Strike Company , Limited

If M&A acquisition needs decline and the market contracts due to deterioration in the economic environment or financial market conditions, this could affect operating results and financial condition. In the past, the market has temporarily contracted in the wake of events such as the Lehman Shock and the Great East Japan Earthquake, and the greater the degree of economic deterioration or the scale of a natural disaster, the greater the impact tends to be. The Company has established a system capable of responding to a variety of M&A needs, and judges that the possibility of this risk materializing in the near term is low.

Currently, there are no laws, licensing systems, or qualification restrictions that directly regulate M&A Intermediary Services, but if such laws were enacted in the future, restrictions could arise on business operations, potentially affecting operating results and financial condition. There is also a risk that M&A needs themselves could change due to amendments to the Financial Instruments and Exchange Act, the Companies Act, tax laws, and other legislation. At present, no specific regulations with significant impact are planned, and the Company judges that the possibility of this risk materializing and its impact are low.

Under the M&A support institution registration system operated by the Small and Medium Enterprise Agency, if a violation of the SME M&A Guidelines occurs, registration could be revoked, which is expected to have a considerable impact on operating results and financial condition. Each time the guidelines are revised, the Company holds discussions across multiple departments to respond appropriately, and judges the likelihood of occurrence to be low; however, the impact would be significant if registration were revoked. There is also a possibility of increased operational burden due to strengthening of the guidelines, but no major revisions are currently recognized.

The M&A Intermediary Business has low barriers to entry, and numerous operators—from major firms to individual practitioners—have entered the market, with competition expected to intensify further. The competitive landscape is shifting from simple client-acquisition competition toward competition centered on service quality, and intensifying competition with rival firms could affect the Company's operating results and financial condition. The Company is working to improve service quality by hiring qualified professionals such as certified public accountants and licensed tax accountants, and by sharing in-house expertise and strengthening training.

In the M&A Intermediary Business, success fees vary depending on deal size, and temporary fluctuations in the number of closed deals or the success or failure of large-scale deals can cause significant fluctuations in quarterly and full-year results. In recent years, deals of very large scale have been increasing, heightening period-to-period revenue volatility depending on whether large deals close, and there have been instances of divergence from business plans. The Company is working to mitigate such volatility by increasing the number of deals handled, but recognizes that fluctuations in performance and divergence from plans may continue to occur in the future.

The Company's business is centered on personal services provided by consultants, and the recruitment, development, and retention of excellent M&A consultants is a key challenge for business expansion. If the Company is unable to secure personnel in a timely manner, if there is a mass exodus of personnel, or if development does not proceed as planned, this could have a significant impact on operating results and financial condition. The Company has established a team-based organizational structure, expanded training, and implemented mutual checks, and judges the likelihood of this risk occurring to be low.

Because the Company operates in the single business segment of the M&A Intermediary Business, the relative impact on operating results and financial condition would be high if something were to affect that business. At present, the Company does not recognize any risk factors with a high likelihood of materializing arising from this single-segment structure, but since it could become a risk factor in the future, the Company intends to mitigate it through expansion of its business domains. There is also a possibility of impact if new business investments do not become profitable as expected, but the current investment amount is not large, and the Company judges the impact to be minor.

The Company bears confidentiality obligations under nondisclosure agreements with clients, and if client information were to leak due to an unforeseen event, this could affect operating results and financial condition through monetary compensation such as damages claims or a decline in creditworthiness. In March 2024, the Company obtained certification under the ISMS international standard "JIS Q 27001:2023 (ISO/IEC 27001:2022)" and has implemented measures such as establishing internal regulations, thorough management of information storage, and confidentiality education for officers and employees. At present, the Company does not recognize any factors that could give rise to this risk.

The Company obtains personal information through channels such as e-mail newsletter registrations and seminar attendance, and if a leak or improper use of such information were to occur, this could affect operating results and financial condition through monetary compensation such as damages claims or a decline in creditworthiness. The Company has established internal regulations in accordance with the Act on the Protection of Personal Information and implements strict management, but the risk of an unforeseen event occurring despite these measures cannot be eliminated. At present, the Company does not recognize any factors that could give rise to this risk.

Kunihiko Arai, the founder and Representative Director, together with his asset management company, is a major shareholder holding 40.2% of the Company's shares, and also plays an important role in management, resulting in a currently high degree of dependence on him. If, for any reason, he were to become unable to continue managing the Company and successor management personnel had not been sufficiently recruited or developed, this could affect operating results and financial condition. The Company is addressing this over the medium to long term through thorough decision-making via its governing bodies, strengthening of organizational management structures, and the recruitment and development of management personnel.