Article at a glance:

Making M&A work in Japan

Yes, Japanese companies are governed by insider relationships and largely protected from the shareholder pressures that drive mergers and acquisitions in the West. Nevertheless, M&A activity in Japan has soared recently, especially in banking, telecommunications, and autos. Much of it has taken the form of cross-border deals that would have been hard to imagine just a few years ago. Would-be buyers from inside or outside Japan must still overcome many obstacles, including accounting standards that make it difficult to assess the value of large companies.

The take-away

Companies that understand the important obstacles can make their acquisition efforts succeed. A deep knowledge of the industry in question, along with the support of key executives at target companies, is essential to consummating acquisitions successfully. It is also important for deals to focus on achieving strategic advantage rather than short-term gains.