Goldman Sachs sees Japan's reforms driving more deal activity

On March 19, 2024, the Bank of Japan ended its negative-rate regime, raised its short-term policy rate to around 0% to 0.1% from -0.1%, and abolished yield curve control. Inside Goldman, the desks most likely to feel the shift first are Japan coverage, cross-border M&A, sponsor coverage, financing, and restructuring, where more live processes mean more late-night coordination across Tokyo, New York, and Asia.

Why this cycle looks different

Japan is no longer being driven by a single market trade. The Bank of Japan move changed how management teams think about cost of capital, balance-sheet efficiency, and the price of waiting.

The wage backdrop also shifted. Japan’s 2024 spring wage negotiations delivered an average increase above 5% for the first time in 33 years, and the increase was 5.10% including regular wage hikes. Higher pay, together with persistent labor shortages, pushes companies toward strategic investment, productivity spending, and long-term capacity building rather than pure cash hoarding.

Tokyo Stock Exchange reforms have added another layer of pressure. On January 15, 2024, the exchange published a list of companies that had disclosed actions to become more conscious of cost of capital and stock price, following its March 2023 request that Prime and Standard Market companies take action to implement management conscious of cost of capital and stock price. Capital allocation and shareholder dialogue are more visible, giving activists, sponsors, and strategic buyers a cleaner opening to push for change.

Where the transaction flow is concentrating

Japan’s total M&A deal count reached 4,700 in 2024, a record and up 17.1% from 2023, while total deal value hit JPY 19.7 trillion, or about USD 137.1 billion, up 8.0%. Cross-border M&A transactions targeting Japan rose to 208 deals in 2024, up 24.6% year on year, expanding workloads well beyond domestic advisory.

Private equity is part of that buildout. Japan-focused funds raised $8.74 billion in 2024, close to the record $9.3 billion set in 2020, and take-private deals in Japan reached $40.3 billion in 2023, a benchmark that kept sponsors and bankers focused on another step up in activity. The shift widens the book of business from plain-vanilla public-company coverage into sponsor finance, leveraged buyouts, public-to-private work, and follow-on capital raising.

The share buyback data shows how deep the corporate shift now runs. Publicly traded Japanese companies announced 18,036.3 billion yen of buybacks in 2024, nearly double the 9,573.3 billion yen announced in 2023, and Japanese nonfinancial companies posted a record annual buying excess of 7,884.1 billion yen for Japanese stocks. The Nikkei 225 also hit a new all-time high in 2024.

What this means for bankers on the floor

The most valuable desks will be the ones that can stay close to Japan’s boardrooms while still operating globally. That means more pressure on bankers who cover industrials, financial sponsors, capital markets, and restructuring, especially those who can handle cross-border diligence, shareholder messaging, and financing execution without slowing the process down. In a market where every board is being asked to justify capital spending, the ability to move quickly between strategic advice and financing detail becomes a real advantage.

For analysts and associates, the upside is not abstract prestige but more live deal exposure. A Japan pipeline that stays active can mean more pitching, more diligence, and more process management, which is how junior bankers build credibility ahead of bonus cycles and improve exit options into private equity, corporate development, or another advisory seat. The downside is familiar too: more time zones, more weekend materials, and a heavier load when Tokyo, New York, and other Asia desks all need answers at once.

For VPs and managing directors, the competitive edge will come from local knowledge plus global reach. Goldman’s Japan view for 2026 links persistent wage growth and labor shortages to continued economic resilience and firmer M&A activity.