Information about potential partners or acquisition targets in Japan can be hard for a headquarters based overseas to access, and it is not easy to assess a candidate company's actual condition and trustworthiness. A limited understanding of Japan-specific business practices and decision-making processes can also lead to misaligned expectations during negotiation and on deal terms.
- It is unclear how to find potential partners or acquisition targets in Japan
- The general process for pursuing a partnership or acquisition is unclear
- It is unclear what to check during due diligence
- Explaining the deal to headquarters and reaching agreement is taking time
This article explains the general approach foreign companies can take when considering a partnership or acquisition in Japan.
Why Considering a Partnership or Acquisition in Japan Is Difficult
Information about potential partners or acquisition targets in Japan can be hard for a headquarters based overseas to access, and it is not easy to assess a candidate company's actual condition and trustworthiness. A limited understanding of Japan-specific business practices and decision-making processes can also lead to misaligned expectations during negotiation and on deal terms.
Without first clarifying the business objective behind a partnership or acquisition — such as expanding distribution, acquiring talent, or acquiring technology — the criteria for selecting candidates tend to drift, and the process can drag on.
The General Process for Considering a Partnership or Acquisition
Considering a partnership or acquisition generally proceeds through the following steps.
| Step | Description |
|---|---|
| Clarifying the objective | Define what the partnership or acquisition is meant to achieve |
| Sourcing and screening candidates | Search for candidates that fit the business strategy through networks and specialists |
| Initial negotiation | Reach agreement on the broad terms and structure of the deal |
| Due diligence | Examine the candidate's financial, legal, and business risks in detail |
| Signing and post-merger integration | Carry out post-merger integration (PMI) in a planned way after the contract is signed |
Points for Moving Forward Smoothly
Considering a partnership or acquisition requires expertise spanning several specialist areas, including finance, legal, and tax. Where internal resources are insufficient, bringing in outside specialists early makes it easier to balance the speed and accuracy of the process.
When explaining the deal to headquarters, sharing not only the appeal of the candidate but also Japan-specific risks and how the process is being run tends to make it easier to reach agreement smoothly.
Summary
- Considering a partnership or acquisition in Japan is made harder by limited access to candidate information and gaps in understanding business practices
- Move through clarifying the objective, sourcing candidates, initial negotiation, due diligence, and signing and PMI
- Bring in finance, legal, and tax specialists early to balance the speed and accuracy of the process
- When explaining to headquarters, share Japan-specific risks in addition to the appeal of the deal
Contact
JBN provides one-stop support for foreign companies considering partnerships or acquisitions in Japan, from sourcing candidates through due diligence.
To discuss a partnership or acquisition, please contact us.