Tokyo — Japan recorded 5,115 M&A transactions in 2025, up from 4,700 in 2024 and the highest level in the data series since 2012. Boston Consulting Group forecasts the number to rise again to 5,260 transactions in 2026, an increase of 2.8% from 2025. Of that total, domestic transactions are expected to account for 4,200 deals, outbound transactions for 620 and inbound transactions for 440.
Those conclusions are based on research by the Boston Consulting Group (BCG), published in September 2026 in its assessment of Japan’s M&A market. The firm argues that Japan is not simply sustaining the momentum of a record 2025, but is undergoing a structural change in how companies use M&A to reshape their businesses. Business development, global expansion and industry consolidation remain the three dominant forces behind dealmaking in 2026.
BCG’s data shows how dramatically Japan’s M&A market has expanded over the past decade. Transactions increased from 1,848 in 2012 to 3,050 in 2017 and 4,304 in 2022, before falling to 4,015 in 2023 and then climbing to 4,700 in 2024 and 5,115 in 2025. The projected 5,260 transactions for 2026 would put the market at roughly 2.8 times its 2012 level.
The expansion reflects more than a conventional M&A cycle, with BCG pointing to structural pressures facing Japan’s corporate sector. Slower organic growth in the domestic market, combined with shareholder demands for clearer capital allocation and higher returns, is forcing companies to reassess their portfolios. M&A is increasingly being used not simply to buy growth, but to acquire capabilities, improve governance, reshape portfolios and unlock corporate value.
Three themes dominated Japanese M&A in 2025: business development, global expansion and industry consolidation. Companies are using acquisitions to enter growth markets, gain customers and secure technology, licences and business models that could take years to build internally. Cross-border deals are also being used to acquire new markets, technological capabilities and supply-chain assets, while domestic consolidation is being driven by rising labour costs, technology investment and a shrinking domestic market.
Global expansion remains a central part of the strategy, although the number of outbound deals is expected to decline slightly in 2026. BCG forecasts outbound transactions to fall from 657 in 2025 to 620 in 2026, a decline of about 5.6%, while inbound transactions are expected to increase from 372 to 440, or 18.3%. Domestic M&A is forecast to rise from 4,086 to 4,200 transactions, indicating that Japanese companies are pursuing growth through a combination of domestic restructuring and international expansion.
Two additional themes are becoming increasingly important in 2026: group restructuring and more proactive approaches to acquisitions of listed companies. Japanese companies are reassessing which businesses they should own, improve or sell as pressure builds around capital efficiency, corporate governance and activist investment. Group restructuring is therefore becoming less of a defensive exercise and more of a mechanism for creating shareholder value.
BCG identifies three major dimensions of this restructuring: business portfolio restructuring, the reassessment of previously acquired businesses and the unwinding of parent-subsidiary listings. The first involves divestitures, carve-outs and the separation of non-core businesses whose strategic rationale within a group has weakened. Companies are increasingly being forced to determine whether an asset would generate greater value if retained, improved under existing ownership or transferred to a new owner.
One example cited by BCG is Kyocera’s carve-out of part of its chemicals business, which is to be acquired by Sumitomo Bakelite. The transaction illustrates how a Japanese company can separate a non-core asset while another corporate buyer uses the business to strengthen its position in higher-value materials, including applications linked to data centres and AI. The logic is no longer simply about the purchase price or traditional synergies, but about identifying the owner best positioned to develop the asset.
The second dimension involves reassessing subsidiaries acquired in previous M&A transactions, particularly overseas businesses. Japanese companies undertook significant international expansion over the past decade, but some acquired assets have failed to generate the expected synergies or returns. Management teams are now facing more explicit choices, including additional investment, leadership changes, governance improvements, operational restructuring or outright disposal.
The third dimension involves the unwinding of parent-subsidiary listings, a longstanding feature of Japan’s corporate landscape that has come under renewed pressure from investors. Parent companies are increasingly being pushed to decide whether listed subsidiaries should remain public, be fully consolidated or be sold to other investors. BCG cites Medipal Holdings’ tender offer for PALTAC as an example of an effort to unwind a parent-subsidiary structure and strengthen group governance.
The approach to acquisitions of listed companies is also changing. Since 2023, when Japan’s Ministry of Economy, Trade and Industry issued its Guidelines for Corporate Takeovers, more proactive acquisition proposals, including unsolicited approaches, have become a more visible part of Japan’s takeover market. In July 2026, METI issued final materials covering interpretations, key points and questions and answers following a public consultation, providing further clarity on the application of the guidelines.
BCG identifies three implications from the rise of proactive takeover proposals. First, potential buyers are increasingly identifying targets based on their own strategic priorities rather than waiting for investment banks to present opportunities, as illustrated by Brother Industries’ tender offer for MUTOH. Second, acquisition proposals increasingly need to explain how the transaction would create growth for the target, rather than focusing solely on synergies for the buyer, as seen in Yokogawa Bridge Holdings’ tender offer for BR Holdings.
The third implication falls on companies that could become takeover targets. Traditional defensive strategies may no longer be sufficient if investors question whether those measures protect management interests or genuinely increase shareholder value. Listed companies therefore increasingly need a full-potential plan that demonstrates how much value they could create independently before accepting an acquisition proposal from another company.
Other transactions show how growth is becoming central to Japan’s takeover market. Brother Industries is using the MUTOH acquisition to strengthen its industrial printing business by combining technology and commercial capabilities, while Yokogawa Bridge sees BR Holdings as a way to expand business opportunities, human-resource investment and digitalisation in construction. The rationale for acquisitions is therefore shifting from a simple question of “how much synergy can be extracted” to “how much growth can be created after ownership changes.”
Japan’s M&A market in 2026 is consequently undergoing a broader change in the role of corporate transactions. From 5,115 transactions in 2025 to a projected 5,260 in 2026, M&A is increasingly being used for business development, global expansion, industry consolidation, group restructuring, governance reform and changes in corporate ownership. For Japanese management teams, M&A is becoming a continuing exercise in deciding which businesses should be developed, improved, separated, sold or acquired rather than a series of standalone transactions. (NB)
