Friday, July 24, 2009

Changing Japan's M&A culture over a beer?

Strapping two leaky canoes together will not improve buoyancy. And merging two weak companies rarely strengthens the combined entity. M&A is no super glue for struggling enterprises.

Successful M&A activity is a thoughtful, strategic build on a company's core competency.

Nevertheless, Japan's business culture has traditionally assumed that mergers are for the weak and are an admission of failure. As The Economist (July 18, 2009) says about Japanese corporate marriages: "Most deals involve firms in distress."

So the announcement that Kirin and Suntory (both successful Japanese brewers) are discussing a $41 billion merger might signal that a new generation of corporate development thinking is arising within the country.

Indeed many Japanese middle-market firms across all industries were begun after WW II and are led by aging founders. Many of these companies have focused on a contracting local market and do not have scale and capital to compete globally.

Could Japan's M&A attitude be changed over a couple of beers?
February 8, 2010 -- Update...

The Kirin and Suntory merger talks fail to come to fruition. The collapse is viewed as a setback for strategic consolidation and efficiency in Japan.

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