3801 Operating Performance in 1H FY09/2202 Forecast for FY09/2203 Medium- to Long-Term Management Policy04 Company Overview05 Market Trends05. Market TrendsMarket Trends: Japanese M&A Market Size (Estimated)Although there is no comprehensive data on M&A activity in Japan, we estimate the annual number of M&A deals in Japan is about 10 times higher (over 8,000 deals) than the number of M&A deals disclosed by listed companies. (This figure is higher when including extremely small M&A deals.)M&A Deals in Japan (Estimate)Undisclosed M&A deals (estimate)M&A deals disclosed by listed companiesUndisclosed M&A deals (Strike estimate)This estimate is calculated based on the percentage of M&A deals we were involved in that were not subject to timely disclosure.M&A deals disclosed by listed companies(Source: M&A Online)M&A deals of listed companies involving a change in management that were subject to timely disclosure (excluding intra-group restructuring and deals not subject to timely disclosure)Copyright© Strike Co., Ltd. All Rights Reserved.40706 2016756 2017785 2018853 2019849 2020877 202105. Market TrendsMarket Trends: Aging CEOs, Lack of SuccessorsWith CEOs aging, there are many companies without successors, even among companies with older CEOs.We expect the market for M&A deals that help address business succession to continue expanding.Aging CEOsAverage age of CEOsMany companies have no successorPercentage of companies without a successor62.49 years old62.16 61.73 66.5% 66.4%66.1%65.9%65.4%65.2% 65.1%Age63.0062.5062.0061.5061.0060.5060.0059.5059.0058.5061.45 61.19 60.89 60.62 60.43 60.24 60.03 59.87 68.0%67.0%66.0%65.0%64.0%63.0%62.0%61.0%60.0%2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Source: Nationwide Survey of Company Presidents’ Ages, Tokyo Shoko Research, Ltd.2011201420162017201820192020Source: Nationwide Survey on the Percentage of Companies without Successors (2020) by Teikoku Databank, Inc. included in the 2021 White Paper on Small and Medium Enterprises in JapanCopyright© Strike Co., Ltd. All Rights Reserved.4105. Market TrendsMarket Trends: Boosting Productivity is Crucial to the Survival of SMEsWidening disparity in value added between large companies and SMEsValue Added per Employee (Labor Productivity) by Company SizeBoosting productivity* is essential for SMEs in Japan to achieve both wage increases and profit growth.*Increase of value addMillions of yenLarge companies1614121086420SMEsLarge companies (non-manufacturing)Large companies (manufacturing)SMEs (non-manufacturing)SMEs (manufacturing)13.63 12.38 5.35 5.34 Source: Financial Statements Statistics of Corporations by Industry, Annually by the Ministry of Finance, included in the 2021 White Paper on Small and Medium Enterprises in Japan2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Copyright© Strike Co., Ltd. All Rights Reserved.4205. Market TrendsMarket Trends: Boosting Productivity is Crucial to the Survival of SMEsBoosting productivity* is essential for SMEs in Japan to achieve both wage increases and profit growth.*Increase of value addCreating new value through new business development and expanding possibilities through collaboration with companies in other industries will become important, and M&A is one way to do this.Companies that carried out M&A deals: Companies with confirmed M&A deals as a buyer in 2015. Growth rates were calculated as a comparison with the previous period, and outliers in the top 5% and bottom 5% were removed.Source: Corporate Information File by Tokyo Shoko Research, Ltd., included in the 2021 White Paper on Small and Medium Enterprises in JapanPerformance driven by M&A dealsGrowth rates: Companies with M&A experience vs. companies without M&A experience (median)Sales Growth RateCompanies with M&A experienceCompanies without M&A experience2.7%1.7%2.0%1.3%1.4%0.6%201720182019Operating Profit Growth RateCompanies with M&A experienceCompanies without M&A experience2.9%3.0%0.9%-0.4%-0.4%-1.7%Copyright© Strike Co., Ltd. All Rights Reserved.433.0%2.5%2.0%1.5%1.0%0.5%0.0%4.0%3.0%2.0%1.0%0.0%-1.0%-2.0%05. Market TrendsMarket Trends: M&A of StartupsCurrently, there are few M&A deals involving startups in Japan, but there is a lot of room for growth. Acquiring startups as part of R&D investment can help companies grow and increase corporate value more efficiently than if they were to conduct R&D on their own.Small percentage of M&A exits among startupsM&A success rate is higher than R&D success rateIPO and M&A status of venture capital portfolio companiesSuccess rate of medium- to long-term R&D and M&AIn Japan, M&A accounts for one-third of exits.M&AIPO753789428993382836864759870201720182019In the US, M&A accounts for over 90% of exits.100%80%60%40%20%0%100%80%60%40%20%0%201720182019Source: Venture White Paper by the Venture Enterprise Center, included in the Survey Report on M&A Activities of Large Companies and Startups by the Ministry of Economy, Trade and IndustrySuccessFailure36%SuccessFailure18%M&A success rate64%R&D success rate82%Source: Investigation into the Actual Conditions Source: Survey on the Establishment of a of Companies that Have Conducted M&A (2013) by Deloitte Tohmatsu Consulting Co., Ltd., included in the Survey Report on M&A Activities of Large Companies and Startups by the Ministry of Economy, Trade and IndustryJapanese Innovation System from a Medium- to Long-Term Perspective by the Japan Research Institute, included in the Survey Report on M&A Activities of Large Companies and Startups by the Ministry of Economy, Trade and IndustryCopyright© Strike Co., Ltd. All Rights Reserved.4405. Market TrendsMarket Trends: Other TopicsKunihiko Arai, our president and CEO, assumed the position of representative director for the M&A Intermediaries Association effective March 1, 2022.NameM&A Intermediaries Association (MAIA)EstablishedOctober 1, 2021Representative directorKunihiko Arai President and CEOStrike Co., Ltd.The M&A Intermediaries Association is a self-regulatory organization established for the purpose of improving the quality of M&A intermediary services, promoting the sound development of the M&A intermediary industry as a whole, and supporting companies engaged in M&A through the thorough implementation of appropriate transaction rules, including the M&A Guidelines for SMEs.DirectorsWe will actively engage in the activities of the association and contribute to the sound development of the industry.AuditorYutaro Kikuchi(attorney-at-law, Kikuchi Sogo Law Office)Suguru MiyakePresident and Representative DirectorNihon M&A Center Inc.Satoru NakamuraPresident and CEOM&A Capital Partners Co., Ltd.Ryosuke KuboPresidentOndeck Co., Ltd.Yasuhito ShinodaPresidentMeinan M&A Co., Ltd.Copyright© Strike Co., Ltd. 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