Japanese family businesses are facing a succession crisis, fueling a private equity boom

Japan Inc. is confronting a ticking demographic time bomb, and private equity players are racing to defuse it. Across the country, ageing business owners are facing a dual reckoning: heirs not interested in taking over the family business, and steep inheritance taxes. For many family businesses, rooted in the tradition of handing over the reins to the next generation, a once-taboo option is fast becoming a viable alternative: selling to private equity. According to Bain & Co., Japan's private equity market has now topped 3 trillion yen ($20 billion) in annual deal value for four consecutive years. On a year-to-date basis, deal activity in Japan has jumped over 30% to $29.19 billion year on year, data from PitchBook shows. Much of this deal flow is being driven by a massive wave of family-o