Tokyo Stock Exchange to Introduce New Rules for MBOs to Prevent Low Valuations Amid $230 Billion M&A Boom in January 2025

The Tokyo Stock Exchange (TSE) is set to introduce new rules aimed at preventing unfairly low valuations in management buyouts (MBOs). This move comes in response to longstanding concerns regarding the squeeze-out thresholds and fairness processes that have negatively impacted minority shareholders in Japan. Industry observers suggest that these new regulations could lead to an acceleration of MBOs as bankers rush to finalize deals before stricter rules are implemented. The TSE's initiative is viewed as a significant step toward enhancing fairness for minority investors, potentially reducing the incentive for MBOs or improving their valuations. Additionally, the M&A market in Japan is experiencing a boom, with reported transactions reaching $230 billion, indicating a growing interest from private equity firms.