JAPAN Trends and Developments Contributed by: Takeshi Iitani, Reid Monroe-Sheridan, Takahito Fujii and Akira Kawashiro, southgate
southgate (registered association) Parkside Six #305 9-5-12 Akasaka Minato-ku Tokyo 107-0052 Japan Tel: +81 3 5414 8090 Email: contact@southgate-law.com Web: southgate-law.com
Overview of the Landscape Recent M&A trends in Japan include sustained growth in deal activity, increased engagement by foreign pri - vate equity funds and activist shareholders, M&A deals fuelled by succession problems at privately held com - panies, a surge in MBO transactions, and increasing popularity of M&A as an alternative to start-up IPOs. There were 4,086 domestic M&A deals in 2025, an all-time high and a 10.4% increase from the previous year, in comparison to the number of deals worldwide remaining largely flat. The total deal value increased 59.9% to JPY11.2 trillion, but the year-on-year change was not as dramatic as may appear at first blush because the 2025 figure was significantly boosted by a single transaction: the JPY4.684 trillion take-private of Toyota Industries by the Toyota Group. Globally, deal value increased by 43% year-over-year, reaching its highest level since 2021. The number of outbound deals in 2025 remained largely the same as the previous year (665 in 2024, 657 in 2025), but deal value rose 87.2% to JPY18.2 trillion. The number of inbound deals increased by 11.7% from the previous year (333 in 2024, 372 in 2025) while deal values grew 70.0% to JPY6.2 trillion. Private equity investments in Japan surged in 2025, more than doubling year-over-year to a record USD51.8 billion. Japan accounted for over one third of total private equity investment value in the Asia-Pacif - ic region, which attracted USD144.9 billion across 1,162 deals. Some of the factors contributing to this significant increase include the outflow of capital from
China, corporate governance reforms, and the weak yen leading to attractive prices in US dollar terms. After reaching an all-time high in 2024, the value of Japanese stocks newly purchased by overseas activ - ist funds continued to rise in 2025, with the cumula - tive value reportedly reaching approximately JPY13 trillion. Activists are increasingly targeting large, blue- chip companies rather than focusing solely on small- and mid-cap firms, as ongoing corporate governance reforms and shareholder-friendly policy shifts have made Japan one of the most active markets for inves - tor advocacy. Notable purchases include Elliott Invest - ment Management’s acquisition of a stake of between 4% and 5% in Kansai Electric Power, Japan’s second- largest utility and a major nuclear power operator. The number of M&A deals driven by succession issues also reached an all-time high of 1,028 deals, an 11.6% increase from the previous year. These deals account - ed for 20.1% of all Japanese M&A deals in 2025. The volume of MBOs hit a record high in 2025. How - ever, the Tokyo Stock Exchange has imposed stricter regulations on MBOs, effective July 2025, in an effort to protect the interests of minority shareholders and prevent management and large shareholders from tak - ing companies private at unfairly low prices. Despite the tightening of MBO regulations, the transitional measures introduced by the Tokyo Stock Exchange for companies that do not meet the listing mainte - nance standards have been gradually expiring since March 2025. As a result, for companies that continue to fall short of those standards, going private – includ -
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