As Japan's population continues to decline, many Japanese companies are trying to find opportunities overseas. There were a record high number of 672 overseas M&As by Japanese companies in 2017. Many companies are expanding in emerging markets such as China and India, as well as the rapidly developing Southeast Asia. The U.S. is the only country in the developed world with a continuously growing population and a legally stable business environment thanks to its improved systems.
In the article, Mr. Kimoto explains what is needed to know about acquiring a U.S. company and how it differs from M&A practices in Japan. There are three "pitfalls" that Japanese corporate M&A personnel should be aware of.
- The speed of transactions, such as those represented by private equity (PE) funds.
- The need to be aware that the use of "expressed warranty insurance" is becoming more common in the U.S.
- Even the acquisition of a U.S. company cannot be unrelated to laws and regulations linked to the global situation, and investment in the U.S. should be considered while paying attention to the trends in the global situation.
In order to ensure that Japanese companies can continue to grow in the face of a declining population, the key to a successful M&A deal in the U.S. is careful information gathering and analysis of the unique features and differences between the U.S. and Japanese practices.
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