Strike : ［Delayed］Financial Results and Future Measures 1H of Year Ending September 30, 2021

Financial Results and Future Measures

First Six Months of the Fiscal Year Ending September 30, 2021

(1H FY09/21)

Strike Co., Ltd.

(First Section of the Tokyo Stock Exchange: 6196)

March 30, 2021

Copyright© Strike Co., Ltd. All Rights Reserved.

Contents

1

2

3

4

5

Operating performance in 1H FY09/21 ... P. 3

Net sales rose 11.1% YoY to ¥3,899 million as we steadily closed deals on large M&A projects. Meanwhile, ordinary profit declined 4.3% YoY to ¥1,484 million due primarily to workforce expansion.

Forecast for FY09/21* ... P. 8

We project net sales of ¥8,368 million and ordinary profit of ¥3,083 million. *FY09/21 is a 13-monthaccounting period due to a change in fiscal year-end.

Market Trends ... P. 19

We expect expansion in the M&A market, mainly in the category of business succession.

Medium- to Long-Term Management Policy ... P. 24

In addition to expanding M&A associated with business succession, we aim to fulfill rising needs associated with other types of M&A. Over the long term, we strive to become the M&A broker with the highest number of deals closed.

Company Overview ... P. 28

We are a group of professionals, chiefly certified public accountants, with "Realizing people's aspirations through M&A" as our corporate credo.

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Operating Performance in 1H FY09/21

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1H FY09/21 Operating Performance

In 1H FY09/21, deals closed fell to 63 (minus seven YoY). Meanwhile, net sales rose to ¥3,899 million (+11.1% YoY), primarily due to the steady closing of deals associated with large M&A projects, and reached a record high for 1H. Ordinary profit dropped to ¥1,484 million (-4.3% YoY) due to increases in personnel expenses and operating expenses.

Net Sales and Number of Deals Closed		Ordinary Profit

Millions of yen		Net sales (left)	Deals

	Number of deals closed (right)	80
5,000		70
		63	70
4,000				60
	44		3,899	50
	3,508
3,000
			40
2,000	2,192			30
				20
1,000
				10
0				0
	1H FY08/19	1H FY08/20	1H FY09/21

Millions of yen

2,500
2,000
1,500	1,551
	1,484
1,000
756
500
0
1H FY08/19	1H FY08/20	1H FY09/21

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Year-on-Year Comparison

Cost of sales rose 25.1% YoY to ¥1,476 million, and the cost-to-sales ratio increased, as personnel expenses and introduction fees grew. SG&A expenses expanded 21.2% YoY to ¥942 million due primarily to an uptick in operating expenses-increases of ¥17 million in advertising expenses and ¥20 million in expenses associated with the purchase of marketing data (included under "Other")-and a ¥37 million upturn in recruiting expenses (included under "Other").

Millions of yen

	1H FY08/20		1H FY09/21
		% of net		% of net	YoY
		sales		sales
Net sales	3,508	100.0%	3,899	100.0%	+11.1%
Cost of sales	1,179	33.6%	1,476	37.9%	+25.1%
Gross profit	2,328	66.4%	2,423	62.1%	+4.1%
SG&A expenses	777	22.2%	942	24.2%	+21.2%
Operating profit	1,551	44.2%	1,481	38.0%	-4.5%
Non-operating income	0	0.0%	3	0.1%	+1438.6%
Ordinary profit	1,551	44.2%	1,484	38.1%	-4.3%
Extraordinary income	225	6.4%	-	-	-
Extraordinary losses	27	0.8%	-	-	-
Profit before income taxes	1,748	49.8%	1,484	38.1%	-22.1%
Income taxes	567	16.2%	484	12.4%	-14.6%
Profit	1,181	33.7%	999	25.6%	-15.4%

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Breakdown of cost of sales

	1,179	1,476
1,400
1,200					Personnel expenses
1,000		980
			Introduction fees
800	779
			Other
600
400
319	415
200
80	79
0
1H FY08/20	1H FY09/21

Breakdown of SG&A expenses

1,000	777	942
800					Personnel expenses
	424
600					Advertising expenses
401	60
400	42	103			Rent expenses on
200	91				land and buildings
				Other
242	353
0
1H FY08/20	1H FY09/21

Quarterly Financial Performance

Despite sluggish growth in the number of deals closed caused primarily by the COVID-19 pandemic, we closed on a larger number of large-scale M&A deals and achieved record-highnet sales for the three months ended February 28, 2021. In terms of new contract acquisition, we are taking care to ensure that we obtain contracts for projects on which we can close deals but still steadily attained contracts for projects expected to be large in scale.

			FY08/19					FY08/20				FY09/21
	Q1	Q2	Q3	Q4	Total	Q1	Q2	Q3	Q4	Total	Q1	Q2	Total
Number of deals	22	22	24	36	104	24	46	27	37	134	25	38	63
closed
Number of contracts	41	42	44	68	195	48	89	52	73	262	47	73	120
closed
Number of new	57	49	97	86	289	117	80	57	86	340	88	88	176
contracts
Net sales	827	1,365	1,220	1,664	5,077	1,481	2,026	1,470	1,937	6,916	1,197	2,701	3,899
(Millions of yen)

Number of deals closed:

Number M&A transactions in which Strike provides brokerage or advisory services (i.e. number of deals).

Number of contracts closed:

Number of contracts on closed M&A deals in which Strike provides brokerage or advisory services (i.e. number of companies). In brokerage services, each deal counts as two contracts (one for the seller and one for the buyer), while in advisory services, each deal counts as one contract.

New contracts:

Number of new brokerage service contracts signed with sellers (or in the case of advisory services, contracts signed and services effectively commenced).

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1H FY09/21 Performance Highlights

In 1H FY09/21, we did not achieve growth in deal closures on small and medium-sized M&A projects, and net sales and deal closures fell short of our initial projections. However, deal closures on large M&A projects increased, and net sales rose YoY. Overall, costs were mostly in accordance with our expectations as sales activities and recruiting generally proceeded according to plan.

1H FY09/21 Financial Results

• Net sales of ¥3,899 million (+11.1% YoY)
• Ordinary profit of ¥1,484 million (-4.3%YoY)
• Profit of ¥999 million (-15.4% YoY); recorded a ¥225 million gain on sale of investment securities in 1H FY08/20

KPIs for Net Sales

• In 1H, the number of deals closed was 63 (-7deals YoY), and the number of large deals closed was 10 (+2 deals YoY).
• In 1H, the number of new contracts was 176 (-21contracts YoY).

Business Conditions in 1H FY09/21

• Sales activities were more or less typical despite a state of emergency declared in response to COVID-19.
• The number of deals closed (primarily those associated with small and medium-sized M&A projects) fell temporarily due to factors resulting from deteriorating business performance caused by COVID-19, including an increase in the number of projects that required lengthy term negotiations. In addition we encountered more sale cancellations than we had initially expected, primarily in cases of contracts that we acquired prior to the start of pandemic, which also contributed to the temporary decline.
• We saw steady progress in terms of large M&A projects (those associated with per-deal sales of ¥100 million or more) and closed ten deals on these projects.
• The number of acquired contracts did not grow, but acquisition of contracts expected to develop into large-scaleprojects was steady.
• We achieved a net increase of 16 M&A consultants and have also secured new future staff members who are scheduled to join the Company starting in Q3.

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Forecast for FY09/21

(FY09/21 is a 13-month period due to a change in fiscal year-end.)

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FY09/21 Forecast

(Note: FY09/21 is a 13-month period due to a change in fiscal year-end.)

For the 13-month accounting period of FY09/21, we had previously forecast 191 deal closings and net sales of ¥8,368 million. Based on circumstances surrounding deal closings on small and medium-sized M&A projects during 1H, we expect that the number of deals closed will fall short of our full-year projections. However, many large-scale projects are proceeding steadily, and we anticipate that net sales and profit will meet their full-year targets.

Net Sales and Number of Deals Closed		Ordinary Profit and Ordinary Profit Margin

Millions of yen		Net sales (left)				Deals	Millions of yen	Ordinary profit (left)
		Number of deals closed (right)	191	200	4,000	Ordinary profit margin (right)	43.1%
10,000							3,500	37.0%		37.2%			40%
							36.2%		36.8%
8,000				134	8,368	150	3,000					3,083
								2,983
												30%
							2,500
				6,916
			104
6,000
		88				100	2,000
			5,077							1,889			20%
	67
4,000						1,500
		3,743							1,355
	3,092				1H (actual)	50	1,000	1,144					10%
											1H (actual)
2,000					3,899
										1,484
					(63 deals		500
					closed)
0						0	0						0%
	FY08/17	FY08/18	FY08/19	FY08/20	FY09/21			FY08/17	FY08/18	FY08/19	FY08/20	FY09/21
					(forecast)							(forecast)

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FY09/21 Forecast

For full-year FY09/21, we forecast net sales of ¥8,368 million and ordinary profit of ¥3,083 million. June 2021 will mark the fifth anniversary of our public listing; accordingly, we will resolutely conduct proactive investment activities in pursuit of further growth in the future.

FY09/21 Forecast

• Net sales of ¥8,368 million (¥6,916 million in FY08/20)
• Operating profit of ¥3,081 million (¥2,981 million in FY08/20)
• Ordinary profit of ¥3,083 million (¥2,983 million in FY08/20)
• Profit of ¥2,069 million (¥2,202 million in FY08/20)
• EPS of ¥108.35 (¥115.29 in FY08/20) and forecast dividend of ¥27.00 (¥24.00 in FY08/20)

Non-Monetary Targets

• We aim to close 191 deals (+57 deals YoY) but expect that the final number will fall short of this goal. In addition, we acknowledge the possibility that new contract acquisitions may finish underneath our target of 482 (+142 contracts YoY).
• We forecast a total of 138 M&A consultants at end-FY09/21 (+27 consultants versus end-FY08/20), but the pace of recruitment is on pace to exceed this target.

Supplemental Information on Earnings Forecasts, Latest Outlook

• FY09/21 is a 13-month accounting period due to a change in fiscal year-end.
• Our initial forecast assumed that performance would be mostly unaffected by the COVID-19 pandemic. However, we encountered increases in the number of delayed small and medium-sized M&A projects and in project cancellations and now expect that total number of deals closed will fall short of our targets. Meanwhile, negotiations concerning many large-scale projects are proceeding steadily, and we project that deal closures on large-scaleprojects will rise in number. (We initially expected to close 12 of these deals but now project a greater number of these closures).
• We plan to relocate our headquarters in May 2021 and accordingly expect to experience an increase in rent and to incur temporary relocation expenses.
• We added 13 new M&A consultants in March and nine more are expected to join in April. We plan to continue our proactive recruitment efforts moving forward.

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Growing Number of Consultants: Present Conditions vs. Plan

As of end-February 2021, we had increased our headcount of consultants to 127 and non-consultants to 32. In March, more than 20 new consultants had either joined or were scheduled to join the Company in the future. We will hire more new employees than forecast if we discover enough talented human resources, but fewer if we do not.

People 250

200

Non-consultants
Consultants (not included in cost of sales)
Consultants (included in cost of sales)	42

150

100

50

0

					29
	21	18
				14
	19
10				84		93
	47
39

		37	20
32	33	19
17
16
		147	172
	121
111

FY08/17	FY08/18	FY08/19	FY08/20	End-Feb.	FY09/21	FY09/22	FY09/23
				2021	(target)	(target)	(target)
				(1H FY09/21)

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Organization (as of March 1, 2021)

Our organizational structure is unchanged.

General Meeting of

Shareholders

Board of Directors

Audit & Supervisory

Board

	Representative Director		Internal Control
		Department

Corporate

Business

Business

Marketing

Public Relations

M&A Online

Information

Administration

Advisory

Operation Support

Promotion

Editorial

Systems

Department

Department

Department

Department

Department

Department

Department

Department

Sections 1-11

Higher number of

Improved

Higher number

Enhanced

Sales support

Proliferation

Increased

deals closed

service quality

of contracts

contract

through

of M&A

convenience of

received from

acquisitions

seminars and

M&A Market

partners

through direct

public relations

SMART

sales

Included in cost of sales

Not included in cost of sales

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Establishing a Nationwide Sales Network

We plan to relocate our headquarters in May 2021. We are actively recruiting personnel at our other sales offices as well.

Headquarters

Sapporo sales office

Sales offices

Strike's field

extends

across all of

Japan

Sendai sales office

Nagoya sales office

Fukuoka sales office

Tokyo headquarters

(scheduled to be relocated)

Osaka sales office

Takamatsu sales office

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Increasing and Streamlining Direct Contracts through Seminars

We are shifting from conventional in-person seminars to online seminars and increasing the number we hold. Online seminars have fewer regional and time restrictions, so more people can participate. Also, online seminars are substantially less expensive to hold.

Online Seminars Held and Planned for FY09/21 (excluding small-scale seminars)

Date	Type	Title	Applicants
Sep. 2020	Online-only seminar	Overcoming the increasingly stringent corporate market: Life insurance	731
sales and M&A
Oct. 2020	Online-only seminar	Why now is the time for proactive M&A	355
Nov. 2020	Online-only seminar	Business succession measures and M&A support expertise tax	342
accountants should know
Dec. 2020	Online-only seminar	Analyzing M&A strategies in terms of your company's enterprise value: The	224
		decision for successful executives
Jan. 2021	Primarily online	Management seminar on succeeding in the post-COVID era: Strategic M&A,	217
seminar	not merely a means of business succession
Jan.-Feb. 2021	Online-only seminar	What you need to know about taxes and succession methods before	131
implementing your business succession
Feb. 2021	Online-only seminar	Strategies for surviving in the COVID era: Maintaining and growing your	73
business using M&A
Feb.-Mar. 2021	Online-only seminar	The secret to making progress on corporate business succession and M&A	1,867
		even amid COVID-19
		Procedures for conducting business succession through the use of	Under
Mar. 2021	Online-only seminar	investment funds: The reasons why a company with one billion yen in net
calculation
		sales used an investment fund for business succession
Mar. 2021	Online-only seminar	Construction industry seminar: Business succession and M&A in today's	Under
construction industry	calculation
		The characteristics of companies in Shikoku that have achieved growth	Under
Mar. 2021	Online-only seminar	during COVID-19: The economic outlook for the Shikoku region and
calculation
		expertise concerning the use of M&A to endure and achieve growth
Apr. 2021	Online-only seminar	What can be done to create synergy through M&A: How to achieve growth
(planned)	post-M&A
Apr. 2021	On-site and through	New M&A strategies for management: The secret to successful M&A
(planned)	online broadcast	strategies that will prevail in this era of uncertainty

Note: Scheduled to plan and hold one or more online seminars each month

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Expanding New Business Partners and Strengthening Ties with Existing Partners

We expand our partnerships with financial institutions, professionals, and investment companies. In addition, we aim to strengthen our ties with existing partners through further personnel exchanges.

Financial Institutions		Professionals
		Accounting firms
Banks and Shinkin banks		Cooperative
	societies of certified
Securities companies		public tax accountants
Financial product		Cooperative societies of
intermediaries		certified public accountants
Insurance companies		Professional journal
	publishers
and insurance agencies
		Consulting firms
		M&A firms
Others		Investment companies
Companies		Investment companies,
providing corporate
information		investment funds (including
Other operating companies		venture capital firms)
	Corporate revitalization funds
Business succession
	Startup support companies
support centers

Expanding new partners and strengthening ties with existing partners

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Proposal Flow of Pre-Marketing Services

Growing demand for pre-marketing services, which search for potential sellers from the potential buyer's perspective-thus far, we have concluded new pre-marketing service contracts with 44 companies in FY09/21.

Standard M&A Brokerage

Services

Request

Search

Strike

Potential seller

Potential buyers

Pre-Marketing Services

Approach the seller on the buyer's behalf

Sounding

out

Request

Strike

Potential sellers

Potential buyer

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M&A Portal Site
M&A Online	Monthly Page Views for M&A Online
A free portal site that offers a variety of	Page views
4,500,000
M&A-related information, such as the latest	4,250,000
news and legal information,	4,000,000	3 million
in a timely fashion
3,750,000	monthly
	3,500,000
	page views
	3,250,000
	maintained
	3,000,000
	2,750,000
	2,500,000
（https://maonline.jp/） 2,250,000
	2,000,000
Achieving Profitability for M&A Online	1,750,000
1,500,000
(1) M&A Online Market facilitates the posting of information on deals for	1,250,000
which another company acts as the financial advisor of the seller.	1,000,000
Strike strives to generate profits by functioning as the financial advisor	750,000
of buyers that make an inquiry.
500,000
(2) "Company wanted" ads, where buyers target sellers	250,000
(3) General advertisements from companies involved in M&A operations	0
Aug. Aug. Aug. Aug. Aug. Aug.
	2015	2016	2017	2018	2019	2020
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Forecast for Shareholder Returns

Dividends: We plan to raise our dividend payout ratio from 20% to 25%, increasing the dividend from ¥24.0 per share in FY08/20 to ¥27.0 in FY09/21.

Shareholder benefits: We present a QUO card worth ¥1,000 to each shareholder with at least one share unit (100 shares) at the fiscal year-end.

Dividends and Payout Ratio

Yen		Dividend per share (left)

30.00		Payout ratio (right)			40%
25.00
					30%
20.00					24.9%
		18.9%	20.8%	20.8%
15.00	18.4%			20%
				24.00	27.00
10.00
			14.50		10%
5.00	8.00	9.00
0.00					0%
	FY08/17	FY08/18	FY08/19	FY08/20	FY09/21
					(forecast)

Note: Dividend per share figures reflect a stock split conducted on June 1, 2018.

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Market Trends

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Market Trends: Aging Company Presidents, a Lack of Business Successors

As the ages of company presidents advance, many companies even with relatively old presidents lack successors.

• To address this problem of business succession, we expect the M&A market to continue growing.

100%

80%

60%

40%

20%

0%

Advancing Age of Company Presidents

Age Distribution of Company Presidents

4.2%	4.0%	3.8%	3.5%	3.2%	3.0%
15.2%	15.5%	15.5%	15.9%	15.6%	15.3%
23.1%	22.9%	22.9%	22.6%	23.0%	23.3%

35.8%	35.1%	34.6%	34.0%	32.0%	30.3%

21.6%	22.6%	23.3%		24.1%	26.2%	28.1%
2013	2014	2015			2016	2017	2018
		70s or older		60s			50s			40s		30s or younger

Numerous Companies without Successors

Successors in Place (by Age of Company Presidents)

100%
	8.1%	8.8%	14.2%
80%									28.4%
											50.5%	60.1%
															68.2%
60%
	91.9%	91.2%	85.8%
40%
								71.6%
20%												49.5%	39.9%
														31.8%
0%
	Younger		30s		40s		50s			60s		70s		80s or
		than 30																older
						No successor		Have successor

Source: 2020 White Paper on Small and Medium Enterprises in Japan (Data from "Nationwide Survey of Company Presidents' Ages," Tokyo Shoko Research, Ltd.)

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Source: 2020 White Paper on Small and Medium Enterprises in Japan (Data from "Nationwide Field Study regarding Companies Facing Successor Issues [2019]," Teikoku Databank, Ltd.)

Market Trends: Issue of Passing on Key Management Resources to the Next Generation

Even as older SMEs are replaced with newer ones, highly productive companies are also going out of business.

• Passing on key management resources to motivated next-generation managers is an important issue. M&A is also effective.

More than 40,000 Companies Each Year Suspending Operations and Dissolving

Number of Companies Discontinuing Operations

60% of Those Companies Are Profitable

Number of Profitable/Unprofitable Companies

Discontinuing Operations

50,000					46,724
			41,162	40,909		43,348
40,000		37,548
34,800	33,475
30,000
20,000
10,000
0
2013	2014	2015	2016	2017	2018	2019

100%

80%

38.3%

37.4%

36.3%

36.0%

38.1%

38.4%

38.6%

60%

40%

61.7%

62.6%

63.7%

64.0%

61.9%

61.6%

61.4%

20%

0%

2013	2014	2015	2016	2017	2018	2019
		Profitable companies			Unprofitable companies

Source: 2020 White Paper on Small and Medium Enterprises in Japan (Data from "2019 Survey of Companies Suspending Operations and Dissolving," Tokyo Shoko Research, Ltd.)

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Source: 2020 White Paper on Small and Medium Enterprises in Japan (Data from "2019 Survey of Companies Suspending Operations and Dissolving," Tokyo Shoko Research, Ltd.)

Market Trends: Issue of Ensuring SMEs' Survival through

Increased Productivity

To simultaneously boost wages and ensure higher profits, Japan's SMEs need to raise productivity (increase added value).

• To achieve this, companies can create new value by developing new businesses or increase their potential through alliances with companies in other industries. M&A offers one method.

Growing Disparity in Added Value between Large Companies and SMEs

Added Value per Worker (Labor Productivity) by Size of Company

Millions of yen

16

13.94

14

12	13.67

10

8

5.54

6

4

5.43

2

0

SMEs, manufacturing		SMEs, non-manufacturing
Large, manufacturing		Large, non-manufacturing

Note: Large companies are defined as those capitalized at ¥1.0 billion or more; SMEs are capitalized at less than ¥0.1 billion.

Source: 2020 White Paper on Small and Medium Enterprises in Japan (Data from the "Financial Statements Statistics of Corporations by Industry, Annually," Ministry of Finance)

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SMEs with High Labor Productivity Also Exist

Labor Productivity by Size of Company

Millions of yen			15.78
16
14
12
10		8.32
8	6.46
		5.85
6
4		3.26
2	1.74	1.90	1.69
0.10
0
	Small	Medium	Large
	Median	Top 10%	Bottom 10%

Note: Large companies are defined as those capitalized at ¥1.0 billion or more; SMEs are capitalized at less than ¥0.1 billion.

Source: 2020 White Paper on Small and Medium Enterprises in Japan (Data revised and processed from the "2016 Economic Census for Business Activity in Japan," Ministry of Internal Affairs and Communications and Ministry of Economy, Trade and Industry)

Market Trends: M&A around the World

Compared with other countries with high levels of GDP, Japan ranks low in terms of M&A, suggesting development potential.

Ratio to GDP (Top 30 countries by GDP)

10.0%

9.0%

8.0%

7.0%

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Sources: M&A amounts are from a study by Refinitive (2019). GDP figures are from an IMF survey (2018).

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Medium- to Long-Term Management Policy

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Results and Targets for New Contracts and Deals Closed

Based on our current personnel organization and plans for additional personnel increases, we aim to achieve 300 deal closings per year in three years. We also target further growth by raising the productivity and efficiency of consultants.

Contracts, deals	New contracts					665
700
	Deals closed
650
600						555
550					482
500
450
400				340
350						300
		289
300					245
	232
250
			191
200
143			134
150	88	104
67
100
50
0
	FY08/17	FY08/18	FY08/19	FY08/20	FY09/21	FY09/22	FY09/23
					(target)	(target)	(target)
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Aiming for Further Growth by Increasing Per-Consultant Efficiency (Number of Deals Closed)

Reinforce Sourcing Routes

1. Enhance matching functions
2. 1. Increase convenience of, and access to, M&A Market SMART
   2. Accumulate data on acquisition needs, and strengthen data search functionality
   3. Reinforce teams that search for potential buyers, step up internal information-sharing to enhance searches for potential buyers
3. Strengthen new contract sources
4. 1. Promote personnel exchanges to enhance relationship with business partners
   2. Step up sales of pre-marketing services
   3. Increase direct sales primarily through the Marketing Department
5. Boost the number of locations

Expand regional sales offices

Boost Productivity and Efficiency

1. Recruit and train talented consultants

Hire even more qualified consultants by enhancing our name recognition

Strengthen development by improving in-house training and expanding training content

2. Business support from specialists
Further strengthen business support by	increasing the number of
× specialists (Business Operation Support Department) in fields
such as accounting and law

3. Leverage IT

1. Support operation streamlining by improving internal systems with IT
2. Share deal information through in-house system, manage deal progress

Optimize client discovery and brokerage services

Acquire more contracts and aim for four deal closings per consultant (with three or more years of experience) by shortening the time required until

finding a buying company and closing the deal

26 Copyright© Strike Co., Ltd. All Rights Reserved. Copyright© Strike Co., Ltd. All Rights Reserved.

Aiming to Top the Japanese M&A Market in Number of Deals Closed

We aim to further increase our share of the market for business succession M&A, focus on cultivating the M&A market as an exit method for startup companies, and achieve net sales CAGR of over 20% over the medium term. As in FY08/19, in FY08/20 we closed nine M&A deals involving startups (limited to companies that have concluded an M&A brokerage agreement within five years of their establishment).

Target Sales Composition

Aiming to lead the Japanese M&A market in the number of deals closed

Contracts other than business succession

Business succession M&A

• Medium- to long-term focus on becoming the leader in the Japanese M&A market in the number of deals closed
• Contracts other than business succession: Cultivate the M&A business as an exit method for startup and growth companies. In addition, actively cultivate large M&A deals that drive industry consolidation.
• Business succession M&A: Market is forecast to expand for several years, but dependence on business succession contracts is expected to decline due to an increase in the types of contracts indicated above.

27 Copyright© Strike Co., Ltd. All Rights Reserved.

Company Overview

28	Copyright© Strike Co., Ltd. All Rights Reserved.

Company Overview

We are a group of professionals, chiefly certified public accountants, with "Realizing people's aspirations through M&A" as our corporate credo. We established the first online M&A market in Japan. We are developing our business by focusing on one of the serious issues facing Japan, the succession of small and medium-sized enterprises, through our efforts in M&A.

Company name	Strike Co., Ltd.
Established	July 1997
Share capital	¥823 million (as of February 28, 2021)
Representative	Kunihiko Arai, President and CEO
Headquarters	18th floor of Otemachi Financial City Grand Cube
1-9-2 Otemachi, Chiyoda-ku, Tokyo, Japan
Number of employees	159 (excluding temporary staff, as of February 28, 2021)
Net sales, operating profit	Net sales of ¥6,916 million and operating profit of ¥2,981 million (operating profit margin of
43.1%) in FY08/20
Businesses	M&A brokerage business
	With "Realizing people's aspirations through M&A" as our corporate credo, we propose M&A as a
	sincere solution to client needs. Our management philosophy is to contribute to society at large
Management philosophy	through M&A, providing corporate management structures to respond to fluctuations in the
	business environment and changes in the times. To realize this, we aim to become the leader in
	the number of M&A deals in Japan.

29 Copyright© Strike Co., Ltd. All Rights Reserved.

History

Established in July 1997, Strike broke new ground in Japan by leveraging the internet for M&A services. We are expanding our partnerships with organizations such as cooperative societies of certified public tax accountants and certified public accountants. In addition to our headquarters, we have sales offices in six major cities.

Deals 800

700

600

500

400

300

200

100

Jul. 1997 Established in Adachi-ku, Tokyo, to conduct business focusing on M&A brokerage

Oct. 1998 Launched SMART, Japan's first online site for the M&A brokerage market

Jan. 1999 Began full-scale operation of M&A market SMART

May 2001 Relocated headquarters to Shibuya-ku, Tokyo

Aug. 2002 Relocated headquarters to Sanbancho, Chiyoda-ku, Tokyo

Jun. 2009 Relocated headquarters to Rokubancho, Chiyoda-ku, Tokyo

Jan.-Jul. 2012 Opened the Osaka, Sapporo, Sendai, Fukuoka, and Takamatsu sales offices

Jan. 2013 Opened the Nagoya sales office

Mar. 2014 Entered business alliance with cooperative societies of certified public tax accountants

Jul. 2015 Launched M&A Online, an M&A portal site

Aug. 2015 Entered business alliance with Daido Life Insurance Company

Feb. 2016 Entered business alliance with cooperative societies of certified public accountants

Jun. 2016 Listed on the Mothers market of the Tokyo Stock Exchange

Aug. 2016 Relocated headquarters to Otemachi, Chiyoda-ku, Tokyo

Jun. 2017 Changed listing to the First Section of the Tokyo Stock Exchange

Total number of deals closed through M&A brokerage

Total number of deals

closed: 739

(as of February 28, 2021)

0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

(end-February)

30 Copyright© Strike Co., Ltd. All Rights Reserved.

Business Overview

Strike primarily engages in the M&A brokerage business. Our earnings model is based on brokerage fees received from both sellers and buyers. While carefully considering possible conflicts of interest, we place the utmost importance on client satisfaction.

Principal Businesses

M&A Brokerage Business

We broker M&A deals between sellers and buyers and receive brokerage fees from both parties.

Company Characteristics

• By actively utilizing our M&A Market SMART online service, we aim to match better clients on better terms
• We employ a high percentage of specialists, including CPAs and certified public tax accountants, and can provide service for complicated projects

Compensation Structure: Lehmann Method

Sample Compensation Structure

M&A Brokerage Earnings Model

Strike

CompensationCompensation

M&A	M&A
brokerage	brokerage
agreement	agreement
Brokerage	Brokerage
Transfer of shares and businesses
Seller	Buyer

Seller

Amount of shares or assets to be	Rate
transferred
Portion below ¥500mn	5％
Portion from ¥500mn to ¥1.0bn	4％
Portion from ¥1.0bn to ¥5.0bn	3％
Portion from ¥5.0bn to ¥10.0bn	2％
Portion above ¥10.0bn	1％

Buyer

Market value of total assets at	Rate
transfer
Portion below ¥500mn	5％
Portion from ¥500mn to ¥1.0bn	4％
Portion from ¥1.0bn to ¥5.0bn	3％
Portion from ¥5.0bn to ¥10.0bn	2％
Portion above ¥10.0bn	1％

Payment of considerations

Memorandum of understanding

Transfer agreement

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Flow of M&A Brokerage Business

The brokerage process consists of searching for leads, acquiring contracts, matching companies, and closing the deal.

Searching

for leads

Acquiring contracts

Matching

companies

Closing the deal

• Hold seminars, issue publicity magazines, and disseminate M&A information via internet, newspapers, and magazines
• Contact potential sellers through direct sales and direct mail
• Cultivate business partners, strengthen relationships, and receive potential seller introduction from business partners
• Respond to consultations from potential seller and make proposals
• Sign non-disclosure agreement with potential seller and gather information on company to be sold
• Conduct prior corporate analyses and consider viability of sale
• Sign M&A brokerage agreement with potential seller
• Propose sale scheme and conduct corporate valuations
• Create proposal documents
• Search for potential buyer (post on M&A Market SMART) and make anonymous inquiries
• Sign non-disclosure agreement with potential buyer and disclose proposal document
• Sign M&A brokerage agreement with potential buyer
• Interview top management and arrange company visit
• Confirm potential buyer's intention and make adjustments to basic terms
• Provide support for the signing of memorandum of understanding
• Establish environment for potential buyer to conduct due diligence
• Make final adjustments to terms between potential seller and potential buyer
• Provide support for the signing of transfer agreement

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Using the Internet to Search for Matches

Methods used to search for potential buyers

1. Our consultants utilizes Strike's internal database of acquisition needs (which contains data on M&A needs for over 10,000 companies collected through daily sales activities) to make direct proposals to potential buyers.
2. We receive inquiries from potential buyers interested in deals posted anonymously on M&A Market SMART (https://www.strike.co.jp/smart/).
3. We receive introductions to customers looking to make an acquisition from partner financial institutions.

• Our mission is to introduce many buyer candidates to potential sellers through methods (1)-(3), allowing them to find the party that matches their needs. To this end, we make effective use of the internet.

Inquiries Received through SMART

Deals posted on SMART (left)

Deals		Inquries received through SMART (right)	Deals

			118	117	5,000
100	91	100			4,000
		2,849
74			3,573	3,000
	3,640
50	2,621				2,000
1,536					1,000
0					0
FY08/16	FY08/17	FY08/18	FY08/19	FY08/20

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Advantages to using M&A Market SMART

• Enables searches outside a given region for potential buyers, and allows for faster matching
• Provides the possibility of finding an unexpected potential buyer (sharply increases the possibilities of sale for niche businesses, and contributes to matching between different fields of business)
• Increases the number of choices for selling companies, and increases the possibility of selling the company to a good buyer under favorable terms

In FY08/20, an increase in teleworking prompted a decrease in the number of deals posted on SMART, and email distribution was limited. As a result, deals posted and inquiries received were both down year on year.

Disclaimers

• These materials contain forward-looking statements with respect to Strike Co., Ltd.'s business trends and business content, and are based on the Company's expectations, estimates, projections, and forecasts as of the time of publication.
• Expressions related to the Company's future outlook contain a variety of risks and uncertainties.
  Actual results may differ from those anticipated in expressions related to the future outlook due to known and unknown risks, uncertainties, and other factors.
• The actual content and results of Strike Co., Ltd.'s future business may differ from the future outlook contained in these materials.
• Expressions in these materials in relation to the future outlook are based on information available to Strike Co., Ltd., as of the date these materials were released (March 30, 2021). Expressions regarding the future outlook will not be updated or revised to reflect future events and conditions.

34 Copyright© Strike Co., Ltd. All Rights Reserved.