JSTORIES ー In 2022, the Japanese authorities applied the “Startup Improvement 5-year Plan” to extend funding in startups to 10 trillion yen by 2027. Based on a report by the Ministry of Financial system, Commerce, and Business, one of many key elements mandatory for reaching this purpose is the promotion of mergers and acquisitions (M&A) and international enlargement.
Giant firms like GAFAM have been actively buying startups to attain discontinuous progress. M&As are additionally seen as a strategic possibility for secure progress for startups. The truth is, within the U.S., 90% of startups select M&As as their exit technique as an alternative of an preliminary public providing (IPO). Nonetheless, in Japan, there are nonetheless comparatively few M&As involving startups. Most startups nonetheless intention for IPOs, and M&As are usually not actively utilized as a progress funding technique.
Why are M&As nonetheless underutilized in Japan regardless of their significance for creating the startup ecosystem alongside worldwide enlargement? How can we unlock the potential for enterprise progress by means of M&As and enhance exit choices for startups?
To discover these questions, Toshi Maeda, government editor of J-Tales, interviewed an M&A consultant in Japan.
Hidetaka Kojima graduated from the College of Overseas Research at Tokyo College of Overseas Research in 2003, accomplished an MBA from the Graduate Faculty of Commerce and Administration at Hitotsubashi College in 2009, and accomplished the Program for Management Improvement (PLD) at Harvard Enterprise Faculty in 2019.
After working at Daiwa Securities and GCA (now Houlihan Lokey), he joined Mitsubishi Corp. in 2011 to launch the Life Sciences Division and was concerned in M&A/PMI. In 2020, he joined SHIFT and established the M&A/PMI system, main the corporate’s exceptional M&A outcomes. In 2022, he based SHIFT Development Capital and took on the function of Director/CEO of SHIFT USA in 2025 to supervise worldwide methods. Kojima can also be concerned as an adviser and angel investor for Japanese startups and goals to construct Japan’s startup ecosystem.
SHIFT – The M&A Powerhouse
SHIFT is an organization that helps clients in creating “sellable providers,” with its base in software program high quality assurance. As of February 2025, the corporate has about 14,000 workers and 37 group firms. SHIFT aimed for 100 billion yen in gross sales by 2025 by means of its midterm progress technique, “SHIFT1000,” and hit this goal by the top of fiscal 12 months 2024. SHIFT is now specializing in reaching 300 billion yen in gross sales by means of its subsequent technique, “SHIFT3000,” and is implementing varied initiatives.
Japan’s ‘M&A King’ examines round 300 offers yearly
J-Tales Government Editor Toshi Maeda (hereafter, J-Tales): At present, we’ve Hidetaka Kojima, the top of M&A/PMI and abroad enterprise growth at SHIFT, an organization that has maintained exceptional progress in gross sales over the previous decade, specializing in software program high quality assurance and testing. Kojima-san, we’re at SHIFT’s headquarters in the present day, and it’s unbelievable how shut we’re to Tokyo Tower!
Hidetaka Kojima (hereafter, Kojima): Sure, everybody who visits right here all the time mentions Tokyo Tower first (laughs). It’s a logo of Japan, and it’s acquainted to each locals and foreigners, so it’s all the time a great matter of dialog.
J-Tales: It is really a improbable workplace. In 2023, SHIFT was the Japanese publicly listed firm that introduced probably the most M&A offers, making it honest to name you Japan’s “M&A King.” At present, I would prefer to give attention to the secrets and techniques behind SHIFT’s M&A hit, which you could have been main.
Kojima: Thanks for having me.
J-Tales: Our media platform, J-Tales, has been protecting Japanese startups and researchers who’ve the potential to unravel international points by means of their know-how and providers. By distributing this content material in a number of languages, we intention to advertise Japanese innovation and assist the worldwide enlargement of Japanese firms.
One space we have not centered on a lot till now could be startup M&A. Nonetheless, lately, we have broadened our protection to incorporate particular person startups and the startup ecosystem, which entails cities, enterprise capital companies, and worldwide gamers that stimulate innovation. We have been taking note of startup infrastructure, and I consider M&As are important to that ecosystem.
Kojima: Completely. We have seen a noticeable enhance in startup-related M&As in Japan lately. At SHIFT, we consider about 300 M&A offers yearly, and the proportion involving startups continues to develop. Nonetheless, in comparison with abroad markets, it is nonetheless comparatively low. Within the U.S., M&As are the first exit technique for startups, however Japan has but to succeed in that degree.
At present, along with discussing SHIFT’s M&A/PMI methods and abroad enlargement, I would like to dive into the challenges going through Japan’s startup ecosystem.
J-Tales: Thanks. Kojima-san, you’re undoubtedly probably the most educated particular person in the case of M&As for Japanese startups. I stay up for listening to your ideas not solely on SHIFT’s M&A/PMI technique but in addition on Japan’s startup ecosystem challenges.
SHIFT’s M&A document: the biggest variety of M&As achieved amongst Japanese listed firms in 2023
J-Tales: First, may you inform us about your present function at SHIFT? Since becoming a member of the corporate in 2020 as the top of M&A/PMI, you have constructed a complete M&A/PMI group from scratch. In 2022, you additionally cofounded SHIFT Development Capital, later turning into its Consultant Director in 2024. Moreover, you have lately established SHIFT USA and are overseeing its worldwide enterprise enlargement as Director/CEO. That is a powerful observe document.
Kojima: SHIFT has performed round 40 M&A offers up to now (excluding capital and enterprise alliances). After establishing our M&A/PMI workforce in 2020, we’ve persistently evaluated about 300 potential M&A offers per 12 months. In consequence, our group firms have been rising at a median annual price of 20%-30%.
Not too long ago, an increasing number of individuals have acknowledged SHIFT as an organization that leverages M&As for speedy enterprise enlargement. When talking with home and worldwide traders, I usually hear that SHIFT’s M&A/PMI technique is extremely repeatable, which strongly validates our strategy.
Moreover, we established an abroad workforce a couple of 12 months in the past. In December final 12 months, we fashioned enterprise alliances with two U.S. firms. In February this 12 months, we formally launched SHIFT USA. This marks the start of our full-scale worldwide enlargement, beginning with america.
J-Tales: Forty offers — that is an unbelievable quantity! Not solely has SHIFT executed the very best variety of M&A transactions amongst publicly listed firms in Japan, however your small business has additionally been rising exponentially. It is no exaggeration to name you the M&A King of Japan.
In Japan, M&A offers are far much less frequent than within the U.S. Would you say that SHIFT’s strategy is exclusive on this panorama?
Kojima: We always monitor disclosed M&A exercise, and it’s true that only a few firms announce a number of offers yearly. I consider there are two main causes for this: (1) an absence of accrued M&A/PMI experience inside organizations, and (2) a lack of information of the variations in M&A methods for big enterprises, small and medium-sized companies (SMEs), and startups.
Relating to the primary level, many firms do not need devoted M&A/PMI groups. As an alternative, they assemble groups on an advert hoc foundation when offers come up, and these groups dissolve as soon as a deal is accomplished. This makes it tough to build up institutional data about M&As and PMIs. At SHIFT, we’ve a devoted M&A/PMI workforce that has assessed over 1,000 M&A alternatives, permitting us to refine a singular strategy. In consequence, we will consider alternatives extra swiftly and execute offers extra effectively, with higher consistency.
Relating to the second level, M&A methods must be adjusted relying on whether or not the goal firm is a big company, an SME, or a startup. Many professionals transition from giant firms to startups and have interaction in M&As, however those that battle usually fail to acknowledge these variations. For example, people with a background in giant enterprises have a tendency to use the identical M&A strategies to startups, which doesn’t work. The reverse can also be true. Moreover, M&A transactions involving funding banks differ considerably from these facilitated by intermediaries, even when it comes to processes like aggressive bidding. It’s important to know these nuances and reply accordingly.
J-Tales: Your experience on this space is well known, and I hear you obtain fixed invites for lectures, seminars, and even presents to function an exterior director or adviser. You’ve got additionally began instructing usually at universities, is that appropriate?
Kojima: Sure, I am grateful for the alternatives which have come my method. Relating to college lectures, I at present educate programs at Kyoto College for undergraduate college students and on the Enterprise Faculty (MBA program).
Final 12 months, I invited Mr. Nakanishi, director of the Industrial Group Division at Japan’s Ministry of Financial system, Commerce, and Business (METI), as a visitor speaker for a dialogue session. METI revealed the “Tips for Company Acquisitions” in August 2023, and Mr. Nakanishi was the lead architect of those tips.
These tips have had a big impression on “hostile takeovers” in Japan, so our dialogue supplied worthwhile insights — from each the policymaker’s perspective (who created the rules) and the enterprise government’s perspective (who has to implement them).
I hope such conversations will enhance Japan’s total M&A literacy and foster a extra refined dealmaking setting within the nation.
Making use of M&A principle and frameworks from funding banking and M&A advisory companies
J-Tales: Kojima-san, your work in enterprise succession by means of M&As and rising the variety of unicorn startups is one thing that Japan urgently wants. Nonetheless, only a few individuals have the data and experience you possess. I would like to know why you have been capable of accomplish issues that others have not. May you inform us the way you first acquired concerned in M&As?
Kojima: I began my profession at Daiwa Securities after graduating from college. Later, I transitioned to GCA (now Houlihan Lokey), a boutique M&A advisory agency, the place I labored as an M&A adviser for varied firms.
Whereas being an adviser supplied nice studying experiences, I additionally felt pissed off that I may by no means really be on the decision-making facet of those offers.
Then, I discovered that Mitsubishi Corp. was launching a Life Sciences Division as a mannequin case for enterprise funding, utilizing M&As and PMIs to develop its enterprise. Coincidentally, my graduate faculty thesis was about how basic buying and selling firms ought to transition into enterprise funding companies, arguing that they need to transcend conventional buying and selling and scale their companies by means of investments.
So, after I acquired the chance to affix Mitsubishi Corp., I felt it was the right setting to tackle the problem I had all the time wished. That is after I made the transfer and commenced my profession in a enterprise company.
J-Tales: So, wouldn’t it be honest to say that you simply mastered M&A principle and frameworks at securities companies and M&A advisory companies, then utilized them in a buying and selling firm to achieve sensible expertise?
Kojima: Sure, precisely. Early in my profession, I used to be uncovered to many various company M&A methods as an adviser, and it was a useful studying expertise. I can confidently say that my basic expertise in M&A have been constructed throughout my time as an adviser.
One of the vital influential figures in my profession was Nobuo Sayama, the founding father of GCA and a pioneer of M&As in Japan. Having the possibility to work with him had a profound impression on me.
After I transitioned to Mitsubishi Corp. to assist set up the Life Sciences Division, I made a dedication to the then Group CEO (who later turned Senior Government Vice President at Mitsubishi Corp.) that we might make this enterprise a core pillar of the corporate inside 10 years.
Whereas my advisory expertise helped, I nonetheless had a lot to study and adapt shortly. By means of trial and error, I drove home and worldwide M&A and PMI initiatives. After practically a decade of effort, we efficiently turned it right into a core enterprise unit.
J-Tales: So, you got down to make the Life Sciences Division a core a part of the corporate inside 10 years — and you probably did it! Did you are feeling assured about reaching that purpose from the beginning?
Kojima: I had a transparent imaginative and prescient of the way to make it occur. I labored backward from the 10-year purpose, setting particular milestones alongside the way in which. The primary 5 years have been centered on strengthening our home basis by means of M&As and roll-ups. As our enterprise scale grew, we have been capable of interact in negotiations with international firms on an equal footing. The second half centered on the U.S. market — the biggest on the earth — the place we expanded internationally by means of acquisitions.
J-Tales: Regardless of your success at Mitsubishi Corp., you later joined SHIFT, a enterprise firm. Why did you make this transition?
Kojima: Many individuals requested me, “Why depart Mitsubishi Corp. for a enterprise?” (laughs). I had no points with Mitsubishi Corp., however after reaching my 10-year purpose, I wished a brand new problem. Additionally, I used to be strongly drawn to SHIFT’s President and CEO, Mr. Tange. After getting back from my U.S. task, I met with him and mentioned SHIFT, its administration, M&As, and IT business challenges. On the finish, he mentioned, “Let’s develop SHIFT collectively!” I used to be so excited that I instantly accepted his provide.
Becoming a member of SHIFT and constructing a workforce with like-minded members to attain top-class M&A efficiency in Japan
J-Tales: SHIFT, which you selected as your new problem, has continued to ship exceptional outcomes, reaching excessive income progress for the previous 10 years. Specifically, the corporate has constructed a top-class observe document in Japan within the area of M&As, which you’re liable for, and as talked about earlier, has quickly expanded by means of these M&A actions. Did you already see a transparent path to success earlier than becoming a member of?
Kojima: I would sound overconfident, however I noticed a path to achievement (laughs). Throughout my interview with Tange, he requested me about my strengths. I instructed him: “My greatest power is my luck — I’ve all the time helped each group I labored for obtain its targets. SHIFT’s targets will likely be realized, too!” I nonetheless clearly bear in mind him laughing and saying, “I like that.”
Identical to I did at Mitsubishi Corp., I labored backward from the corporate’s targets, envisioning the mandatory organizational construction, team-building methods, and initiatives in my thoughts. After that, all that was left was to place within the effort to show that my choices have been proper.
In 2020, I joined SHIFT and established the Company Improvement Division. Step one was creating two groups beneath it: the M&A Crew and the PMI Crew. At first, we had no members, so I centered closely on recruitment alongside dealing with every day operations. In comparison with now, our observe document was nonetheless restricted, so hiring was fairly difficult initially. Fortuitously, as time handed, members who resonated with our imaginative and prescient joined us one after the other.
Now, we’ve grown right into a construction the place three groups — the Strategic Planning Crew, M&A Crew, and World Enterprise Improvement Crew — work as one, dealing with all the things from home and worldwide M&A technique formulation to execution, PMI, and international technique growth. The workforce members come from various backgrounds, and I really consider we’ve constructed an unbelievable workforce.
J-Tales: I see. So, by strengthening the workforce construction, you have been capable of speed up enterprise operations even additional?
Kojima: Irrespective of how proficient a person is, they cannot scale a enterprise alone. I felt this strongly throughout my time at Mitsubishi Corp. As M&A actions proceed and the group grows, it turns into not possible for one particular person to supervise all the things. I all the time take into consideration the way to leverage organizational energy to scale operations successfully.
For instance, in March 2022, to additional speed up our M&A technique, we established a specialised M&A subsidiary.
J-Tales: That might be SHIFT Development Capital, the place you function the Consultant Director, appropriate?
Kojima: Sure. One among its key options is that so long as we function inside sure predefined standards (equivalent to funding targets and multiples), choices may be made by SHIFT Development Capital’s funding committee slightly than requiring approval from SHIFT’s board of administrators. Basically, a sure degree of authority has been delegated from the board. Not like board conferences, the funding committee may be convened flexibly, considerably rushing up the decision-making course of.
PMI methods for maximizing M&A effectiveness
J-Tales: You’ve been quickly rising SHIFT by means of M&As, haven’t you? I believe that M&As are the driving power behind progress, each for Japanese startups and listed firms. How do you view M&As because the driving power for progress?
Kojima: In fact, natural progress is essential, and we proceed to pursue it. Nonetheless, I additionally consider that accelerating progress by means of M&As — basically “shopping for time” — is a mandatory technique.
To this point, we have accomplished round 40 M&A offers, and what issues most is making certain repeatability. Hitting a house run is nice, however it’s not one thing to be praised if it is only a fortunate swing. Nonetheless, persistently hitting base hits day by day is praiseworthy. I guarantee our workforce understands this, and we incorporate this mindset into our evaluations. This consistency permits us to execute M&A offers yearly and ensures we create worth by means of Publish-Merger Integration (PMI).
J-Tales: You’ve simply talked about PMI, the administration integration course of. May you inform us extra about it? Basically, does it imply supporting the acquired firms, sharing SHIFT’s imaginative and prescient and targets, and rising collectively?
Kojima: Precisely. When an organization joins our group, we share SHIFT’s imaginative and prescient with them. I exploit the ideas of “centrifugal power” and “centripetal power” to elucidate our strategy.
In easy phrases, we do not micromanage. Nonetheless, we encourage acquired firms to totally make the most of SHIFT’s property to develop along with us. Fairly than imposing adjustments, we create a construction the place group firms can transfer ahead autonomously. In consequence, the top-line income of our group firms has elevated 12 months after 12 months.
J-Tales: So, to drive enterprise progress, it is not nearly closing M&A offers but in addition about correctly executing PMI.
Kojima: Completely. To realize the targets of an M&A and maximize its impression, a well-structured PMI technique is important.
As I discussed earlier, we had no members once we first arrange our PMI workforce. However the workforce has grown over the previous few years, and we have established a structured PMI framework. This has enabled our group firms to maintain a median of 20%-30% annual progress. In consequence, group firms now account for about 40% of SHIFT’s consolidated income.
In fact, we nonetheless have challenges forward. Nonetheless, since our PMI workforce persistently provides worth to acquired firms, our M&A workforce can aggressively pursue new offers with full confidence.
J-Tales: Evidently you’ve constructed stable groups for each M&As and PMIs. On this context, what do you assume is crucial side of PMI?
Kojima: I consider there are two most important views on PMI. The primary is the “100-day plan,” which entails making certain that the minimal required actions are taken within the three months after acquisition. Company-related duties, like fiscal 12 months changes and inner controls, are frequent right here, and since the responses are already decided to some extent, it’s simpler to standardize this space of PMI. The second is PMI that goals to extend the highest line and understand synergy results. This usually requires a case-by-case strategy, so it’s not all the time straightforward to standardize intimately, however I consider we will standardize it for big themes. In SHIFT’s case, we’ve primarily centered on PMI assist requests associated to “recruitment,” “gross sales,” and “technique.” Not too long ago, we’ve additionally added “know-how” to this. I consider it’s essential to standardize in accordance with our personal assets, stage, and challenges.
In Half 2, we’ll focus on SHIFT’s abroad technique, the Japanese startup ecosystem, and the way to enhance unicorns in Japan.
Translated by J-Tales (Anita De Michele, Lucas Maltzman)
High video: J-Tales (Jeremy Touitou, Giulia Righi)
For inquiries relating to this text, please contact jstories@pacificbridge.jp
