M&A

The biggest stumbling block for foreigners setting up a business in Japan is opening a corporate bank account. Due to measures to prevent money laundering, it is becoming increasingly difficult to open a new corporate bank account each year. Even if you have obtained a visa through a startup program and have completed the registration of your company, you may still be unable to open a bank account, which can hinder your business.

One solution is to buy a company that already has a bank account. The original idea behind M&A is to acquire shares or equity in an active company, but if the company is dormant or effectively dormant, but has the necessary conditions in place, such as a bank account, it can be worth buying. As Japan’s population ages, there are a not insignificant number of business owners who have already retired and let their companies become dormant. If the company is already dormant, it can be purchased relatively cheaply. It is also possible to have a Japanese person establish a new company, and then buy that company after the necessary preparations have been made, such as obtaining approval to open a bank account.

Disadvantages

There is a possibility of hidden liabilities.

There is a possibility of hidden liabilities, as well as tax reporting omissions, etc., so it is necessary to check this through due diligence.

The cost is higher than for a new company

Because you are buying an existing company, there are many procedures to go through, such as changing the board of directors, relocating the head office, and changing the purpose of the company, so the total cost of the procedures is higher than for a new company.

Advantages

You can start your business immediately

Because you already have a company, you can start your business immediately. If you go through the procedures of obtaining a visa and establishing a corporation, it can take up to a year.

The business can continue

In the case of a licensed business, the license can be taken over as it is. If the company is active, the know-how of the employees etc. can also be taken over.

The scale of M&A differs depending on the objective, but it has been used as an effective means of entering the Japanese market in recent years. In particular, in the case of entering from a visa-exempt country, a visa is often not required immediately, so the priority is to start the business as soon as possible.