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In April 2023, the Ministry of Economy, Trade and Industry (METI) published "Case Studies Relating to the use of Inbound M&A Transactions –Leveraging of Foreign Capital by Japanese Companies for Corporate Reforms, Management Enhancement and Dramatic Growth" ("Case Studies").1 The Case Studies examine 20 inbound M&A transactions2 and identify (i) issues Japanese companies have sought to address through inbound M&A; (ii) things parties should keep in mind concerning inbound M&A transactions; and (iii) benefits enjoyed by target companies as a result of inbound M&A. Transactions have been divided into four patterns/categories: (a) sale of a subsidiary or transfer of business (carve-out); (b) sale of / receipt of investment by large companies (i.e., not at the subsidiary-level); (c) sale of / receipt of investment by owner-operated companies; and (d) sale of / receipt of investment by a start-up company.
The Case Studies are intended to serve as reference material for Japanese companies, demystifying inbound M&A and encouraging the use of foreign investment to resolve management issues and/or accelerate corporate growth. They are nonetheless valuable and relevant to foreign investors, enabling them to better understand the motivations and concerns of Japanese target companies in inbound M&A transactions and formulate more effective acquisition and/or post-merger integration strategies.
This article will briefly outline the Case Studies before analyzing how foreign investors should utilize them to ensure that their investments in Japanese companies go smoothly. Please note that our interpretations and/or English translations of the Case Studies may differ from the provisional English translations provided by METI. As such, we recommend that readers of this article refer to the pages in the Case Studies indicated in the footnotes for more details.
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1 A provisional English translation of the Case Studies is published at the link below: https://www.meti.go.jp/english/press/2023/0419_002.html
2 See page 13 of the Case Studies for a list of the 20 inbound M&A transactions examined in the Case Studies.
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