14 What should investors know from a cultural, commercial, or regulatory standpoint? Mr. Kiuchi points out: “Organizational culture in Japanese companies varies; some operate under a top-down structure, others follow a bottom-up approach, but consensus-building is a central tenet in many firms.” Once Japanese colleagues resonate with the organizational vision, understand their respective roles in the plan, and feel a sense of psychological safety, they collaborate effectively (Junzaburo Kiuchi) “Foreign acquirers and joint venture partners often require time to adapt to how Japanese teams and individuals collaborate and build consensus. However, feedback I frequently receive from non-Japanese clients is that once Japanese colleagues resonate with the organizational vision, understand their respective roles in the plan, and feel a sense of psychological safety, they collaborate effectively, support one another, and work diligently with integrity toward shared goals.” Ms. Sakai adds: “Traditionally, Japan has been cautious toward outside and foreign investment, particularly from private equity firms. The prevailing corporate culture tended to emphasize stability and the interests of internal stakeholders over aggressive growth strategies. Many Japanese businesses hold shares in each other to protect itself from takeovers. In 2023, the Japanese government issued the first major revisions in nearly two decades to its corporate governance code (May Sakai) However, this landscape is changing, driven by both regulatory reforms and broader structural shifts. Notably, in 2023, the Japanese government issued the first major revisions in nearly two decades to its corporate governance code and public takeover guidelines. These reforms aim to stimulate greater activity and transparency in the M&A market. Japan also continues to be a shrinking domestic market, so Japanese companies will continue to look for outbound M&A opportunities. Another significant domestic factor is the growing number of companies facing succession challenges. Many Japanese businesses are led by aging founders without clear succession plans, but which makes them attractive acquisition targets, for example due to their established market presence, operational stability, or proprietary technologies. Additionally, numerous Japanese companies are highly regarded within Japan but have yet to expand their products, services, or technologies globally. These firms present compelling opportunities for investors with a vision for international growth. Combined with accessible financing and a regulatory environment that is increasingly
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