Declaration of compliance with the SME M&A Guidelines (2nd edition)

Smile Home is currently in the process of registering with the M&A Support Organization Registration System established by the government.

When engaging in M&A support projects, we hereby declare our commitment to adhering to the “Small and Medium Enterprise M&A Guidelines (2nd Edition)” (September 2020) issued by the Small and Medium Enterprise Agency. We will also implement the following measures and practices to ensure quality and compliance.

Commitment to Quality Support

1. Fulfilling Contractual Obligations: We carry out brokerage and financial advisory (FA) services with due diligence and care, prioritizing the client’s interests over our own or any third party’s.
2. Ethical Standards: Beyond contractual obligations, we respect our clients’ wishes and act to achieve their best interests, guided by professional ethics.
3. Ongoing Knowledge and Skills Improvement: ・We prioritize continuous learning and the development of expertise among our team members. ・Our leadership emphasizes the importance of quality support and implements practices aligned with these values both internally and externally.
4. Ensuring Proper Operations: ・We take proactive steps to ensure all executives and employees involved in support tasks perform their roles accurately and responsibly. ・When outsourcing, we ensure third parties handle tasks appropriately.

Behavioral Guidelines for the M&A Process

1. Client-Centered Proposals and Decision-Making Support: We provide practical, well-informed proposals and transparently explain key advantages and disadvantages to clients to support their decision-making.
2. Contract Transparency: Contracts are tailored to reflect the actual scope of our services. Before signing, we provide clear explanations of key terms, including fees, confidentiality clauses, exclusive clauses, and cancellation terms.
3. Valuation Clarity: We explain valuation methods and assumptions beforehand, ensuring clients understand and are satisfied with the process and outcomes.
4. Confidentiality in Matching: We take strict precautions to prevent the leakage of sensitive information during the selection process until a confidentiality agreement is signed.
5. Support During Negotiations: We guide clients through every stage of negotiations, offering clear explanations of the process and next steps.
6. Due Diligence Assistance: We assist clients in preparing and organizing required materials for due diligence while encouraging professional evaluations.
7. Final Contract Review: Before closing, we help clients confirm all contract details to avoid omissions or misunderstandings.
8. Closing Support: We ensure smooth execution on the closing day, including verifying that transaction funds are transferred successfully.

Guidelines for Exclusive Clauses

1. Minimizing Restrictions: We ensure exclusivity clauses are limited in scope and duration (six months to one year) and allow clients to seek second opinions where appropriate.
2. Cancellation Flexibility: Clients may terminate contracts at any time, with clear terms outlined in the agreement.

Guidelines for Tail Clauses

1. Tail Period Restrictions: ・The tail period will be limited to a maximum of two to three years. ・Tail clauses apply only to transferees introduced or contacted during the contract term.

Intermediary-Specific Guidelines

(Applicable only for intermediaries)

1. Neutrality and Fairness: We act impartially, ensuring neither party’s interests are unfairly prioritized.
2. Conflict of Interest Disclosure: We disclose any potential conflicts of interest between transferors and transferees to both parties clearly and promptly.
3. Valuation Transparency: We do not perform definitive valuations but may provide simple reference calculations. Clients are encouraged to seek independent professional evaluations.
4. Negotiation Support: We strive to achieve a balanced outcome for both parties while maintaining neutrality.
5. Due Diligence: We do not conduct due diligence ourselves but guide clients to seek opinions from professionals as needed.

Commitment to the Guidelines’ Objectives

1. Adherence to Purpose: In addition to the above, we strive to act in accordance with the intent and principles outlined in the Small and Medium Enterprise M&A Guidelines.

Smile Home is dedicated to providing transparent, ethical, and high-quality M&A support services, ensuring our clients can navigate the process with confidence and trust.