Deal report · sample
Healthcare software company
Software for clinics and care facilities · Kansai (Osaka area) · 2009 · 9 employees
- Prepared for
- US search fund, first acquisition in Japan
- Date
- September 2026
- Exchange rate used
- ¥150 = $1
Sells and maintains billing and records software to about 180 clinics and care facilities. The founder wrote the core product, wants to retire, and pays himself far more than a replacement would cost. That makes the true earnings much higher than the listing shows.
Asking price
¥90M $600K
All-in cost
¥127M $847K
asking + fees + debt, less cash
True earnings per year
¥43M $287K
listed as ¥28M
Multiple
3.0×
all-in cost ÷ true earnings
Payback
3.0 years
at true earnings, before tax
Match score
91 / 100
Recurring revenue, self-running sales and support, price inside budget.
01Snapshot
- Revenue
- ¥190M ($1.27M)
- Customers
- ≈180, largest is 6% of revenue
- Recurring share
- 85% (annual maintenance contracts)
- Owner
- 62, founder and lead developer, no successor
- Debt / cash
- ¥40M debt, ¥25M cash (net debt ¥15M)
- Competing buyers
- 12 already in talks
02True earnings
What the business actually earns for a new owner, starting from the profit on the listing.
| Line | ¥ millions | USD |
|---|---|---|
| Operating profit as listedAfter the owner's own compensation of ¥30M, which the listing shows separately. | ¥28M | |
| Add back owner's compensationPaid to the founder on top of the profit shown. It goes to you after the deal. | +¥30M | |
| Cost of replacing the founderA senior engineer-manager in Osaka at market salary, including social insurance. | −¥12M | |
| Development cost that should be expensedYearly software work is capitalized on the balance sheet. Treat it as an ongoing cost. | −¥3.0M | |
| True earnings per year | ¥43M |
The founder's pay is the whole story here. Japanese owners often take profit as salary for tax reasons, so the listed profit understates what the business earns.
03All-in cost
What you actually pay, including the fees that do not appear on the listing and the debt you take over.
| Line | ¥ millions | USD |
|---|---|---|
| Asking price | +¥90M | |
| Broker's minimum fee (buyer pays)The listing says “plus advisor fee”. The minimum is fixed regardless of deal size. | +¥20M | |
| Marketplace fee (2.2%) | +¥2.0M | |
| Net debt you take over¥40M bank loans less ¥25M cash. | +¥15M | |
| All-in cost to you3.0× · payback 3.0 years | ¥127M |
Verdict
Pursue at asking price. Move within two weeks.
At 3.0× true earnings this is fairly priced, and twelve other buyers are in talks, so a discount is unlikely. Offer the asking price with the founder retained for 12 months as a paid advisor. That converts the biggest risk, his knowledge of the code, into a handover.
04Flags
Red flag
Founder is the only person who knows the core codebase
No second developer, thin documentation. Without a 12-month retention agreement, product updates stall.
Check
Regulated fee schedules change every 2–3 years
Japan revises medical and care reimbursement rules on a fixed cycle. Each revision forces a software update. Budget ¥5–8M per cycle.
Check
Twelve competing buyers
Speed and certainty matter more than price. A clean offer beats a cheaper one.
Good
180 customers, none above 6% of revenue
Losing any single customer does not hurt. Churn over the last three years was under 4% a year.
Good
Sales and support already run by staff
The owner's role is engineering, not selling. That is the easier role to replace.
05Questions to ask the seller
- 1.Who owns the source code, and is it documented well enough for a new engineer to ship the next regulatory update?
- 2.Customer churn by year for the last three years, with reasons.
- 3.Maintenance price per customer and when it was last raised.
- 4.Estimated cost and timing of the next reimbursement-rule update.
- 5.Will the founder stay 12 months as an advisor, and at what fee?
06Documents to request next
- Three years of financial statements with the itemized schedules (勘定科目内訳書)
- Customer list with contract start dates, prices and cancellations
- Software development cost schedule and capitalization policy
- Bank loan schedule and any personal guarantees by the owner
- Employment contracts and salary list for all nine staff
07How the succession would work
Sign a share purchase with the founder staying as a part-time advisor for 12 months. Hire a Japanese engineer-manager before closing. Keep the support team and pricing unchanged for the first year. Monthly English reports from TSUGU cover cash, churn and the regulatory calendar.