Lack of Successors at 61%, Threatening 6.5 Million Potential Job Losses by 2025

The President is 70 ～80s to 80s Many companies with presidents in their 70s to 80s have “no successors.” ……Bankruptcy due to inability to pay for expensive business transfer M&A

A survey shows that more than 60% of managers in companies, including small, medium, and micro enterprises, have no successors. Small, medium, and micro enterprises may go bankrupt due to lack of successors as a result of the sudden ill health or death of the manager. There is a movement among managers to seek a successor from outside the company as early as possible and to buy and sell the company, but various issues remain.

Bankruptcy due to lack of successors also affects the local economy.

It can lead to a decline in the local economy, as it can cause employment problems for part-timers, employees, and other local workers,” said one business owner who spoke at the Tokyo Shoko Research Institute.

This can lead to a decline in the local economy,” says Yoshihiro Sakata, manager of the Information Division of Tokyo Shoko Research Institute. Many small, medium, and micro business owners, who do not have a retirement age like large corporations, say that they will work while they are still healthy. Mr. Sakata says, “Even if a manager is healthy now, he or she must be aware of whether the company will continue to exist and, if so, what to do about successors.

Sakata points out that one of the reasons for this difficulty in finding successors is that “managers are getting older.

The national government, too, is becoming increasingly aware of the crisis and is taking steps to address the problem. According to a study by the Small and Medium Enterprise Agency, it is estimated that the number of small and medium-sized business owners over the age of 70 will be approximately 2.45 million by 2013, and about half of them, or 1.27 million, will have no successor in mind. If this is left unchecked, the number of business closures will skyrocket, which could result in the loss of a cumulative 6.5 million jobs and approximately 22 trillion yen in gross domestic product (GDP) by ’25.

Some small and medium-sized enterprises (SMEs), such as small factories, have supported Japan’s manufacturing industry with their superior technologies, and the succession of these technologies is also becoming an issue.

The reason for the reluctance of M&A for business transfer is “public perception”!

Mergers and acquisitions (M&A) is a method of transferring companies as they are. The M&A intermediary business is to find and connect sellers and buyers of companies. A man in his 50s who is engaged in that business after retiring from a major bank also targets companies without successors for M&A. He points to “public perception” as the reason for the reluctance of business owners to use this method of business transfer, and explains as follows.

There is still an image of ‘the sword breaks, the arrow runs out, and the company is defeated.

The situation is changing, as some owner-operated companies have recently been forced to sell because they have no successors and are being pushed out by their employees.

Last year, the “no successor rate” was approximately 61%, up 1.19 percentage points from the previous year and exceeding 60% for the first time since the survey began. Tokyo Shoko Research surveyed approximately 171,000 companies. While the number of young managers of startup companies, for whom the issue of successors is less pressing, has increased, the survey also points out that there is concern that the death or ill health of an elderly manager and the absence of a successor may lead to bankruptcy.