Private equity (transactions)—Japan—Q&A guide

The following Financial Services practice note provides comprehensive and up to date legal information covering:

  • Private equity (transactions)—Japan—Q&A guide
  • 1. What different types of private equity transactions occur in your jurisdiction? What structures are commonly used in private equity investments and acquisitions?
  • 2. What are the implications of corporate governance rules for private equity transactions? Are there any advantages to going private in leveraged buyout or similar transactions? What are the effects of corporate governance rules on companies that, following a private equity transaction, remain or later become public companies?
  • 3. What are some of the issues facing boards of directors of public companies considering entering into a going-private or other private equity transaction? What procedural safeguards, if any, may boards of directors of public companies use when considering such a transaction? What is the role of a special committee in such a transaction where senior management, members of the board or significant shareholders are participating or have an interest in the transaction?
  • 4. Are there heightened disclosure issues in connection with going-private transactions or other private equity transactions?
  • 5. What are the timing considerations for negotiating and completing a going-private or other private equity transaction?
  • 6. What rights do shareholders of a target have to dissent or object to a going-private transaction? How do acquirers address the risks associated with shareholder dissent?
  • 7. What notable purchase agreement provisions are specific to private equity transactions?
  • 8. How can management of the target company participate in a going-private transaction? What are the principal executive compensation issues? Are there timing considerations for when a private equity acquirer should discuss management participation following the completion of a going-private transaction?
  • 9. What are some of the basic tax issues involved in private equity transactions? Give details regarding the tax status of a target, deductibility of interest based on the form of financing and tax issues related to executive compensation. Can share acquisitions be classified as asset acquisitions for tax purposes?
  • More...

Private equity (transactions)—Japan—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to private equity (transactions) in Japan published as part of the Lexology Getting the Deal Through series by Law Business Research (published: December 2020).

Authors: Nishimura & Asahi—Asa Shinkawa; Keitaro Hamada

1. What different types of private equity transactions occur in your jurisdiction? What structures are commonly used in private equity investments and acquisitions?

In Japan, there are several types of private equity fund-related transactions, such as going-private transactions of public companies by private equity funds, private investment in public equity and carve-out transactions. Among them, the most popular private equity transactions in Japan are going-private transactions of listed companies, paired with squeeze-outs of remaining minority shareholders with some members of management of the companies participating in the transactions. In addition, as is often the case with a private equity transaction, a private equity fund usually obtains financing through leveraged buyout (LBO) non-recourse loans to make investments with sufficient leverage.

To take a listed company private, a private equity fund may commence a tender offer with the shareholders of a listed company. However, in practice, it is generally difficult to satisfy delisting conditions of stock exchanges in Japan with a tender offer; accordingly, private equity funds usually proceed with making target companies wholly owned subsidiaries by undertaking transactions to squeeze out minority shareholders.

There are several schemes for

Popular documents