METI
Font Size Change
S
M
L
Easy Web Browsing tool

Study Group for Japanese Companies’ M&A Overseas Compiles Two Documents Report on its Discussion Results and Compilation of Nine Actions for Successful Management Taking Advantage of M&A Overseas

In August 2017, the Ministry of Economy, Trade and Industry (METI) established the Study Group for Japanese Companies’ M&A Overseas. Since then, the study group has been holding discussions on related issues and ultimately compiled the discussion results into two documents: (1) “Report on Discussion Results of the Study Group for Japanese Companies’ M&A Overseas,” a compilation of key points that Japanese companies should note in effectively taking advantage of M&A overseas and referential case examples and (2) “Nine Actions for Successful Management Taking Advantage of M&A Overseas,” a compilation of important points in conducting M&A overseas, in particular from the perspective of top executives.

1. Background and purpose

In recent years, overseas M&A is becoming an important and effective tool for Japanese companies in realizing growth on a global scale amidst fierce global competition. Moreover, the breadth of companies engaging in M&A overseas has been further expanding, including companies that traditionally focused primary business development locally in Japan. However, often when Japanese companies seek to advance M&A activities overseas, they are confronted with many challenges, including differences in legal and regulatory systems, languages, and cultural aspects, compared to the domestic M&A environment and establishing an affiliated office in a target country. Due to these challenges, Japanese companies often fail to achieve expected results.

To address this situation, in August 2017, METI established the Study Group for Japanese Companies’ M&A Overseas comprised of experts with rich experience in and knowledge of M&A overseas, and, since then, the study group has been holding discussions concerning challenges faced by Japanese companies and solutions to these challenges, including interviews with leading companies proactively committed to M&A overseas, exchanging views with other experts, and holding an open-style symposium.

2. Key points of the report and the nine actions

As outcomes of the discussions, the study group compiled (1) a report titled “Report on Discussion Results of the Study Group for Japanese Companies’ M&A Overseas,” a compilation of key points that Japanese companies should note in effectively taking advantage of M&A overseas and on referential case examples.

In addition, in light of the fact that many members of the study group pointed out the importance of roles and commitments that top executives should take on and be involved in when advancing M&A overseas, the study group compiled (2) “Nine Actions for Successful Management Taking Advantage of M&A Overseas,” a concise, reader-friendly compilation of important points of M&A overseas from the perspectives of businesses, in particular top executives, so as to help companies advance such efforts. As the base on which companies are able to develop M&A overseas are expanding, METI will aim to popularize the report and the nine actions across Japan.

Major points of the report and the nine actions are as follows.

(1) Key points of the report

Effective utilization of M&A overseas in realizing company growth requires that top executives be proactively committed to the entire processes and exercise leadership from start to finish, and based on this approach, they should carry out individual projects, design strategic M&A stories, and enhance global-scale management power as their business base.

[ⅰ] Ability to carry out M&A overseas

Companies should secure the necessary abilities to effectively engage in and take advantage of M&A overseas, including knowledge and skills expertise, such as due diligence, valuation, and contract negotiations, as well as post-merger integration (PMI) following the establishment of acquisition contracts. Moreover, companies that intend to conduct M&A overseas should master sufficient in-house M&A literacy and should improve their ability to proactively carry out the process of M&A overseas without excessively depending on external advisors.

[ⅱ] Ability to design strategic M&A stories and to enhance global-scale management power

Meanwhile, companies that effectively utilize overseas M&A for growth often approach the practice in a careful, deliberate fashion, not simply taking advantage of the ability to carry out M&A overseas but also conducting everyday efforts in pre- and post-process affairs while forecasting the future of the M&A overseas.

In terms of pre-process efforts, such successful companies clearly define their mid- to long-term goals, and with these in mind, plan phases and roadmaps to success, spending sufficient time on and utilization of human and other resources in advancing proactive discussion and strategic preparation toward building comprehensive M&A stories (summary of 2.1 Ability to Design Strategic M&A Stories).

In terms of post-process efforts, companies should proactively introduce outstanding and valuable aspects of overseas companies into their own, and be willing to change existing management systems across their own group businesses to best practices that drive global-scale growth. (summary of 2.3 Ability to Enhance Global-Scale Management Power)

(2) Key points of the nine actions

Roles played by top executives are extremely important to successful overseas M&A. Many successful companies encourage top executives to spend the necessary time and resources to personally understand the nature of M&A overseas, enabling them to proactively exercise leadership making pre-emptive decisions and engage in related efforts with firm commitment to the entire processes of M&A. Based on the details of the report, the study group extracted key points that companies, in particular top executives, should note, and compiled them into nine actions along with case examples.

  • Action 1: Make clear the ultimate goals and stories to achieve them utilizing M&A overseas
  • Action 2: Transfuse the growth strategies and stories among all the parties concerned within the company
  • Action 3: Take time to carefully prepare forthcoming M&As
  • Action 4: Stipulate determination standards for growth without fixing goals to acquisition alone
  • Action 5: Take necessary actions immediately after the execution of acquisition for successful integration
  • Action 6: Thoroughly make corporate data and state of play of acquired companies visible under the policy: “entrust rights to a third party but do not forget it.”
  • Action 7: Make best efforts to convey one’s own strong points and philosophies to acquired companies
  • Action 8: Accomplish one’s own transformation and enhance global-scale management power through M&A overseas
  • Action 9: Be experts on M&A overseas by accumulating experience

Release date

March 27, 2018

Divisions in Charge

  • Investment Facilitation Division, Trade and Economic Cooperation Bureau
  • Corporate System Division, Economic and Industrial Policy Bureau
Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
Copyright Ministry of Economy, Trade and Industry. All Rights Reserved.