Financing M&A in Japan

Financing M&A in Japan: financing is a major part of the necessary preparations for any joint-venture, acquisition or similar venture. There are many different options to invest in Japan:

• transfer cash from the mother company/HQ overseas to Japan
• triangular share exchange: pay for the acquisition/investment with shares of the mother company/HQ, provided of course the seller accepts such an arrangement. Paying for investments/transactions with overseas shares used to be impossible, but a few years ago changes in Japan’s laws and regulations enabled this option. This form of finance is usually called “triangular share exchange”, since it involves three parties: (1) acquiring overseas company, (2) Japanese subsidiary, (3) Japanese target company to be acquired
• finance locally in Japan, via loans, investments, or other instruments of finance raised locally in Japan under Japanese conditions, and normally in Japanese YEN, reducing exposure to currency exchange risks. Usually Japanese interest rates levels will apply.

In many cases, acquisitions in Japan can be financed locally, at Japanese level interest rates. Note also that financing locally in Japan can reduced the impact of exchange rate fluctuations.

Financing M&A in Japan: Over the last 25 years we have built many cooperations with the financial industry, and we have also worked with a large number of fund managers and financial institutions.

There are many options in addition to the three large mega-banks

• red: Mitsubishi UFJ Financial Group (MUFG)
• green: Mitsui Sumitomo Banking Corporation (SMBC)
• blue: Mizuho Financial Group (MHFG)

Overall there are about 200 banks in Japan: http://www.eurotechnology.com/2013/08/07/how-many-banks-are-there-in-japan/, and there are many other options including private equity funds, and other funds.

Government, central or local government, or Government affiliated funds are an option for strategic industries, currently for example AI relevant data centers, and semiconductor industry.

1. M&A process
2. Understand the industry: research
3. Find and approach partners
4. Build cooperation
5. Stakeholders
6. Due diligence
7. Finance
8. Negotiate and close agreements
9. Post merger
10. Sale of a company by auction in Japan, or cross-border

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