JAPAN Trends and Developments Contributed by: Takeshi Iitani, Reid Monroe-Sheridan, Takahito Fujii, Akira Kawashiro and Daisuke Eguchi, southgate
Overview of the Landscape Recent M&A trends in Japan include a steady increase in overall deal count bucking the glob - al downturn, a rise in activity by foreign private equity funds as well as activist shareholders, M&A deals fuelled by succession problems at privately held companies, and a surge in MBO transactions. There were 3,702 domestic M&A deals in 2024, an all-time high and a 20.5% increase from the previous year, despite a 14% decrease in the number of deals worldwide. The total deal value decreased 18.4% to JPY6.53 trillion, but the year-on-year change was not as dramatic as it may appear at first blush since the 2023 figure was significantly boosted by a single transac - tion: the JPY2 trillion acquisition of Toshiba by a consortium led by Japan Industrial Partners. Globally, deal value increased by 6%. The number of outbound deals in 2024 remained largely the same as the previous year (661 in 2023, 665 in 2024) but deal value rose 16.9% to JPY9.53 trillion. The number of inbound deals increased by 17.7% from the previous year (283 in 2023, 333 in 2024) while deal values grew 74.5% to JPY3.63 trillion. Private equity investments in Japan saw year- on-year increases of 39% in number of deals (41 in 2023, 57 in 2024) and 58% in deal value (USD8.1 billion in 2023, USD12.8 billion in 2024). Factors contributing to this significant increase include the outflow of capital from China, cor - porate governance reforms and the weak yen leading to attractive prices in US dollar terms. The value of Japanese stocks newly purchased by overseas activist funds reached an all-time high, exceeding the previous high mark set in 2020. Notable purchases include Elliot Invest -
ment Management’s acquisition of stakes in Sumitomo Corporation and Tokyo Gas, and Oasis Management Company’s acquisition of stakes in Kao, DIC and Kokuyo. During 2024, the total value of Japanese stocks held by activ - ist funds reached JPY4.8 trillion, or equivalent to about 0.5% of the total market capitalisation of the Tokyo Stock Exchange. The number of M&A deals driven by succession issues also recorded an all-time high of 918 deals, a 32.5% increase from the previous year. These deals accounted for some 19.5% of all M&A deals in 2024. The volume of MBOs hit a record high in 2024. However, the Tokyo Stock Exchange is plan - ning to impose stricter regulations on MBOs in spring 2025 in an effort to protect the interests of minority shareholders and prevent management and large shareholders from taking companies private at unfairly low prices. It remains to be seen whether such regulations will put a damper on future MBO activity. One factor driving the increase in M&A activity is China’s fall from grace with international inves - tors. Deterred by the US–China tariff dispute and uncertainty around China’s economic growth, foreign investors withdrew nearly USD12 billion from funds focusing on Chinese assets between November 2024 and January 2025. Meanwhile, market reforms driven by activist sharehold - ers, especially overseas funds, are granting foreign investors more access to the Japanese economy. As a result, Japan has emerged as an increasingly attractive destination for foreign investment, producing a buoyant M&A market in 2025.
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