In order to build a system that allows us to pursue M&A consistently no matter the market environment, we updated our strategies in 2025. In September, we shifted our organic (existing businesses) strategy to focus on generating free cash flow (FCF), and in December, we updated our inorganic (M&A) strategy to ensure a more disciplined selection of M&A deals.
From the perspective of enhancing shareholder value, we have previously utilized equity financing as a means of funding M&A and other initiatives during periods of valuation multiple expansion. However, under the aforementioned strategic changes, even during the current environment of multiple contraction, we have established a framework that enables us to sustain transformational growth through M&A funded by FCF and debt financing, without relying on equity financing, while also securing financial position that allows for the execution of share repurchases.
Alongside these measures, we strengthened our governance around capital allocation decisions regarding what to invest in and how to prioritize those investments as follows. To be specific, we changed the personnel composition of two key decision-making bodies: the Investment Committee, which handles internal M&A decisions, and the Board of Directors, which acts as the final approving body.
- Investment Committee
We have restructured the personnel composition to center around the Strategic Investment and Finance Departments. This transition has established a framework that ensures decision-making with a stronger emphasis on investment efficiency when screening potential targets.
- Board of Directors
Following approval at the Ordinary General Meeting of Shareholders in April 2026, we transitioned to a Company with an Audit and Supervisory Committee, changing our board composition so that Outside Directors constitute a majority (five Internal Directors and seven Outside Directors). As a general rule, executing M&A transactions now requires majority approval from this Board of Directors where Outside Directors hold the majority, establishing a governance system that ensures whether each M&A deal serves the best interests of minority shareholders is substantively deliberated.
Through this strengthening of both our formal and substantive governance, we have established the necessary framework to execute our announced strategic changes.
Please refer to the section below for further details regarding our corporate governance system.
- Corporate Governance Report (April 30, 2026):Link
- Notice concerning Transition to a Company with Audit and Supervisory Committee and Changes in Directors and Corporate Auditors (April 8, 2026):Link
- Minutes of the 8th Ordinary General Meeting of Shareholders held on April 30, 2026 (May 18, 2026, Japanese only):Link
