Japan promotes foreign takeovers of heirless firms
The Japanese government is preparing to launch a service aimed at helping foreign companies take over small businesses that are struggling to find successors to ageing leaders.
The service, planned by the Ministry of Economy, Trade and Industry and provided through the Japan External Trade Organisation (Jetro), is designed to save companies with viable products and services from going out of business by encouraging foreign entities to take over their operation through mergers and acquisitions.
Many European and US businesses, including food companies and automakers, wish to acquire small Japanese enterprises to increase sales in the country, and have sought assistance from Jetro.
Information on such companies will be stored in a database maintained by the Organisation for Small & Medium Enterprises (SMEs) and Regional Innovation, also known as SME Support, through its offices across Japan.
It includes roughly 24,000 records of companies looking to sell their operations due to a lack of successors, along with details of potential buyers.
SME Support currently only provides
information to financial institutions on 3,000 entries regarding the sale or purchase of companies, all of which have agreed to disclose their details on condition of anonymity.
Jetro has so far responded to inquiries from overseas companies using information from private-sector merger and acquisition intermediary services. With its assistance, for example, a Hong Kong company successfully rescued a Japanese hotel in the northern prefecture of Miyagi from bankruptcy and restored it as part of a spa resort.
The new service is aimed at facilitating similar deals.
The number of Japanese companies facing succession problems is rising steadily, as increasing numbers of business owners with no heirs willing to take over enter their seventies.
In 2025, 1.27 million small to mid-sized companies, or a third of all Japan’s businesses, will be at risk of closure, according to the Small and Medium Enterprise Agency.
This, the agency said, could lead to the loss of roughly 6.5 million jobs.