MS&Consulting × Tokio Marine Capital ～The trajectory of growth by working together～

Introduction

Recently, “omotenashi,” which describes the Japanese-style of hospitality has become a familiar and popular term among foreign tourists visiting Japan. This word is said to have originated from the tea ceremony tradition that was developed during Japan’s Muromachi period, and the term expresses care and concern for a customer or valued person—one part of Japanese culture that Japan can proudly claim in this world.

MS&Consulting pioneered mystery shopping through the use of consumer monitoring in Japan, and as such, it monitors the “omotenashi” that a company contributes to its customers. It does this through the use of methods like mystery shopping research as well as providing consulting services for the purpose of improving “omotenashi.” MS&Consulting also conducts employee satisfaction surveys. As labor shortages are starting to have a more profound impact in Japan, they serve as an essential tool for creating a better work environment for employees.

In October 2017, MS&Consulting was listed on the Tokyo Stock Exchange’s Mothers (Market of the high-growth and emerging stocks). To mark this occasion, a cross-interview was conducted between Akinori Namiki, the President of MS&Consulting, and Koji Sasaki, the President of Tokio Marine Capital(now T Capital Partners), which has supported the growth of MS&Consulting since acquiring stake in the company in May 2013.

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A Five-Year Journey Alongside Tokio Marine Capital(now T Capital Partners)

Sasaki Congratulations on getting listed on the Tokyo Stock Exchange. And thank you for all the hard work you put into preparing for the listing as well as providing investors with information, all while running your company. Well, it’s already been five years since we first came into contact with each other, Mr. Namiki, and ever since our initial investment in your firm, myself and my company have been right along with you as you’ve grown. Looking back, I’d like to ask what were your feelings on us, and what kind of hopes did you have for us after our first encounter.

Namiki First, we received an explanation from you about past investments and the state of business activities, and after that, I got a real sense that your firm would become a partner that I could trust. The investment manager assigned to us was also very enthusiastic in supporting our company, and some of the companies that your firm had previously invested in were already customers of ours, so you had a good understanding of our company’s strengths and business operations.
We had hoped to carve our way into the financial industry. We had already earned the trust of and gained results for a wide range of service industry businesses that deal in customer service, such as those in the food industry. However, we were new to conducting customer satisfaction surveys in the financial sector with businesses like banks and insurance firms, so we set out to establish a unique survey and consulting method that would allow us to differentiate ourselves from existing players in the financial sector, and challenged ourselves in this new area of business. With that in mind, I thought that I would like to work with you and utilize your network.

Sasaki Thank you. In the beginning, we had introduced you to local banks and other financial institutions and business firms, but in the end, you were welcomed into numerous financial institutions, and were able to gain renewed and expanded contracts. It’s great that you were able to accomplish all that. On the other side of things, the team members that we had assigned to your company were also involved in the development of your service menu and the operation of your business, and through this process, we were truly amazed with the excellence of your staff, your dedication to quality, and passion for work.

Namiki No, I should thank you. Not only did you introduce customers to us, they also considered our business policies along with our field managers and representative-level staff, and then you helped to push those policies forward. Also, when we faced issues that needed to be resolved, you came directly to our company and, working with our employees as a cohesive unit, you provided us with support to overcome those issues. You provided us with sincere guidance at those times, even if that guidance was sometimes strict. We were able to directly exchange opinions with each other, and I believe that is exactly why we were able to build mutual trust in each other at both the macro, business management level, as well as the micro level in relation to field activities.

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The Achievement of an IPO and Further Growth

Sasaki As a top-level mystery shopping company in Japan with over 400,000 monitors across the country, MS&Consulting’s services include mystery shopping to determine customer satisfaction (CS) and employee satisfaction (ES) surveys. Your company also uses these surveys to gain an understanding of current conditions, and beyond this, you offer consistent support to your business customers with subsequent consulting and training. I believe that these points highlight the staggering amount of knowhow and strength that your company possesses.

Moreover, as we await the grand event that is the coming 2020 Tokyo Olympics, and with “work-style reform” recently gaining a great deal of attention, it would seem that conditions are ripe for the services that you manage. With that in mind, and now that you’ve been publicly offered, I’d like to hear about your current thoughts and your strategy for future growth.

Namiki Yes, well, first let me say how grateful I am to you for your consistent support and understanding starting from the time of your initial investment leading all the way up to our IPO. At the level of the actual work that had to be done, you offered your support in so many ways, such as selecting the securities firm that would become our lead underwriter and enhancing our internal management system to meet the requirements for being listed on the exchange.

In the process leading to our IPO, we had opportunities to speak with a great number of investors. I believe that they found value in us due to our highly original business model and our all-in-one survey and consulting services, but we also gained attention from investors due to external conditions such as labor shortages and work-style reform. We’ve achieved our goal of being listed on the exchange, but this is no more than a milestone on our journey forward. From now on, we will firmly and bravely push ourselves toward further growth as a public institution.

As far as our strategy for future growth, for our customer satisfaction (CS) surveys, in addition to our existing customers, there is still a wide range of customer areas that we have yet to penetrate, including financial institutions, government agencies, public transportation, as well as the education industry. Therefore, I would like to steadily expand our customer base. On the other hand, from the view that it would benefit recruitment and help to retain employees for our business customers, the improvement of employee satisfaction (ES) is a theme that is becoming increasingly important to our society, and we would like to meet the demand presented by this theme. Additionally, following our first expansion into foreign markets in countries such as Thailand and Taiwan in 2016, we would like to further advance the international expansion of our customer satisfaction surveys, which are founded in the Japanese spirit of “omotenashi.”

Sasaki Thank you. Well then, after being listed, do you feel that you’ve experienced specific changes as far as the promotion of your business or the atmosphere within your company?

Namiki Yes, well, on the business side, as a listed company, our credit was strengthened, and I believe that this had a greatly positive effect on our sales. After being listed, we saw an increase in the number of inquiries from businesses, and we also acquired new customers at faster rates than before. Also, being listed on the exchange created a heightened mood among our staff that had everyone getting more and more energized, so I believe that the listing will also have a positive effect on recruitment and in other similar areas.

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In Closing

Sasaki Changing the subject a little, within Japan, as the birthrate continues to decline and the average age of our population increases, one issue that has become apparent is the succession of small to mid-sized owner-operated businesses. Because of this, we’re seeing an increase in the number of opportunities in which we as a private equity fund can expect to provide support through both funding and management. The development of mutual trust and the support of growth through teamwork are things that I would like cultivate with a greater number of managers and businesses, just like we’ve done with you, Mr. Namiki. So, in closing, I wonder if you, as someone with experience in this, could give a message to the small to mid-sized business owners who are looking into what they can do to deal with the succession of their business or those who are looking to rebuild their capital.

Namiki Sure. We’ve been acquainted with you for around 5 years, but a private equity fund acts as both a supplier of capital and an entity that regularly offers advice and support to management from an objective point of view. You could go as far to say that they act as you partner, or even as a spouse would. That’s what a private equity fund is like. What’s important is the exchange of candid advice right from the start. If you can do that, you’ll develop a good relationship where they will meet you on the same level and work together in pursuit of growth as partners, or on occasion, they will efficiently govern your company as owners. If, like my company, your business aims to be publicly offered in the future, or even if that’s not your goal, I believe that a fund like your firm will be a truly reliable partner in achieving the further growth of your business.

Sasaki Mr. Namiki, thank you very much for taking so much time out of your busy day to take part in this interview. I wish you great success and growth in the future.