I was preparing a note on Strike (6196). The thesis was straightforward:
Rising M&A volume
From January–September 2025, disclosed deals by listed companies rose 11% y/y to 985. Including private transactions, Strike estimates ~11,000 deals in 2024 (2018–24 CAGR: 7.6%). Successor-seeking M&A should remain strong as SME owner ages rise (60.9 in 2015 → 63.6 in 2024). Brokers are natural intermediaries, but the industry has faced scandals.
Key scandals
Nihon M&A Center (2021–22): 83 cases of premature revenue recognition, some with forged contracts.
Lucien Holdings (2021): ~30 SME acquisitions failed due to cash extraction, poor management appointments, and unreleased guarantees.
These led to new government guidelines and tighter self-regulation:
Transparency on fees and service scope
Standardized contracts and disclosure of advisor experience
Restrictions on misleading advertising
Shared lists of problematic buyers
Compliance with updated SME M&A Guidelines for subsidy eligibility
Reduced personal guarantees and stronger post-M&A follow-up
Major players, including Strike, have strengthened compliance. Yet regional banks may be better positioned to support ageing SME owners. Many are building dedicated M&A and succession-advisory units.
Why Regional Banks May Be Better?
1. Local relationships and aligned incentives
Banks have long-term ties with SMEs and care about regional economic health, not just fees. In succession deals—where staff, customers, and reputation matter—this alignment reduces risk.
2. Better screening and monitoring
Banks hold credit files, loan histories, and risk data, offering more complete information than brokers who mainly originate and market deals.
3. Lessons from past failures
Japan has seen M&A write-offs from weak diligence and aggressive structuring. Banks’ conservative approach helps avoid these pitfalls.
4. Policy support
Government programs—succession centers, fee subsidies, financing tied to SME M&A Guidelines—encourage orderly deals. Banks can bundle advisory and lending, making execution smoother.
This is why I stopped writing the Strike note. Brokers may benefit from rising activity, but I currently prefer regional-bank names such as Bank of Nagoya (8522) and Kyoto Financial Group (5844).
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