Japan is considering reforms to its accounting treatment of goodwill amortization to stimulate merger and acquisition (M&A) activity, particularly among startups and smaller firms. Under current Japanese Generally Accepted Accounting Principles (J-GAAP), companies must regularly amortize goodwill, which reduces reported operating profits and acts as a barrier to acquisitions. This amortization is non-deductible for tax purposes, further impacting earnings. The Japanese government’s regulatory reform council is exploring eliminating the requirement for goodwill amortization, a move expected to enhance corporate vitality and encourage M&A transactions. Chris Grose, global co-head of technology investment banking at J.P. Morgan, anticipates an acceleration of M&A activity into 2026. Meanwhile, discussions on reforms to the Tokyo Stock Exchange Growth Market, which began in early 2023, continue with a meeting scheduled for July 2025. Japan’s consensus-driven approach suggests that implementation of these reforms may take one to two years.