ONDECK Co., Ltd.

The M&A Advisory Business requires no licenses or permits, resulting in low barriers to entry, and numerous competitors exist ranging from large-scale operators to individual practitioners (accounting firms, consulting firms, etc.). New entrants and intensifying competition among existing competitors are expected to continue, creating a risk that the entry of strong competitors could reduce the profitability of the business. As countermeasures, the Company is pursuing differentiation through knowledge sharing, education and training, and the active recruitment of personnel with practical M&A experience.

If legal regulations related to M&A, such as the Financial Instruments and Exchange Act, the Companies Act, and tax laws, are amended, this could affect the M&A market as a whole and impact business performance through changes in customer needs. In addition, if some form of regulation or restriction is introduced in the future on the M&A Advisory Business, which currently requires no license or permit, this could directly constrain business operations. At present, no specific move toward introducing regulation has been indicated, but continued monitoring of institutional changes is necessary.

The Group's revenue is highly dependent on the M&A Advisory Business, and diversification of business is limited. While the M&A market has been trending steadily against the backdrop of business succession needs among small and medium-sized enterprises and exit needs among venture companies, if M&A demand were to contract sharply due to changes in economic conditions or the business environment, there is a risk of a severe impact on the Group's overall performance. The high degree of dependence on a single business increases vulnerability to changes in the external environment.

The M&A Advisory Business operates on a success-fee basis in which fees arise upon deal closing; if a deal fails to close, or if the closing timing shifts due to difficult negotiations over terms or delays in due diligence, this can significantly affect performance on a quarterly or fiscal-year basis. In particular, the failure to close deals with high fee amounts has a large impact on performance, and the risk is pronounced when multiple high-fee deals simultaneously fail to close or experience delayed closing. The Company is working to reduce the impact of individual deals by increasing the number of contracted deals (expanding the base).

Growth in the M&A Advisory Business requires securing and developing M&A consultants with advanced expertise and extensive experience; if the Company is unable to acquire excellent talent as planned, or if attrition to outside organizations occurs, there is a risk of a decline in service quality and stagnation in business expansion. With only 57 employees (as of November 30, 2025), the organization is small in scale, meaning that even the loss of a small number of personnel has a relatively large impact on business operations. The Company is focusing on acquiring and developing excellent talent, but competition for talent among competitors is also intensifying.

The M&A Advisory Business handles confidential and highly sensitive customer information, including information on listed companies and their subsidiaries and affiliates; if information leakage or insider trading were to occur, this could result in serious risks such as damages, loss of trust, and restrictions on business operations. The Company strives for thorough information management through the establishment, operation, and monitoring of internal regulations and continuous training for officers and employees, but the risk of information leakage due to unforeseen circumstances cannot be completely eliminated. In particular, misuse of insider information could entail legal sanctions and could have a serious impact on business continuity.

Co-founders and Representative Directors Ryosuke Kubo and Masao Funato possess extensive experience and knowledge related to the M&A Advisory Business and play central roles in formulating and executing management policy and business strategy. The combined voting rights of the two total 59.6%, meaning that any unforeseen circumstance or departure affecting either of them would have a significant impact on performance. In addition, if the two sell their shares, resulting in a decline in their voting-rights ratio, or if shares are transferred to a specific party, this could affect the share price, the exercise of voting rights, and business strategy.

The Group's number of employees is small at 57 (as of November 30, 2025), and there is a risk that business operations could be hindered if the Company is unable to adequately respond, in terms of personnel and organization, to rapid business expansion. While an internal management structure suited to the current organizational scale has been established, if the strengthening of the internal management structure fails to keep pace with the speed of business expansion and employee growth, this could lead to a decline in compliance or operational quality. The Company plans to continue strengthening its internal management structure in line with future business expansion.

While the Group utilizes technologies such as generative AI to improve productivity and strengthen information management, there is a risk that failure to respond to changes in the competitive environment driven by technological innovation could reduce the competitiveness of the services offered and affect performance. As digitalization and AI utilization advance in the M&A advisory industry as well, delays in technology investment and talent development could lead to a loss of differentiation capability relative to competitors.

The Group manages important information for business operations on servers and cloud systems; if the use of these systems is restricted by natural disasters such as major earthquakes or typhoons, or if severe damage occurs in the Tokyo metropolitan area or Kinki region, which are the Group's main business locations, this could disrupt business activities and affect performance. While the use of cloud systems provides a degree of risk diversification, the effectiveness of the business continuity plan (BCP) in the event of a wide-area disaster remains a concern.