Tokyo – June 5, 2025 – Japan continues to be a hotspot for private equity (PE) investors, having cemented a higher baseline of deal activity and attracting growing global investor attention, according to Bain & Company’s Japan Private Equity Report 2025 launched today.

For the fourth consecutive year, Japan surpassed JPY 3 trillion in PE deal value, with 2024 reaching JPY 3.1 trillion, powered by large-cap deals exceeding JPY 100 billion—and more deals crossing the JPY 300 billion mark, with carve-outs and take-privates continuing to dominate deal types. The strong momentum continues into 2025 as Q1 recorded the second highest deal value per quarter in Japan’s PE market history.

Exits also rebounded sharply, hitting JPY 1.9 trillion, similar to 2021, though portfolio aging is still a growing concern.

“We see significant headroom for growth of PE and M&A activity in Japan. The market is offering a large universe of PE targets, driven by a corporate landscape that is more fragmented than in other markets. Also, government and regulators’ continued focus on improving Japan’s competitiveness through corporate governance and the recent M&A code encourage activist activity and support delistings,” said Jim Verbeeten, a Tokyo-based partner from Bain & Company’s Japan PE practice.

“However, in the near term, uncertainty from the tariff situation could dampen deal activity,” said Sebastien Lamy, co-head of Bain & Company’s Asia Pacific PE practice. “Changes in supply-demand dynamics, currency volatility and redirections of trade flows make it harder for PE to properly underwrite value. As we witnessed in past periods of volatility, some measure of delay or slowdown in deal-making is likely.”

Despite macroeconomic uncertainty, LPs continue to view Japan as an attractive investment destination, and one reason is its track record of delivering some of the highest returns globally.

And while other markets are mostly concerned with fundraising, exits, and macroeconomic volatility, GPs investing in Japan surveyed by Bain highlighted that competition is the number one concern, followed by high entry valuations and talent retention and recruitment.

Both domestic and international GPs have continued to grow fund sizes, but global funds are deploying more of their Asian capital in Japan and have been gaining share in capital deployment between 2020 and 2024 compared to the last five-year period. In addition, more international investors are establishing presence on ground.

To win in this increasingly crowded market, Bain emphasizes a disciplined focus on value creation. At the due diligence stage, funds should look at the full potential of a target, and double down on assessing how much of that they can underwrite. Pre-close, they should look to get a head start where possible. During ownership, an agile approach can accelerate value capture while addressing a broader list of levers than may have been part of the underwriting case. Finally, GPs should more proactively plan their exits and invest in articulating the equity story 18–24 months before the planned exit and re-align strategy and management initiatives to maximize value realization.

“With strong tailwinds, government support, and ample investor interest, Japan’s PE market is poised for continued growth. But winning in this environment demands sharper strategies, faster execution, and a laser focus on value creation,” said Azusa Owa, a Tokyo-based partner in Bain’s Japan PE practice.

# # #

Media contacts:

Ann Lee - ann.lee@bain.com

About Bain & Company

Bain & Company is a global consultancy that helps the world’s most ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today’s urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry.