Japan M&A Center fires employee in charge of inappropriate brokerage incident

An inappropriate intermediary case was discovered at Japan M&A Center, the largest intermediary that connects buyers and sellers in M&A (mergers and acquisitions). The company fired the employee in July after circumventing measures put in place by industry groups to prevent problems.

The Association of M&A Support Organizations, an industry organization whose representative director is the company's top management, began operating a ``Specified Business Operator List'' in 2024 with the aim of eliminating ``inappropriate buyers.'' The system registers buyers who have had problems, such as overpaying for retirement benefits or stocks, or those who have been deemed to have improperly withdrawn funds, and members use this information as a reference when making transactions.

Asahi Shimbun reported in 2014 that even after the owners and managers of small and medium-sized enterprises sold their company stock through M&A, they were unable to receive a ``manager's guarantee,'' which acts as a joint guarantor for bank loans, etc., resulting in a series of troubles in which they continued to be responsible for the company's debts. For this reason, the association has decided that buyers who do not remove the guarantee within 60 business days after the stock transfer will be automatically registered on the list.

A new problem arose in November last year when the shares of a company in the Tohoku region were transferred. As of March of this year, more than 100 million yen worth of guarantees remained, but the Japan M&A Center's intermediary staff and the buyer's side encouraged the seller's president to falsely reply to a phone call from the Center's department in charge that the guarantees had been canceled, saying, ``All of them have been cancelled.'' The seller told me on the first call that it had not been canceled, but on the second call he revised his answer and said, ``All of them have been canceled.''

As a result, buyers avoided being added to the list even though the warranty had not actually been removed. The problem was subsequently discovered in late June when the seller sent a lawyer's notice to the buyer and the Japan M&A Center requesting that the warranty be canceled.

The seller's attorney, Kentaro Shibata, pointed out that the move "violates the obligation of neutrality and impartiality." While sellers tend to only make one-time transactions, buyers may become repeat buyers who repeatedly acquire companies, so ``there may be a structural problem where (intermediaries) are trying to protect their valued customers,'' he said.

“Obligation to make efforts” contract

Japan M&A Center was interviewed...