Salient to Investors:

  • Family-run businesses with aging owners and no successor are increasing in Japan as the population shrinks. Japan has 1 million small businesses with 10 or fewer employees, with people in their 70s as the biggest proportion of the self-employed.
  • Nobuo Tomoda at Tokyo Shoko Research said a record 28,943 small to mid-sized companies closed in 2013, with failure to find successors a big reason.
  • The number of smaller companies in Japan decreased 20 percent from 1999 to 2012.
  • Japan’s population declined for a third year in 2013, with 65 and older accounting for a record 25%, and children under 15 accounting for 13 percent.
  • The Small and Medium Enterprise Agency said a family member took over in 42.5% of cases when an owner retired, closely followed by a non-related employee, by someone outside of the company in 14.6% of the cases, and by acquisition in 4% of the cases.
  • Nobuo Sayama at Integral Corp said M&As are commonplace in the US but still in a not very mature stage in Japan.
  • Junko Nishioka at Royal Bank of Scotland said many smaller older companies have unique technologies, but these technologies are not being passed down.

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