As the number of companies without successors grows, demand for succession solutions among small and midsize companies is expanding. While succession through M&A is spreading, policy reforms and market regulation are also advancing, involving the entire value chain, including intermediaries, buyers, consultants and funds.
The Small and Medium Enterprise Agency's 2019 estimate that 1.27 million companies would have no successor by 2025 is beginning to materialize as a rise in bankruptcies. Data from Tokyo Shoko Research show that bankruptcies due to a lack of successors totaled 263 in the first half of fiscal 2026, up 23.4% year on year and a record high. Meanwhile, Teikoku Databank says the number of companies without successors remains high at approximately 138,000. As a result, companies with solid performance but no successor are disappearing.
M&A is expanding as a solution, with RECOF Data recording a record 5,115 M&A transactions involving Japanese companies in 2025. M&A and similar transactions accounted for 20.6% of successions among companies that changed representatives, reflecting a shift in attitudes from passing businesses on to children to entrusting them to outside parties.
On the policy front, the Small and Medium Enterprise Agency compiled the SME M&A Market Reform Plan in August 2025, positioning M&A as a means of growth. The deadline for submitting special succession plans was extended to the end of September 2027 under the FY2026 tax reform, lengthening the period for reducing the tax burden on share transfers and intensifying efforts to identify reliable support organizations.
From an investment perspective, companies that capture succession demand are spread across every area of the value chain. The article introduces an independent ranking of 20 companies listed on the Tokyo Stock Exchange across five categories: intermediaries, platforms, consultants, funds and buyers.