December 01, 2020

Local Spotlight: M&A Deal Drivers in Japan - Pulse of the Market

By Robert Torio, Content Marketing Manager, APAC

Dealmaker insights from the M&A Deal Drivers: Japan 2021 - M&A growth opportunities in Q4 2020 and beyond webinar hosted by Datasite and Mergermarket

 

Japan dealmaking is seeing a surge in activity, spurred by a rebound in domestic M&A and an uptick in crossborder deals. Domestic transactions announced in Q3 2020 totaled US$54.11bn across 83 deals, compared with US$7.86bn across 71 deals in Q2 2020. 

Industry consolidation moves appear to have quickened pace and is expected across certain sectors while large companies are also accelerating the pace of non-core divestitures to focus on core businesses. Meanwhile, outbound deals generated US$15.31bn across 27 deals for Q3 2020, representing a 3.42x surge in deal value despite 21 fewer deals compared with 2Q20 (US$4.47bn, 48 deals).

At this recent live panel briefing, we took stock of M&A activity in one of APAC’s major economies and consider the areas that dealmakers should be focusing on. Participants joined Hide Ishii, Partner, Deal Advisory, M&A of KPMG FAS and our panel of leading Japan M&A dealmakers:

  • Yuichi Akai, Senior Executive Managing Director & Co-Head of Global Investment Banking Division, Daiwa Securities Co. Ltd. 
  • Yoshi Hayashi, Director, Head of Corporate M&A & Alliances, Renesas Electronics
  • Naoko Shimura, Partner, Nishimura & Asahi 
  • Yoichiro Shimizu, Head of Japan, Datasite

 

Market sentiment: More than 2/3 now have a positive outlook

In May 2020, we polled dealmakers in APAC about their outlook for M&A in Japan and less than 50% had a positive view while over 30% were negative. Six months later, at least 70% of participants at this briefing have a positive attitude toward the future of Japan’s M&A market.

Mergers and asset purchase/sales expected to dominate

The market expects to see more stressed/distressed companies up come for sale towards the end of this year to Q1 2021 as banks tighten lending. Restructuring businesses, including the sale of domestic and overseas assets, is expected as companies look to lighten their balance sheets.

About 30% of the webinar attendees believe mergers/consolidation will dominate M&A activity in Japan over the next 12 months, while 28% say purchase/sales of domestic assets will be the prevalent transaction. On the other hand, almost a quarter of participants said it will be the purchase/sales of foreign assets. 

Fast and virtual dealmaking

Technology’s role in dealmaking is now more important than ever.

At least 40% of respondents said that the capability to completely due diligence virtually is key to getting M&A deals done today. Meanwhile, over 30% believe tools that increase dealmaking speed and efficiency are the most important. 

According to Mergermarket, Japan’s MA& market expects to see more stressed/distressed companies up come for sale towards the end of this year to Q1 2021 as banks tighten lending.

Restructuring businesses, including the sale of domestic and overseas assets, is expected as companies look to lighten their balance sheets. What sort of opportunities, and in what industries, should dealmakers focus on? Watch the webinar recording to learn more.

 

M&A Deal Drivers: Japan 2021

Watch on-demand the live briefing M&A Deal Drivers: Japan 2021 - M&A growth opportunities in Q4 2020 and beyond, and learn from the insights shared by our expert panellists.

Watch Recording

Deal Drivers APAC Q3 2020

The APAC market recorded some recovery in Q3 2020 and there are reasons to believe the Q3 pick-up will accelerate, including the return of megadeals. Learn more from the latest Deal Drivers report.

Learn More

Ready to Get Started?

You may also like:

Market Spotlight: Hong Kong IPOs set to crawl out of Q2 lows in months to come

Emerging out of the winter of the global pandemic, the summer of 2021 saw renewed activity in the global IPO market. The total amount raised through IPOs by Asian companies expanded exponentially year-on-year in the first half of the year, reaching US$85.4 billion. Learn more in this market spotlight on IPO deal momentum in China and Hong Kong.

Grow Big or Go Home: M&A Acceleration in the US Tech Industry

The explosive growth of the tech industry has created a wealth of opportunities for mergers and acquisitions. Read the highlights from several technology expert panelists sharing their forecasts for the future in tech on our recent live sector spotlight webinar US Tech Opportunities, presented with Mergermarket.

Male Professional Working at Laptop PC on Rooftop
5 Things You Didn't Know a Data Room Could Do for You

The latest and greatest software features aren’t just for your phone anymore. In the face of longer, more complex deals, the data room industry continues to innovate.

Shanghai China city aerial