TOKYO—June 29, 2026 —Japan private equity (PE) continues to be one of the world's most attractive markets for investors, supported by strong returns, a growing pipeline of opportunities and ongoing corporate transformation. As more investors are drawn to the market, however, competition is intensifying and raising the bar for firms seeking to sustain top-tier performance, according to Bain & Company's Japan Private Equity Report 2026 released today. 

The market maintained its strong momentum in 2025. Deal value reached JPY 4.8 trillion, marking the fifth consecutive year that annual deal value exceeded JPY 3 trillion, while exit value rose to a record JPY 2.4 trillion as sponsors worked through older vintages. Large-scale transactions continued to drive activity, with deals valued at more than JPY 100 billion accounting for approximately 70% of total deal value. Take-private transactions remained a key feature of the market, representing around half of total deal value amid a broader increase in delistings supported by ongoing corporate governance reforms. 

"Japan PE has moved beyond being an attractive niche market and established itself as a core destination for global private capital," said Jim Verbeeten, head of Bain & Company’s Japan PE practice. "What makes Japan distinctive is not just the volume of opportunities, but the depth of value creation available across those opportunities. Even high-quality companies often have significant headroom for operational, commercial and strategic improvement, which continues to underpin the market's strong performance." 

Strong performance continues to underpin investor interest. Japan PE outperformed the United States across key return metrics, with median total value multiple (TVM) reaching 2.5x compared with 2.1x in the U.S., while median internal rate of return (IRR) reached 31% compared with 22%. Lower loss ratios, more limited expansion of entry multiples and higher leverage levels have contributed to these returns, while many Japanese companies continue to offer significant opportunities for operational improvement and value creation.  

The combination of strong returns, a large opportunity set and ongoing corporate transformation is attracting an increasingly diverse group of investors. More global and regional PE firms continue to enter Japan, while domestic firms are raising larger funds and expanding their capabilities. As competition for attractive assets intensifies, valuations on competitive deals can be rich, with take-private transactions announced in 2025 frequently involving premiums of 60% to 80%. 

"Japan continues to offer a large universe of opportunities, but competition means investors can no longer rely on market tailwinds alone,” said Bunsho Kure, a Tokyo-based partner from Bain & Company’s Japan’s PE practice. “The ability to identify differentiated opportunities, develop a clear value creation plan during diligence and execute quickly after acquisition becomes increasingly important." 

Against this backdrop, sustaining top-tier returns will require sharper execution across the deal lifecycle. Firms that can move quickly from investment thesis to value creation, systematically prepare for exits and unlock a broader range of operational and strategic improvements will be better positioned to outperform.  

At the same time, artificial intelligence (AI) is emerging as an increasingly important consideration for investors assessing both opportunity and risk. While the impact of AI will vary significantly by sector, investors that can confidently evaluate how AI may reshape competitive dynamics, accelerate value creation or create new sources of advantage may be better positioned to identify differentiated opportunities.  

Japan continues to offer a large and attractive investment opportunity supported by a fragmented corporate landscape, ongoing governance reforms and significant value creation potential. As competition continues to intensify, firms that can consistently generate differentiated insights and execute effectively throughout the investment lifecycle will be best positioned to sustain strong performance. 

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Media contacts:  

Ann Lee (Singapore) — ann.lee@bain.com 

Rachel Ng (Kuala Lumpur) — rachel.ng@bain.com 

Gary Duncan (London) — gary.duncan@bain.com 

Dan Pinkney (Boston) — dan.pinkney@bain.com 

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