Takayuki Kihira returned to Japan shortly after earning an LL.M. at the Law School in 2006, but he returns to Cornell every couple of years to share his experiences with students and to encourage interest in Japan. For the fall 2015 academic term, he is at the Law School teaching a course on global mergers and acquisitions (M&A). On September 22, he also presented at the weekly Clarke Colloquium.
Kihira is a partner at Mori, Hamada & Matsumoto, one of Japan’s “Big Four” law firms, where he practices in the areas of M&A, corporate and securities laws, and international commercial transactions. His lecture was titled “Recent Developments of M&A Activities and Corporate Governance in Japan.”
“Takayuki Kihira is one of the best mergers and acquisitions lawyers in Japan,” says Annelise Riles, Jack G. Clarke Professor of Far East Legal Studies and Director of the Clarke Program. “In recent years, Japan has seen a large wave of mergers and acquisitions as Japanese companies have gone on a buying spree overseas. It was a great opportunity for our students to hear his perspective on these developments.”
Kihira’s lecture provided an overview of some elements of economics that he considers important for business lawyers to understand. He began by taking the audience through the fluctuations in M&A activity among Japanese companies over the past few decades.
The “Bubble Economy” of the 1980s, he noted, corresponded to a surge of outbound deals as Japanese companies made acquisitions in Hollywood and Manhattan. The bursting of the bubble precipitated “the Lost 20 Years,” a period of deflation and corporate restructuring. As struggling companies sought to unload non-core assets, private equity funds emerged to buy up these properties.
A second spike occurred in the late 1990s during the IT bubble, and the period of 2005 to 2007 saw another surge in M&A activity, with a historic number of management buy outs. In the following years, the Japanese economy dealt with the aftermath not only of “Lehman shock” but also of the Great Earthquake of 2011. In 2012, however, outbound investment was booming, fueled in part by a strong exchange rate.
Kihira explained that M&A was not traditionally viewed as an appropriate corporate strategy in Japan, where strong corporate culture and employee loyalty dominate. Private equity funds, it was feared, would ruthlessly cut employees from acquired companies. As M&A activity proliferated during the post-bubble economy in the 1990s, however, the Japanese grew more comfortable with the practice, he said, and it is now widely considered to be a sound business strategy.
Currently, the yen is down considerably from the favorable 2012 exchange rate, Kihira observed, yet outbound M&A activity has not slackened. He posited that this behavior was due in part to declining population numbers in Japan. With the domestic market shrinking, companies find it necessary to expand internationally, regardless of the exchange rate.
Kihira concluded his presentation by providing an overview of some recent large outbound acquisitions by Japanese companies, highlighting the 2014 Suntory acquisition of Beam Inc. (makers of Jim Beam) and the 2012 Softbank acquisition of Sprint Nextel.
The Clarke Colloquium Series presentations take place each week during the term. Faculty, senior graduate students, and visiting speakers meet to present and discuss works-in-progress on law and culture in East Asia. The informal setting encourages discussion, and the series' focus on new and cross-disciplinary research provides attendees with a nuanced view of Asian institutions and practices. The colloquium is presented by the Clarke Program in East Asian Law and Culture, funded by a gift to Cornell Law School by Jack and Dorothea Clarke.