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M&A Guidelines for SMEs Formulated

March 31, 2020

Aiming to further encourage SMEs to pursue M&A activities, the Ministry of Economy, Trade and Industry (METI) fully revised the Guidelines on Smooth Business Succession, which were formulated in March 2015, and newly formulated M&A Guidelines for SMEs.

1. Purpose

For SMEs with no business successors, succession of their businesses to third parties through M&As is an important methods of achieving a viable business succession. Nevertheless, some SME operators have no experience or expertise in M&A, causing them to resist “selling” their companies, often with  long histories, to third parties. Moreover, it is important for M&A support organizations, e.g., intermediary agencies and financial institutes, to provide support measures for SMEs as an effort to encourage them to pursue effective M&A strategies when appropriate.

In light of the current situation, METI, based on the Comprehensive Package of Measures for Supporting SMEs in Business Succession to Third Parties, which was formulated and released on December 20, 2019, fully revised the Guidelines on Smooth Business Succession, which was formulated in 2015, and newly formulated M&A Guidelines for SMEs.

2. Overview

The M&A Guidelines for SMEs feature three major factors that discourage SMEs from undertaking M&As. Based on these factors, the Guidelines present [i] basic points in undertaking M&As and indicators of fees paid to support organizations, and [ii] action guidelines on providing appropriate M&A services, which target M&A agencies and other support organizations.

In addition, concerning the M&A Guidelines for SMEs, METI will require not only Support Centers for Smooth Business Succession located in 48 locations across Japan and registered organizations under the respective centers, but also a wide variety of organizations involved in measures for supporting SMEs in M&A, to observe the guidelines.

Furthermore, METI will prepare an easy-to-understand handbook and hold seminars and other events to both disseminate the handbook and raise public awareness of the guidelines.

Related document:

Division in Charge

Corporate Finance and Tax Affairs Division, Small and Medium Enterprise Agency

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