The tail that wags the dog

Author: | Published: 1 Oct 2007

With proper planning, leveraged buyouts are readily achievable in Japan. However, few parties outside Japan are aware of several aspects of local law that may have an adverse effect on the economics and logistics of a leveraged buyout transaction in which a Japanese subsidiary is included among the acquired companies. From the perfection of security interests to corporate governance, local laws complicate transactions in Japan. As a result, in the worst case, a Japanese subsidiary  can become the tail that wags the dog.

As in every jurisdiction, proper planning requires consideration of the potential Japanese legal issues. These are equally relevant if the Japanese company is the primary target, or if it is a minor subsidiary of a multinational group. Even if the primary target is located outside Japan, Japanese law issues should be considered throughout the process, from the earliest planning stages through the post-closing operation of the target,...