Portfolio Companies

As I mentioned, I was invited by my uncle to become the president, but he had a son, who was working in the company as a director at the time. As the company’s business conditions deteriorated due to the bursting of the bubble economy, my uncle lost confidence and his health was failing. However, his son was still in his 20s and was not ready to be entrusted with the presidency of the company. Since I was 41 at that time, and had an experience as accountant, I think my uncle wished that I would become the president first, and then pass the position on to his son.
Looking back, it was very good that my uncle started the business during the period of rapid economic growth, but he was not prepared to hand over the presidency to his son. After I became the president, there was a time when our business performance temporarily fell in April 2000. At that time, I retired from the position of the president and became the chairman, and my uncle's son took the position of the president, at the request of my uncle and his wife. I think his son was pushing himself a lot too much because he wanted to live up to his parents' expectations. Eventually, he had a physical breakdown and was unable to come to work after about six months. After that he was not able to work full time and passed away at the age of 50. I wish if he had made it clear to his parents that it was too much for him to hold the position of president, but I think he was notable to say so out of kindness. It would be desirable if there is a competent person in the family, but forcing someone to take on the position of the president even in the absence of such a person could lead to unfortunate results.

From around 2015, I began to consider M&A with other companies or working with funds for further growth. In exploring various options, Mr. Komiya, a representative of Komiya Consultants, introduced me to Mr. Kawamura, a representative of CAS Capital. In discussions with Mr. Kawamura, I strongly identified with his and his team members' honest personalities and their attitude of sincerely thinking about the growth of companies.
CAS Capital’s concept of “creating a strong company” was precisely what I was aiming for. Since I agreed with their concept of not simply pursuing size and aiming to create a “large company” but rather a “strong company” and raising corporate value to turn the company from “good” to “great,” I decided to partner with CAS Capital in 2016.

I told the employees that we cannot grow into the next stage without the wisdom from outside. I said to them, “You may hear a lot of different things from different angles from those you have heard before, but they are all for the sake of raising the level of the company. Let's accept them and do our best.”
There is one memorable event. CAS Capital's investment was made in Jan 2017, but in April, we actually posted an operating loss on a monthly basis. I expected to some extent that in April, profits might drop considerably, or even go into the red, since depreciation was increasing as we bought a lot of equipment in preparation for the Tokyo Olympics, and sales would drop in the early spring. However, when I saw the magnitude of the reaction of CAS Capital to the deficit, even if it was only for a single month, I was surprised and deeply regretted my stance. It was an event that caused me to change my mindset and straighten up my attitude.
In addition, I am still grateful to Mr. Kawamura for giving me an opportunity to spend about an hour to talk about the rental business at the first BOD meeting we had with CAS Capital. For my part, I wanted to let CAS Capital know what we have been doing, and CAS Capital showed itself a willingness to listen.

I remember very well what Mr. Watanabe said at that meeting. Beginning with “how rental and leasing differ,” I was able to understand the principles of the rental business and our strengths, and gained an insight into the essential ideas that form the basis for working together to implement measures to increase value in the future. I learned an important lesson, how to create value for customers.

I became more aware of these four issues through discussions with CAS Capital. If I had not been engaged with CAS Capital, I might not still have been able to accurately recognize them.
Regarding the opening of new stores, we proactively opened new stores by making our positioning clear to rental companies, which are our customers, that we are a wholesaler and a “supporter rather than a competitor.” In addition to the opening of conventional stores, we have also developed a new type of store opening, the satellite store system (Note), which allows us to reduce capital investment and respond flexibly to changes in the environment.

Regarding the development of new equipment, we have long been working with manufacturers to develop products, but we have come to seriously consider what we can provide to manufacturers. By communicating the know-how we have gained through maintenance to manufacturers, we have become able to develop easy-to-use products tailored to each site. It has helped us to be much more aware of our own strengths.
When it comes to productivity, I have to admit that I had previously been a little naive about the low inventory turnover. However, by looking at the numbers again with Mr. Yamashita and Mr. Mizumachi, I felt a sense of crisis. Since the participation of CAS Capital, the inventory turnover of equipment has finally improved significantly. I am very grateful for bringing our attention to the inventory turnover.
As for human resources, it is a really difficult issue. First of all, it would be difficult unless the thoughts of the company and employees match. Recruitment is very important. No matter how much we convey our thoughts, some people don’t understand them. Also, it is not enough to enhance the training system, but it is important to have people who can put what they have learned into action on their own.
(Note) The “satellite store system” is a smaller equipment center than conventional ones that can be operated with three or fewer people.

I think the way CAS Capital works is the real hands-on approach that a company wants. They worked together on-site to manage the company, and also sent us very talented people. I think there are few funds that actually perform or able to perform their work to this extent. The real hands-on approach that a company wants is not something that can be implemented easily even if you try to. CAS Capital is capable of implementing such an approach, and I hope that they will continue to maintain.