Why Can M&A Save the Japanese Economy? Essential Knowledge You Should Know

<Table of Contents>
▼M&A has now become indispensable to the business strategies of many companies.
▼M&A is conducted across large corporations, SMEs, and startups.
▼Why Dentsu Inc. partnered with Japan M&A Center to promote M&A intermediation.

---

M&A has now become indispensable to the business strategies of many companies.

Did you know that over the past 30 years or so, the number of M&A (mergers and acquisitions) deals has been steadily increasing?

In fact, since the bursting of the bubble economy—often referred to as the "Lost 30 Years"—the M&A market has been expanding almost continuously.

M&A was once derided as "vulture-like" and often carried a somewhat frightening image. However, in recent years, it has become firmly established as an indispensable part of corporate management strategy and tactics.

Particularly in the last few years, the M&A market has experienced significant growth. Reports on M&A now appear almost daily in newspapers and online economic media. Why exactly has this situation come about?

The answer is straightforward:

"Many companies can no longer survive without M&A."

.

M&A occurs across all types of companies: large corporations, SMEs, and startups.

● For large corporations... Rebuilding business portfolios, choosing and concentrating

First, large corporations. Recently, many large corporations have begun advocating "Innovation," "DX (Digital Transformation)," and "BX (Business Transformation)."

These terms respectively mean "technological innovation," "transformation through digital technology," and "business transformation." However, it is extremely difficult for large corporations to achieve "innovation" or "transformation" on their own.

M&A offers a strategy to rapidly overcome this situation. For example, to strengthen competitiveness, a large corporation might divest non-core businesses to another company and use the proceeds to acquire digital or innovation-focused businesses.

In this way, M&A enables the realization of innovation and transformation that would be impossible for a company to achieve alone.

● For SMEs... Maintaining and growing regional economies through business succession

The above applies not only to large corporations but also to SMEs. However, SMEs face greater difficulty in achieving "innovation," "DX," and "BX" on their own due to challenges in securing sufficient capital and human resources.

Therefore, SMEs aiming for further growth can utilize M&A to become subsidiaries of large corporations. By leveraging the large corporation's financial strength, human resources, sales capabilities, and logistics, they can achieve technological innovation and business transformation.

Furthermore, cases where excellent companies close down simply because they lack successors are increasing, particularly in regional areas. Here too, M&A becomes a highly effective strategy.

● For Startups... M&A as a Growth Strategy and Exit Strategy

For a long time, the image of a startup's exit was "IPO" (initial public offering). However, recently, more startups are choosing M&A as their exit strategy.

We now frequently see news of rapidly growing tech ventures suddenly becoming subsidiaries of large corporations. This aims to simultaneously provide the startup with further growth opportunities and the large corporation with innovation opportunities.

Conclusion: M&A is key to Japan's economic revival.

For Japan to break free from its "lost 30 years" and update its economy, leveraging M&A is indispensable.

Particularly among small and medium-sized enterprises (SMEs), over one million companies face succession issues, making this an urgent challenge for our nation. As mentioned earlier, business succession through appropriate M&A is essential for maintaining and developing regional economies, making it a crucial theme for Japan's economic revival.

Furthermore, M&A is being utilized as a trump card to rescue industries facing rapidly changing business environments due to the COVID-19 pandemic. Companies forced to change their business styles during the pandemic often lack sufficient management resources such as "funds," "talent," and "organization." M&A is chosen as a means to break through this situation decisively.

Why is Dentsu Inc. partnering with Japan M&A Center to promote M&A intermediation?

In the past, when the Japanese economy was growing steadily and mass media dominated advertising, it was said that companies could generally sell their products by investing heavily in advertising.

However, during the subsequent "Lost 30 Years" of economic stagnation and the expansion of internet advertising, companies increasingly required "integrated communication strategies." More recently, the trend has evolved further, with a growing number of companies each year adopting a unified approach to both "communication strategy" and "business strategy."

Anticipating this trend, in 2019, Dentsu Inc. entered into a business agreement with Japan M&A Center. The two companies pledged to collaborate in providing M&A intermediary services for businesses. This enables the Dentsu Group to offer "integrated solutions combining communication strategy and M&A strategy" to various partner companies.

Dentsu Inc. declares its commitment to becoming an Integrated Growth Partner (IGP) for all companies, providing comprehensive support for their business growth.

Dentsu Inc. Integrated Growth Partner (IGP) Special Page
https://www.dentsu.co.jp/igp/

As outlined in this article, M&A has become an indispensable piece in the business strategies of large corporations, SMEs, startups, and many other companies. This is why Dentsu Inc. is promoting M&A intermediation alongside the Japan M&A Center.

Next time, we will discuss the solutions and key insights this agreement aims to generate with a key figure from the Japan M&A Center. Stay tuned!