M&A transactions involving Japanese companies reached an all-time high in 2024 since data collection began in 1985, according to RECOF Data. The surge was primarily driven by investment funds actively acquiring non-core and underperforming business units from companies seeking portfolio optimization. Market participants anticipate this momentum to continue through 2025.
Transaction volume increased 17% year-over-year to 4,700 deals (including stake acquisitions), surpassing the previous record of 4,304 deals set in 2022. Total transaction value rose 8% to ¥19.6 trillion, marking the second-largest annual value after 2018’s ¥29.6 trillion, which included Takeda’s acquisition of Shire.
The largest transaction in 2024 was Nippon Life Insurance’s announced acquisition of Resolution Life for approximately $8.2 billion (¥1.2 trillion), representing the insurance industry’s largest-ever transaction.
Foreign private equity firms significantly increased their presence in the market. “Activist investors and investment funds have been the primary drivers of domestic deal growth,” notes Nobuhiko Kimura, Deputy Head of M&A Advisory at SMBC Nikko Securities. Notable transactions included Blackstone’s ¥270 billion acquisition of Infocom’s digital manga platform “MechaComic” from Teijin, while multiple funds engaged in a bidding war for Fujisoft.
According to Dealogic, investment banking fees from Japan-related M&A reached $1.05 billion through mid-December 2024, exceeding $1 billion for the first time since 2000. M&A bankers report higher per-deal fees due to increasingly complex transaction structures and multiple-bidder scenarios.
The market expansion has triggered a talent war among securities firms. Daiwa Securities Group plans to expand its M&A team to 900 professionals by FY2030, up from the current 800. Mizuho Securities increased its team by 10% over the past three years, while foreign institutions like JPMorgan Securities have significantly expanded their Japanese M&A practices.
Takashi Tomioka, Co-Head of Carlyle Japan, which launched a Japan-focused ¥430 billion PE fund in 2024, notes: “Foreign investor expectations for the Japanese market have risen significantly in recent years, driven by TSE reforms. Combined with Japan’s lower funding costs compared to the U.S., favorable conditions are expected to persist beyond 2025.”
Unsolicited takeover bids are becoming more common, facilitated by the unwinding of cross-shareholdings and declining stable shareholdings. Japan’s relatively undervalued companies have become attractive targets, particularly as U.S. and European M&A markets remain subdued due to higher interest rates.
However, cross-border deals face increasing scrutiny, as evidenced by President Biden’s intervention in Nippon Steel’s planned acquisition of U.S. Steel, highlighting economic security concerns as a potential barrier to large-scale international transactions.
The evolving M&A landscape reflects broader changes in Japanese corporate governance, with the Tokyo Stock Exchange’s emphasis on ROE improvement driving portfolio optimization and strategic divestitures, while creating opportunities for both strategic and financial investors.