Integroup Inc.

The M&A intermediary business has low barriers to entry, and numerous competitors already exist, including listed and unlisted companies, sole proprietors, financial institutions, and accounting firms, with further new entrants expected going forward. The Company seeks to maintain competitive advantage through its unique positioning of a complete success-fee model for both sellers and buyers, and by focusing on small-scale deals with transaction values of ¥300 million or less, but further intensification of the competitive environment could affect business performance.

In principle, the Company receives fees only after deal closing under its complete success-fee model, and the amount of the success fee is heavily dependent on the transaction value. If deal closing numbers, transaction value fluctuations, a decline in the deal completion rate, the success or failure of large-scale deals, and delays in deal progress occur simultaneously, there is a risk of significant fluctuation in quarterly or fiscal year performance. While the Company seeks to reduce the impact of individual deals through the continuous increase in the number of consultants and closed deals, structural earnings instability remains.

There is a risk that the SME M&A market could temporarily stagnate due to economic conditions, natural disasters, pandemics, and other factors. While market expansion is expected over the medium to long term, a short-term contraction in the market would directly affect the Company's business performance. Although government policies promoting business succession provide a tailwind, structural vulnerability to sudden changes in the external environment remains.

Given the nature of the M&A intermediary business, there is a risk of receiving lawsuits or serious complaints from customers, which could affect business performance through the occurrence of damages or the impairment of social credibility and brand value. The Company has established a compliance framework, built a complaint reporting and management system, enhanced its training programs, and set up a structure whereby significant matters are reported to the Risk and Compliance Committee and the Board of Directors.

The Company operates solely in the M&A intermediary business and has not diversified into other businesses, creating a risk that any contraction in the SME M&A market would directly affect overall business performance. While the Company is considering expansion into industries other than M&A intermediation over the medium to long term, for the time being it plans to continue focusing its business operations on the SME M&A intermediary market.

In the M&A intermediary business, individual consultants' abilities directly determine deal success, making the recruitment, training, and retention of talented personnel a prerequisite for business expansion. If the Company is unable to secure the necessary number of consultants due to intensifying competition in the hiring environment or unexpected mass turnover, this could materially affect business performance. The Company addresses this through a high-rate incentive system, a management structure without sales quotas, and the development of a comfortable working environment utilizing technology.

Currently, there are no laws or licensing requirements that directly regulate the M&A intermediary business; however, if future legislation or amendments bring the M&A intermediary business under regulation, this could affect business operations and the earnings structure. The Company is registered under the SME Agency's M&A Support Institution Registration System, has declared its compliance with the "SME M&A Guidelines (3rd Edition)," and also complies with the rules of industry self-regulatory bodies.

In the course of its business, the Company handles highly confidential information such as customers' confidential information, insider information, and personal information, and if information leakage or misuse were to occur, this could affect business performance through the occurrence of damages or the impairment of social credibility and brand value. The Company seeks to ensure thorough information management through the establishment of internal information management regulations, confidential information management regulations, and personal information management regulations, as well as through employee training.

As the Company is a small-scale organization, its internal management structure remains commensurate with its size, creating a risk of excessive dependence on specific personnel. While the Company intends to strengthen and enhance its internal management structure as the organization expands, if these measures do not proceed appropriately, business performance could be affected.

Funds raised through the public offering at the time of the stock listing are planned to be allocated to investments in personnel recruitment and advertising, but if the expected results are not achieved, this could affect business performance. In addition, depending on changes in the business environment, the funds may be allocated to unplanned uses, in which case the Company intends to promptly disclose such changes. The timing of occurrence is specified as within two years.