M&A and Post-Merger Integration Considerations for Japan

By GPMIP Partner, Makoto Ideno, an excerpt from our new book, Cross-Border Mergers and Acquisitions

Most global companies in the U.S. and Europe have faced difficulties in integrating Japanese companies in PMI implementation. I will introduce some ideas, which benefit U.S and European companies who plan to buy Japanese companies in the near future, excerpted from Chapter 15 in Cross-Border Mergers and Acquisitions.

If I was asked to select the most important thing from many difficulties mentioned above, I would say the lack of visible standardized processes in Japanese companies. The Japanese community historically consists of only Japanese people due to its geographical isolation circumscribed by seas and the very difficult language for foreigners to learn.

In very high-context communities like the Japanese, it is not necessary to standardize how to communicate, how to behave, and how to decide because they have been sharing the same values, same code of conduct, and work process among insiders. Moreover, unlike other Asian societies, the Japanese economy developed very well in 20th century except during war time, sustaining its high-context culture even in business organizations.

Therefore, they have not articulated their own business processes, including communication, operation and decision making. They surely have them, off-course, but have not documented them before. It is very difficult for outsiders to guess what kind of rules exist. So, it is required for U.S and European companies, who purchased and want to leverage the Japanese companies’ potential for their global business strategy, to make the invisible process visualized and standardized in order to understand them and, if necessary, revise them to better ones. Otherwise, they will fail in the PMI process in the end.

In the last quarter of Chapter 15 in Cross-Border Mergers and Acquisitions, I identify some issues to be considered and introduce some prescriptions to solve the issues practically.

  • Installation of reporting system
  • Definition of expected result clearly
  • Respect for employee dignity
  • Don’t depend too much on fluent English members
  • Utilization for IMO

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