Abstract
Ⅰ. Current status of the Small Business Corporation M&A market
In Japan, it is only recently that M&A involving the acquisition of small business corporations (SBCs) has begun to attract attention.
The succession of management of a small business corporation (SBC) to others in the form of mergers and acquisitions, rather than to relatives and in-laws, was almost never an option for the parties involved in the past. On the seller's side, there were concerns that, if a rumor spread that the management was considering selling the company, it would immediately lose credibility among clients and employees. On the buyer's side, there were concerns that the management of an SBC had strong personal factors such as the trust and personality of the individual manager and that it would not do well if someone else bought it. Although such concerns are still strong today, the situation has gradually become more prevalent over the past 10 years, starting with those that seem to be successful, due in part to the growing difficulty of finding successors for SBCs.
The Small and Medium Enterprise Agency (SMEA) is also very much involved in M&A of SBCs, and there are 48 “Business Succession/Transition Support Centers” in each prefecture, which are public consultation offices set up by the government. The Center has established a registration system for M&A support organizations, and once the businesses (financial institutions, professionals, and M&A brokerage firms etc.) that provide support for SBC M&A (brokerage services or financial advisor (FA) services) are registered with the Center, government subsidies are provided for the fees which are paid by the parties of an M&A to the registered support organization. Therefore, almost all of the support providers have received such registration, and the number of registered support agencies is 3,057 as of the end of 2023. Registered support organizations are required to comply with the “Guidelines for Small and Medium-Sized M&A” prepared by the SMEA, and these guidelines function as a code of conduct (soft law) for registered support organizations. The guidelines have recently been revised (3rd edition, published on August 30, 2024) due to inappropriate operations reported in newspapers and other media by some registered support organizations.
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