COVID-19 impact on cross-border M&A advisory business in Japan

Abstract

Purpose

The purpose of this study is to shed light on the impact of the COVID-19 pandemic on cross-border M&A advisory business in Japan.

Design/methodology/approach

Using the grounded theory approach and trust embedded in network theory, the authors conducted interviews with 12 Japanese senior M&A advisors from 8 different advisory firms, categorizing the results into three general themes.

Findings

The first theme comprises deep insights contributing to a “decrease in M&A deals” during the COVID-19 crisis as not many deals could be advised while several were canceled. The second theme is “time delays,” with ongoing deals taking more time to be completed. The third gen-eral theme concerns the “new normal” after the COVID-19 era, as M&A advisors have learned to cope with their challenges and are subsequently more efficient, especially time-wise, in dealing with clients.

Research limitations/implications

The research was based on qualitative data gathered from only 12 interviewees from 8 different consultancies who were Japanese senior M&A advisors.

Practical implications

The practical implications of this research go beyond the findings of M&A studies conducted during and soon after the COVID-19 pandemic. Consulting firms commonly report on the COVID-19 impact on M&A markets or client firms but are silent about their own hardships in establishing trustful relationships with clients during the COVID-19 pandemic. In contrast, we turn the spotlight on the consulting firms themselves to understand their challenges.

Originality/value

The originality of this research goes beyond previous studies on the economic impact of firms; the authors lay out the foundation for the hardship of establishing trustful relationships between M&A advisors and their clients during the COVID-19 crisis. The three general themes elucidated the impact of the pandemic, highlighting the challenges confronting the Japanese M&A advisory business. These themes thus provide a more nuanced understanding of the COVID-19 impact.