ENVALITH
株式会社技術承継機構 logo

Next Generation Technology Group Inc.

319A・Growth Market・Metal Products

株式会社技術承継機構 logo
Next Generation Technology Group Inc.319A

Business

Institution for Manufacturing Innovation Co., Ltd. is a Serial Acquirer company established in 2018 with the mission of passing on the technologies and skills of small and medium-sized manufacturers facing successor shortages to the next generation. Its main activities are acquiring manufacturing and manufacturing-related businesses and providing management support, and as of the end of FY2025 (ending December 2025) it has 17 companies (including group companies) under its umbrella. Its portfolio is diversified across a wide range of manufacturing fields, including thin-film materials, cold forging, precision cutting, sheet metal processing, carbon fiber composite materials, power supply equipment, and construction safety equipment, with a customer base spanning diverse end markets such as automotive parts, semiconductors, railways, industrial equipment, and electrical and electronic equipment. Unlike PE funds, the company does not, in principle, plan to sell the companies it acquires, and has established a unique positioning that pursues long-term enhancement of corporate value while maintaining the independence of each individual company.

Business Model

The revenue source is the business profit of manufacturing companies acquired by the company, which receives deal referrals from M&A advisors and financial institutions and acquires profitable companies with high EBITDA margins at appropriate enterprise value/EBITDA multiples. After acquisition, the company employs a circular model in which management support through the NGTG Growth Program (NGP) improves EBITDA, and the cash flow generated is allocated to funding subsequent acquisitions. For financing, the company aims to secure favorable terms centered on regional banks, such as low interest rates, long terms, and in principle no financial covenants, and defines an appropriate leverage level as net interest-bearing debt/adjusted EBITDA of 3 to 4 times.

Company Strengths

Cumulative deal referrals from founding through December 2025 reached 2,398, with approximately 700 brought in during 2025 alone. In addition to a network of over 350 M&A advisors and financial institutions, each group company also conducts its own independent sourcing activities. Leveraging deep expertise specialized in manufacturing, the company screens for only highly profitable companies, achieving deal structuring through direct negotiation.

Whereas PE funds premise their investments on divestiture after a set period, the company in principle does not anticipate selling acquired companies, instead providing support from a super-long-term perspective. Furthermore, since no integration or subordination relationship arises as would occur with a typical operating company, the company can clearly differentiate itself at the sourcing stage, demonstrating negotiating power that makes it the seller's choice on grounds other than price. As of the end of FY2025 (ending December 2025), a track record of 17 acquisitions substantiates the effectiveness of this unique position.

Modeled on Danaher Corporation's Danaher Business System in the United States, the company has built its own proprietary manual, the "NGTG Growth Program (NGP)," comprising over 150 items, which is updated weekly, establishing a system that enables EBITDA margin improvement measures to be executed regardless of the individual in charge. Mechanisms for sharing best practices among acquired companies are also in place, including monthly presidents' meetings, a president's academy, design study sessions, and joint group new-graduate training, systematically supporting organic growth.

ENVALITH's Perspective

1Q FY2026 (ending December 2026) results showed net sales of ¥6,275 million (up 136.0% YoY) and operating profit of ¥906 million (up 212.7% YoY), representing substantial growth in both revenue and profit. Against the full-year net sales forecast of ¥23,000 million, 1Q progress stood at 27.3%, generally on track. However, of the ¥1,081 million in net income attributable to owners of parent, a combined ¥630 million—comprising ¥450 million in gain on bargain purchase (negative goodwill) and ¥180 million in gain on sale of investment securities—was included in extraordinary income, and attention should be paid to the divergence from the ordinary-income-based underlying figure (¥887 million). Adjusted quarterly net income was ¥864 million, and it is important to confirm the underlying performance excluding one-off gains and losses.

The main drivers of revenue growth were the start of full-year contributions from seven groups acquired since 2Q of the previous fiscal year, along with the new consolidation of Horikoshi Seiki (January 2026) and Osaki Denkigyosha (March 2026, the company's first carve-out deal). On the other hand, the organic growth contribution of existing subsidiaries has not been disclosed, making it difficult to assess the sustainability of a growth structure that depends on M&A. While external demand conditions in areas such as superconductivity, semiconductors, and AI data centers provide tailwinds, close attention is warranted regarding the potential impact of market fluctuations on the earnings of existing subsidiaries.

Total liabilities as of the end of March 2026 stood at ¥24,513 million (up ¥2,898 million from the end of the previous fiscal year). Within fixed liabilities, the provision for retirement benefits for directors surged by ¥827 million in a single quarter, from ¥755 million to ¥1,582 million, reflecting the emergence of directors' retirement benefit obligations assumed from acquired companies as a financial burden. The equity ratio remained flat at 29.2% (versus 29.6% at the previous fiscal year-end), but the accumulation of interest-bearing debt accompanying accelerated M&A activity and the risk of rising interest rates remain key financial points to monitor.

Growth Strategy

Pursuing non-linear growth through the twin engines of continuous M&A and value-up initiatives, while also expanding target scope to include carve-outs and other opportunities.

The company continues to acquire small and medium-sized manufacturers facing succession issues. In 1Q FY2026, Horikoshi Seiki and Osaki Denki Kogyo were newly consolidated, and combined with the full-year contribution of 7 groups consolidated since 2Q of the previous fiscal year, revenue grew 136% year-on-year. The company targets full-year revenue of ¥23,000 million (up 53.7% year-on-year).

The company has expanded its target scope to include carve-out deals arising from large corporations' capital efficiency initiatives and going-private considerations at mid-cap listed companies. In March 2026, it acquired Osaki Denki Kogyo (its first carve-out deal), diversifying its deal pipeline and gaining access to larger transactions.

Through a management support program covering DX promotion, production management system implementation, and recruitment enhancement, the company aims to improve the EBITDA margin of acquired companies. In 1Q FY2026, several subsidiaries performed strongly, driven by demand related to superconductors, semiconductors, and AI data centers, resulting in adjusted EBITDA of ¥1,396 million, up 216.7% year-on-year. The company targets full-year adjusted EBITDA of ¥4,000 million (up 38.0% year-on-year).

Last updated: July 17, 2026