Population trends deliver boost for Japan’s micro M&A boutiques
TOKYO: Boutique advisers specialising in micro- M& A for mostly family- run firms are enjoying a boom in Japan, as an ageing, shrinking population brings in the boundaries on the country’s small business landscape.
There are no industry-wide f igures for deals between 500 million and 1 billion yen ( US$ 4.4- US$ 8.8 mil lion), but boutique advisers say they are benefiting as owners look to merge their businesses to cope with dwindling demand or as they reach retirement without a successor.
Japan’s population, already the oldest among developed economies, is projected to shrink by a third by 2060.
Nihon M& A Center Inc, the largest of the three publicly listed boutique advisors, said on Jan 30 nine-month profit to end-December had risen 34 per cent to a record 5.3 billion yen on sales of 15 billion yen.
“Japa n’s popu l at ion is shrinking ... Ultimately none of the small companies will be able survive by itself,” said Yasuhiro Wakebayashi, chairman and founder of the company.
“They have to be part of larger firms to grow. That is going to be a trend in this country, so the M& A market will only become bigger.”
Nihon M& A brokered 406 deals in the first nine months of the financial year ending in March, comfortably on the way to beating the previous year’s 420 total.
Smaller rivals Strike Co and M& A Capital Partners are also capitalising on the trend, brokering a combined 106 deals in the last financial year, up 23 per cent on the previous year and 74 per cent on the year before that.
Reuters has previously reported that private equity firms in Japan have had a similar boost to business after a long period of torpor, based on the same demographic imperatives.
“We are in a niche overlooked by big institutions,” said Kunihiko Arai, president of Strike.
M& A activity among bigger businesses, arranged by financial heavyweights such as conducted has been Nomura Holdings, Daiwa Securities Group Inc and Mitsubishi UFJ Financial Group Inc, grew only 4.3 per cent to 2,137 last year, while deal value fell 10 per cent to 6.2 trillion yen, Thomson Reuters data show.
Investors in the advisors have also benefited. — Reuters