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Myths of Japanese M&A

Tim Bird
21/10/2015

Locations

Japan, United Kingdom

How are Japanese businesses perceived by European targets when they get involved with outbound M&A?

Japanese outbound M&A is on the rise. A number of eye-catching deals have been executed over the last year, including Itochu participating in a massive investment in Citic, Nikkei snapping up the Financial Times, Canon acquiring Axis and Recruit acquiring Wahanda.

So it's a good time to ask, how are Japanese businesses perceived by European targets when they get involved with outbound M&A?

Here are some common views we have heard expressed over the years:

  • Japanese businesses are willing to overpay to close the deal.
  • Japanese negotiation teams are very risk averse and more concerned with keeping the deal going than offending the other side.
  • Decision-making – and therefore deal execution – is slow because of the need to secure approval from a number of stakeholders in the deal.
  • Post-merger integration can be poor, resulting in acquired businesses not meshing with their new Japanese holding companies.

Are these perceptions fair? In short, no.

The modern-day Japanese deal team is more agile, more aware of how the rest of the world sees it and more willing to reach out to their global counterparts. It is true that Japanese businesses have a different approach to, say US acquirers, but that is also what makes the deals enjoyable. What we see now more than ever is that the deal teams have global experience gained from European and US deal-doing. They are willing to jump on a plane at crucial points in the process for face-to-face meetings. The consensus-based approach to business also can lead (in our experience) to better post-deal integration than many US buyers, who place more emphasis on the acquisition team than the post-merger integration team. We would strongly recommend owner-managers to look East as well as West when contemplating selling their business.  We can help with whichever option you choose.

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