Mergers and acquisitions in Japan have been going against the global trend, which is leading to dealmakers taking a closer look at Japanese companies and their low valuations, as well as Japan’s increasingly open M&A environment. Japan can without a doubt claim a position as the epicenter of Asia’s merger and acquisition (M&A) resurgence, with $232 billion in deal volume during the first half of 2025, according to Reuters. This big figure, driven by a surge in private equity activity, highlights Japan’s improving corporate landscape and its growing appeal to global and domestic PE firms. Fueled by corporate deleveraging, PE take-privates, ultra-low interest rates, attractive valuations, and strategic cross-border acquisitions, Japan is recreating the rules of M&A in Asia, particularly in sectors like technology, infrastructure, and healthcare.
J.P.Morgan last year reported that a wave of market reform and a confident investor base was creating a positive environment. They also noted new guidelines from the Ministry of Economy, Trade, and Industry on corporate takeovers, and reforms initiated by the Tokyo Stock Exchange that are helping create a new era of Japanese corporate governance and dealmaking in the region. We also covered a wave of dealmaking in Japan earlier this year, noting that the volume of mergers and acquisitions linked to Japan was up around 20% in the first half of 2024 compared to 2023 and was followed by a strong performance in the second half of 2024.
Additional momentum stems from a trifecta of trends: take-private transactions, corporate carve-outs, and governance-driven divestitures. Japanese public companies are under pressure to streamline operations to increase efficiency and competitiveness, as a result of which many are offloading non-core assets. For PE firms, these conditions present a big opportunity to deploy capital into high-potential deals, particularly in complex carve-outs that require sophisticated restructuring expertise.
One example is Bain Capital’s $5.5 billion acquisition of a portfolio of non-core retail assets from Seven & I Holdings. This transaction is one example of the growing trend of Japanese conglomerates divesting legacy businesses to refocus on core operations. These carve-outs provide PE firms with scalable platforms and allow corporates to sharpen their strategic focus. The deal is part of a broader trend of asset sales, as companies respond to the demands of shareholder and governance reforms by Japan’s regulatory bodies.
Beyond carve-outs, private equity buyers are eyeing larger take-private opportunities. Bain Capital and EQT are reportedly evaluating a potential acquisition of Trend Micro, a cybersecurity giant with a market capitalization over $8.5 billion. These deals further highlight Japan’s appeal. Its corporate valuations remain relatively low compared to other developed markets, offering private equity investors intriguing entry points, and combine with a stable political and economic environment. All these factors make Japan attractive for capital seeking both value and growth.
Japan’s M&A boom sends waves beyond its borders and positions the country as a cornerstone of the global private equity scene. As Japan serves as a model for other Asian markets, PE firms increasingly see Japan as a springboard for regional growth, ensuring sustained momentum in its M&A activity. Moving through 2025, Japan’s role will grow as a hub for innovative dealmaking, and potentially reshape Asia’s investment landscape for many years. This surge may prove to be a catalyst for deeper Asian market integration.
