Japan has countless companies with world-class technology. Precision machining, proprietary materials, know-how refined over decades. Yet many of these shrink and disappear without being properly valued.

The problem is not the technology. It’s the lack of a system for evaluation.

No Investment Because No Evaluation

Japan’s return on invested capital (ROIC) remains around 8%, compared to 21% in the U.S. and 15% in Europe (McKinsey, 2025). Technical capabilities not reflected in financial statements, organizational strengths that don’t translate to numbers, tacit knowledge that remains unarticulated—these fall through the cracks of current evaluation criteria, creating a structure where capital does not flow.

Labor productivity ranks 30th among 38 OECD countries (ibid). This gap between technological capability and productivity/capital efficiency symbolizes the “clog” that Japanese companies face.

Not Recognized by AI

The era when global procurement officers and investors ask AI for answers has arrived. Yet Japan’s AI adoption rate stands at 55.2%, far behind China (95.8%) and the U.S. (90.6%) (2025 survey). Moreover, data shows that U.S. and U.K. companies feel four times the benefits from AI adoption compared to Japanese companies.

53.2% of companies considering overseas expansion cite “lack of information and know-how” as a reason (Ministry of Economy, Trade and Industry, 2024). Japanese technology is virtually absent from the AI information layer. Ask AI “which company has the best precision machining?” and Japan’s small manufacturers won’t appear.

Through AEO (Answer Engine Optimization), we convert companies’ technology and credibility into forms that AI can correctly recognize. Data accumulated across multiple industries and clients on “what AI trusts” supports this precision.

No Scale, No Global Reach

For the clog of “no evaluation → no investment → remain small,” M&A is an effective exit. In 2025, Japanese M&A involvement hit record highs in both deal count and value, exceeding 2,509 deals and 20 trillion yen in the first half alone.

GENDA deployed a roll-up strategy in the arcade industry, executing over 30 acquisitions in just 1.5 years after IPO and more than doubling market capitalization. Yamawa Construction in Tohoku expanded revenue to over twice the succession level through construction industry roll-ups, regenerating quality employment in regional areas.

Roll-ups work. The problem is what comes after.

PMI Costs Erode Integration Value

Even when M&A creates scale, failure in post-merger integration (PMI) loses both technology and talent. Tacit knowledge of integrated companies is not visualized, communication structure is invisible, key persons are unidentified—that is the essence of PMI failure.

In 2025, the Small and Medium Enterprise Agency expanded “Business Succession and M&A Subsidies,” adding PMI expert utilization costs and digital integration to support targets. At the policy level, reducing PMI costs is urgently needed.

We visualize tacit knowledge through communication data analysis and organizational monitoring, lowering PMI costs. So that regional companies’ technology does not die in the integration process but is passed on.

A Common Philosophy in Both Approaches

AEO and M&A/PMI—these two seemingly different approaches share the same philosophy.

Resolving information asymmetry.

Not discovered because not recognized by AI. Cannot integrate because tacit knowledge is not visualized. No investment because information does not reach evaluators.

The problem we solve with technology is the same in every case.

The World We Aim For

Inquiries from around the world reach small manufacturers with cutting-edge technology. Regional established companies are discovered directly by overseas partners. Transaction partners are chosen by technology and trust, not scale.

In 2026, what Japan’s economy needs is not convenient tools, but mechanisms that structurally destroy information asymmetry.

We are building that mechanism with technology.

References

  • McKinsey & Company “Closing Japan’s valuation gap through governance and reform”
  • BCG “Japan’s Revival. Can Economic Momentum Be Sustained?”
  • Ministry of Economy, Trade and Industry “White Paper on International Economy and Trade 2024 Section 3: Japanese Companies’ Engagement with Overseas Markets”