Japan is experiencing a rise in mergers and acquisitions (M&A) as business owners seek to pass on their companies due to concerns over obsolescence and a lack of successors.
The absence of protective laws raises concerns for companies navigating this complex landscape. Authorities have noted an increase in complaints regarding breaches of contract by buyers, prompting them to urge caution. The government is working on protective measures, but the current regulatory framework lacks robust protections.
A cautionary tale is the case of Theliault, a confectionery manufacturer that faced financial difficulties and was sold to Lucian Holdings. Lucian Holdings failed to honor its commitments, leading to significant fallout and complaints against the investment firm.
In response to these concerns, Japanese authorities have revised the M&A guidelines to enhance transparency and accountability. The M&A Intermediaries Association has also provided its members with a list of dubious buyers. These measures aim to sensitize companies to the risks associated with M&A and create a more secure marketplace.
Due diligence and regulatory compliance are crucial, especially for small and medium-sized enterprises. The hope is that with these protective measures, businesses can engage in M&A with greater confidence, contributing to the stability and growth of the Japanese economy.