The shortage of successors for small and medium-sized enterprises (SMEs) in Japan is becoming increasingly serious each year. As a result, the number of mergers and acquisitions (M&A deals) involving mid-sized and small businesses continues to rise steadily (in Japanese), jumping 16-fold between 2014 and 2022.
In response, the Japanese government is promoting third-party succession by launching initiatives such as the "SME M&A Guidelines"(in Japanese), which were introduced in 2020. However, cases of misconduct by unscrupulous M&A intermediaries have also emerged.
In this context, ORIX Group aims to provide a wide range of trusted succession solutions by leveraging its nationwide sales network of around 60 offices, as well as the expertise accumulated through its diversified business operations. ORIX tries to balance respect for the wishes of the current business owners with a smooth handover to the next generation -- with M&A emerging as a viable and increasingly popular option.
Government policies are fueling growth
The recent surge in M&A transactions at smaller companies and family firms is largely driven by government policy, argues Tomohiro Yamamoto, Head of the Business Succession Solutions Department at ORIX.
In 2015, the government released the “Business Succession Guidelines” summarizing key M&A procedures and precautions. These were later revised in 2020 as the “SME M&A Guidelines”.
Other supportive measures include revisions to the business succession tax system and the establishment of subsidies for succession and handovers. In 2021, the government also launched the “Certified M&A Support Institutions” registration system. Organizations registered under this system are eligible for government subsidies, as long as they comply with official guidelines.
As a result, there are approximately 2,900 registered institutions as of 2025, including intermediaries, financial institutions, and tax accountants. Most of these were established after 2010 and employ fewer than 10 dedicated M&A professionals.
Some of these new players, Mr. Yamamoto cautions, lack expertise, leading to a rise in disputes involving M&A intermediaries, with some cases escalating into serious incidents. Usually, this is not due to malicious intent but inexperience and a failure to act professionally and retain a neutral position between buyer and seller.
“Another issue is that many business owners still believe it’s sufficient to consult with their personal tax accountant or a familiar lawyer,” says Mr. Yamamoto. “But when it comes to M&A, it’s essential to consult professionals with proven track records and relevant expertise.”
Providing support through a nationwide network
ORIX, by contrast, can offer holistic, high-quality support regarding business succession on a nationwide basis. The Business Succession Solutions Department works closely with ORIX’s sales teams at approximately 60 locations across Japan. This allows it to identify local needs with great precision, and to provide one-stop services tailored to a variety of succession scenarios.
Most tax accountants and financial institutions cannot offer support for M&A-based succession, while M&A intermediaries typically do not promote succession within families or to employees. In contrast, ORIX offers full support – whether the issue is handing the asset on within the family or striking an M&A deal with a third party.
“Our motivation is to help as many SMEs as possible to continue and grow their businesses,” says Mr. Yamamoto. And since ORIX often already offers SMEs diverse services including finance, leasing, life insurance, corporate pensions, and renewable energy, the owners of these firms naturally turn to the group for advice on succession issues.
Mr, Yamamoto argues that the method of succession is not the prime concern of his team. What matters is preventing a business from closing simply because it has not found a successor. In fact, about 70% of the succession cases ORIX has supported were within the family. Around 20% have involved employee succession, and only about 10% resorted to third-party M&A.
Of course, most family firm owners wish to pass their companies on to their children or other relatives, and ORIX will do everything it can to support that choice, says Mr. Yamamoto – even if it knows from experience that the son who has inherited the business will seek to sell it later on.
Becoming the go-to name for succession support
Having a strong and trusted relationship with its SME clients is critical during a life-changing event like business succession. “It is essential to understand the emotional fluctuations of selling owners and the expectations of potential buyers throughout the process,” emphasizes Mr. Yamamoto. “Most companies are unfamiliar with M&A, so our priority is ensuring they can make informed, regret-free decisions.”
Because ORIX has dedicated sales representatives for both the seller and the buyer, it is able to provide timely and attentive support, even for the smallest concerns. Some clients have told the team they would have abandoned their deal without ORIX’s support.
This dedication is surely one reason for the fact that the number of M&A inquiries ORIX is receiving is growing significantly year-on-year, prompting the team to expand. Mr. Yamamoto says his aim is to become the trusted partner known for one-stop solutions that help businesses continue and thrive – and, therefore, the name business owners think of when in relation to SME business succession support.
