Dispatch from Japan – 2011
October 21, 2011
Dear Friends,
Summer is turning into autumn and the weather is starting to cool, and none too soon. Thermometers have been set higher than normal in offices throughout Japan due to the reduction of electricity throughout the country after the government has taken all but 12 of the nation's 54 nuclear power plants offline.
The government's Cool Biz campaign, which encourages companies to permit their employees to dress down to save energy, has been extended this year, but to the casual observer that is the only sign that life has been affected by the tragic events of "3/11", as last March's earthquake, tsunami, and its after-effects are referred to here.
The resilience of the Japanese people, despite 3/11, and a devastating typhoon season, is quite profound.
I recently spent a week meeting pharmaceutical, medical device, and pharmaceutical services companies in Tokyo and Osaka with my colleagues at IBS Yamaichi.
Despite this year's stock market slump, many Japanese companies have built up large cash reserves, which have grown larger in dollar terms as the yen has appreciated.
Given the maturity and relatively low growth rates of the Japanese economy, the message I heard repeatedly was the strong interest of Japanese companies in overseas M&A. Japanese firms want to build their own businesses in developing countries in Asia, through organic efforts and bolt-on acquisitions, but many are also prepared to utilize their cash to make larger, strategic platform acquisitions in North America and Europe.
My colleagues at IBS Yamaichi believe this interest in overseas M&A is not a temporary blip but rather a longer-term trend. They believe this is not driven by a stock market or financial boom, but is a strategic and structural trend by which even Japanese small and mid-market companies are considering expansion by overseas M&A.
There is also a strong interest in acquiring or in-licensing technologies that can be shepherded through the Japanese approval process and commercialized in their domestic market.
Through our close affiliation with IBS Yamaichi, an independent, Tokyo-based investment bank founded in 2004 and focused on the Japanese mid-market sector, Brocair has deep expertise and transaction capabilities in Japan.
Japan is the world's third largest economy, and should be a component of every firm's global strategy. We would love to discuss with you how Japan can be an opportunity for your business, either as a source of financing or a part of your M&A plan.
Gregg Blake, Managing Partner
Brocair managing partner Gregg Blake, second from right, with colleagues from IBS Yamaichi (from left, Pekka Laitinen, Director, Tachikawa Masahito, Chairman and CEO, and Owen Hultman, General Manager), during recent meetings in Tokyo.
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