(319A) Stock Price

Technology Succession Organization is a company that continuously acquires small and medium-sized manufacturing businesses and related enterprises with specialized technologies and skills, while providing management support to these acquired companies. The company pursues technology transfer through business restructuring, talent development, and IT infrastructure improvements at acquired firms. Its basic policy is to hold acquired companies long-term and nurture their growth.

The company's primary customers are the acquired small and medium-sized manufacturers and their business partners who handle their products. Revenue is primarily derived from operating profits generated by the acquired enterprises. Additionally, revenue includes fees from introducing acquisition candidates and support fees for management assistance provided after acquisition. The company uses generated cash flow to pursue further acquisitions.

The business portfolio is diversified across multiple manufacturing sectors rather than concentrated in specific fields, designed to mitigate industry fluctuation risks. Specifically, the company creates value-add through executive dispatch, talent development, and IT implementation at each acquired company, while generating synergies across the group from product development to sales. Since its founding, the company has acquired 10 companies to date and aims to achieve both diversification and growth.

The company has made continuous acquisitions of small and medium-sized manufacturers the core of its growth strategy, aiming to become a "serial acquirer" that nurtures businesses through long-term ownership. Since its founding through December 2024, the company has received introductions to over 1,717 projects from more than 350 external advisors, of which it has completed acquisitions of 10 companies to date. In financial performance, adjusted EBITDA (operating profit plus depreciation and other one-time expenses) reached 2,155 million yen in the December 2024 period, while adjusted net income reached 1,042 million yen, representing approximately 27% growth year-over-year. As a financial strategy, the company plans to maintain net interest-bearing debt to adjusted EBITDA at approximately 3 to 4 times, and aims to secure funding from financial institutions on long-term, low-interest terms with minimal financial constraints in principle.

The company differentiates itself by clearly focusing its investment targets on the manufacturing sector, pursuing a policy of acquiring profitable companies with high profit margins relative to sales at appropriate valuations. The company's acquisition strength lies in its accumulated M&A execution capabilities and systematized processes, with an in-house structure capable of handling everything from initial research through valuation, negotiation, and bank financing. In approaching sellers, the company appeals through proposals beyond price, such as respecting the owner's desire to continue as president and maintaining operational independence, thereby leveraging negotiating power to achieve acquisitions at appropriate EBITDA multiples. In project selection, the company avoids high-risk turnaround cases and enhances competitiveness through acquisitions of established companies and efficiency improvements via operational manuals.

The company prioritizes growth realization following acquisitions, adopting phased implementation plans: the first six months, six months to two years, and year three onward. Immediately after acquisition, the company conducts company-wide employee interviews, strengthens management structures, and implements IT tools for current-state assessment and foundation building. Subsequently, it promotes sales strengthening aligned with business plans, manufacturing floor improvements, and enhanced talent recruitment. Over the medium to long term, the company also considers business expansion including overseas expansion and partnerships with other companies. Following its listing, it plans to leverage market funding to consider acquisitions of larger EBITDA-scale companies. Within the group, the company actively creates synergies through customer referrals, shared suppliers, and machinery sales.

Technology innovation is essential to the company's value-up efforts. The company operates the NGTG Growth Program (NGP), an improvement manual of over 140 items updated weekly and shared and executed company-wide. Specific initiatives include website renewal, new customer acquisition through sales strategy, profit margin improvement via in-sourcing of outsourced work, IT tool adoption such as SaaS, implementation of image inspection using AI and IoT-based shop floor management systems, and technical training in 3D CAD. The company exchanges know-how through monthly president meetings and retreat-style president seminars. Through these efforts, the company advances systematization to deliver results regardless of who is responsible, monitoring growth through objective metrics such as adjusted EBITDA and adjusted net income.