{"id":124630,"date":"2026-01-05T11:45:05","date_gmt":"2026-01-05T11:45:05","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=124630"},"modified":"2026-01-06T11:05:50","modified_gmt":"2026-01-06T11:05:50","slug":"japan-private-equity","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/japan-private-equity\/","title":{"rendered":"Japan: Private Equity"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-124630","comparative_guide","type-comparative_guide","status-publish","hentry","guides-private-equity","jurisdictions-japan"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Anderson Mori &amp; Tomostune<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/AMT_PrimaryLogo_Color-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Anderson Mori &amp; Tomostune<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/AMT_PrimaryLogo_Color-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Private Equity laws and regulations applicable in Japan<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What proportion of transactions have involved a financial sponsor as a buyer or seller in the jurisdiction over the last 24 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Bain &amp; Company&#8217;s 2024 study shows Japan&#8217;s private equity market recorded \u00a53.1 trillion in total deal value, its fourth year above \u00a53 trillion. RECOF Data places Japan&#8217;s total M&amp;A value in 2024 at \u00a522 trillion. Japan\u2019s M&amp;A activity reached record highs in 2024, fueled by private equity investments and corporate divestitures. This surge underscores Japanese corporations&#8217; efforts to streamline operations, shed non-core businesses, and embrace innovation and diversification. Private equity firms have emerged as influential players in Japan\u2019s M&amp;A market, capitalizing on undervalued assets and favorable financing conditions. Listed companies are increasingly facing pressure from shareholder activism, as investors push them to unlock value and focus on their core competencies. The shareholder activism is one of the key factors which is driving PE\u2019s acquisition activities in Japan.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the main differences in M&A transaction terms between acquiring a business from a trade seller and financial sponsor backed company in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Sponsor deals typically provide greater price certainty for sellers and feature more sponsor-friendly execution mechanics: locked-box structures or tightly negotiated completion accounts, minimum closing conditions, reduced warranty protection often supplemented by W&amp;I insurance. When Japanese corporations sell, they commonly require the purchaser to commit to maintaining employment and employment terms for the employees of the acquired business for a specified period after closing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">On an acquisition of shares, what is the process for effecting the transfer of the shares and are transfer taxes payable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Assuming this is an acquisition of shares in a private company. The usual process is: (i) execution of a share purchase agreement (SPA); (ii) obtaining required corporate approvals (many Japanese stock companies (kabushiki kaisha, KK) require board and\/or shareholder approval for a share transfer); (iii) updating the company\u2019s shareholder register and delivering share certificates (if the company issues share certificates); and (iv) completion of payment.<\/p>\n<p>Please note that, for some transactions, regulatory approvals (e.g., merger filings, FDI filings under the Foreign Exchange and Foreign Trade Act, sector specific approvals, etc.) may be necessary prior to closing.<\/p>\n<p>No specific transfer tax applies to the transfer of shares in a Japanese kabushiki kaisha (KK). Any tax liability of the seller (for example, capital gains tax or corporate income tax) will depend on the seller&#8217;s tax residence\/status and the precise transaction structure; specialist tax advice should therefore be obtained.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do financial sponsors provide comfort to sellers where the purchasing entity is a special purpose vehicle?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In practice, financial sponsors rarely provide full parent guarantees. Instead, they typically provide equity commitment letters (and, where applicable, limited guarantee letters if closing fails) from the fund or the general partner (GP), together with debt commitment letters from lenders.<\/p>\n<p>Additionally, sellers will occasionally require that part of the purchase price be placed in escrow to secure the buyer\u2019s post-closing indemnity obligations to the seller.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is the use of locked box pricing mechanisms in your jurisdiction and in what circumstances are these ordinarily seen?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Japan, transactions have historically used a \u201cquasi\u201d locked box mechanism. While such arrangements typically include negative covenants to prevent cash extraction from the target between signing and closing, they often lack clearly defined concepts of the &#8220;Locked Box Account Date&#8221; and &#8220;Leakage&#8221; that underpin a true locked box. More recently, normal form locked box structures have become increasingly common\u2014particularly in deals involving sophisticated financial sponsors. Completion accounts are also widely used in the Japanese market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the typical methods and constructs of how risk is allocated between a buyer and seller?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Representation &amp; warranties with negotiated caps, baskets and thresholds; escrow arrangement; indemnities for specific liabilities (tax, title, environmental); survival periods (general reps often 12\u201324 months; \u201cfundamental\u201d reps such as title\/tax may survive longer or be subject to separate arrangements); disclosure schedules; and fraud carve outs are well seen mechanism to allocate the risks between sellers and buyers.<\/p>\n<p>Allocation is also effected by purchase price adjustments, W&amp;I insurance (see Q7) and contractual covenants.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent is the use of W&I insurance in your transactions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>W&amp;I insurance has become prevalent in Japan, notably in private equity sponsored transactions. PE sellers commonly employ W&amp;I policies to cap potential post closing liabilities. While W&amp;I was historically uncommon in smaller domestic transactions because premiums were disproportionate to deal size, Japanese insurers have, over roughly the past five years, introduced competitively priced W&amp;I products that are viable for smaller transactions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How active have financial sponsors been in acquiring publicly listed companies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Financial sponsors have increasingly pursued take private transactions in Japan, a trend that accelerated in the wake of corporate governance reforms and waves of shareholder activism. Listed companies now face heightened pressure from investors to unlock shareholder value and refocus on core competencies, a development that has contributed materially to the expansion of private equity driven M&amp;A activity.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Outside of anti-trust and heavily regulated sectors, are there any foreign investment controls or other governmental consents which are typically required to be made by financial sponsors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign Exchange and Foreign Trade Act (FEFTA) requires either prior notification or a post facto report for certain inbound investments. In principle, investments in specified sensitive sectors (for example, critical infrastructure, defence related technologies, and certain personal data processing activities) require a prior notification and are subject to a subsequent review period (typically 30 days). Investments in non sensitive sectors generally only require a post facto report. Note that there are exceptions to the prior notification requirement \u2014 for example, passive investments by foreign licensed banks or securities firms may be exempt.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is the risk of merger clearance normally dealt with where a financial sponsor is the acquirer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Hell or high water obligations (including divestiture undertakings or behavioural remedies) are typically negotiated but seldom remain in the final documentation for transactions involving financial sponsors. Sellers commonly seek reverse break fees; sponsors will sometimes agree to them where the perceived regulatory or execution risk is low, or where competitive auction dynamics make acceptance commercially necessary.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have you seen an increase in (A) the number of minority investments undertaken by financial sponsors and are they typically structured as equity investments with certain minority protections or as debt-like investments with rights to participate in the equity upside; and (B) \u2018continuation fund\u2019 transactions where a financial sponsor divests one or more portfolio companies to funds managed by the same sponsor?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>(A) Minority investments: Yes \u2014 Private equity players are more frequently making minority growth investments in later stage startups in Japan. These investments are generally structured as equity with tailored minority protections set out in the shareholders\u2019 agreement \u2014 for example, veto rights on key governance and financial decisions, inspection and information rights, board representation or observer seats, anti dilution and pre emptive rights, and tag along\/drag along provisions. In some cases, convertible debt is used to participate in upside.<\/p>\n<p>(B) Continuation funds: GP led continuation transactions (i.e., transactions in which private equity sponsors re place mature portfolio companies into continuation vehicles to prolong investment horizons or facilitate secondary liquidity for exiting LPs) have recently emerged in Japan and appear to be in the early stages of growth.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are management incentive schemes typically structured?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In PE-backed transactions in Japan, management incentive schemes typically take the form of stock options, restricted stock, or \u201cphantom equity\u201d (synthetic equity) designed to align management\u2019s economic incentives with the fund\u2019s exit objectives (IPO or trade sale). Common design features include cliff or graded vesting, performance or time-based vesting conditions, change of control acceleration, and contractual buy back mechanics on certain exits or terminations to manage post exit ownership and liquidity. Additional elements often addressed are transfer restrictions and forfeiture for misconduct. In practice, the specific instrument chosen reflects liquidity expectations, tax efficiency, governance simplicity, and negotiations with management \u2014 phantom equity can be easier to implement where share transfers are constrained (e.g., pre-IPO), while equity grants may be preferred where long-term ownership alignment and potential capital gains treatment are desired. Documentation typically includes an incentive plan, individual grant letters or agreements, and related employment or service agreements to tie performance, vesting and termination consequences into a coherent package.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any specific tax rules which commonly feature in the structuring of management's incentive schemes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Tax considerations are pivotal to incentive plan design. Under typical scenarios, value realized from share or option grants can be taxed as employment income at grant, exercise, or vesting depending on instrument design and whether certain conditions for deferred taxation apply. By contrast, post-sale proceeds on disposal of shares are generally treated as capital gains and taxed under different (often more favorable) rules. Consequently, a central structuring objective is to align tax timing with liquidity events so that managers do not face substantial income tax liabilities when no cash is available, and where permissible, to structure outcomes so that part of the upside is taxed as capital gain rather than salary. Specific tax regimes, exemptions or qualified share option regimes (where available) can materially affect outcomes. Given complexity and frequent regulatory updates, plan terms should be validated with local tax advisors early in the design process.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are senior managers subject to non-competes and if so what is the general duration?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. It is common to impose non compete and confidentiality covenants on senior managers both during employment and for a limited post termination period. Typical post termination durations in Japan range from one to three years, calibrated by the seniority of the role, the sensitivity of business information, and the anticipated risk of competitive harm. Longer periods may be proposed, but judicial scrutiny may result in reduction to a \u201creasonable\u201d period based on factors such as duration of employment, business nature, geographic scope and whether adequate consideration or compensation is provided for the restriction.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How does a financial sponsor typically ensure it has control over material business decisions made by the portfolio company and what are the typical documents used to regulate the governance of the portfolio company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A sponsor secures effective control through a combination of equity stakes and contractual protections. Key mechanisms include board composition and appointment rights (majority control or the ability to appoint a controlling slate) and shareholder veto\/consent rights over reserved matters (e.g., M&amp;A, annual budgets, material capex, capital raises, related party transactions, changes to share capital or governance documents). These rights are typically implemented and coordinated through a package of governance documents: the shareholders\u2019 agreement (SHA) that sets out reserved matters and transfer mechanics; amendments to the articles of incorporation; subscription or purchase agreements; management or executive service agreements (covering remuneration, duties and consent rights); and ancillary documents such as tag-along\/drag-along rights, pre emptive rights and information\/inspection rights. The SHA and related documents are negotiated to create an integrated, enforceable governance framework that balances control, minority protections and exit mechanics, and to ensure operational clarity between board responsibilities and shareholder-level vetoes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it common to use management pooling vehicles where there are a large number of employee shareholders?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Pooling vehicles \u2014 for example an employee shareholding association or trust \u2014 are more common in listed companies but sometimes seen in portfolio companies of PE funds, where many employees hold or will hold interests. Such vehicles simplify administration (vesting tracking, tax reporting, distributions), reduce the number of counterparties for sponsor governance and buy back mechanics, and can streamline liquidity events. In PE settings they are useful where direct shareholding would create operational complexity. Important considerations include whether the structure triggers regulatory obligations (notably investor protection rules under the Financial Instruments and Exchange Act), the tax consequences to participants and the vehicle, and clear rules for handling departing members\u2019 interests (valuation, buy backs, transfer restrictions). Proper documentation and review by legal and tax advisers are essential to ensure compliance and to avoid unintended regulatory or tax exposures.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most commonly used debt finance capital structures across small, medium and large financings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Secured senior loans are the most common source of debt financing across acquisitions of all sizes. In smaller transactions, senior loans are sometimes provided as bilateral bank loans, whereas in larger deals they are typically syndicated among banks and other financial institutions. In medium- to large-sized transactions, mezzanine financing is frequently used alongside senior loans. Mezzanine financing commonly takes the form of (i) subordinated loans to the borrower, (ii) payment-in-kind (PIK) loans to the holding company, or (iii) non-voting preferred shares.<\/p>\n<p>Financing through corporate bonds is less common for acquisitions, since secured bonds require the involvement of a bond trustee to administer the security under the Secured Bond Trust Act of Japan.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is financial assistance legislation applicable to debt financing arrangements? If so, how is that normally dealt with?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Japanese law, there are no explicit statutory restrictions on providing financial assistance or corporate benefits that would apply to the upstream guarantee. There are also no statutory limitations on downstream and cross-stream guarantees. However, if there is any minority shareholder of the guarantor company, it is commonly understood that the guarantor company providing the upstream guarantee may constitute a breach by the directors of the guarantor company of their fiduciary duties. A solution commonly adopted in practice is to obtain consent from all minority shareholders for the upstream guarantee. In a transaction where it is difficult to obtain such consent from all minority shareholders (e.g., if the guarantor company is a listed company), it is common practice to withhold providing an upstream guarantee until a squeeze-out of minority shareholders is completed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">For a typical financing, is there a standard form of credit agreement used which is then negotiated and typically how material is the level of negotiation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Japan, many acquisition financings use the Japan Syndication and Loan Trading Association\u2019s (JSLA) standard facility agreement forms. Compared with global templates (e.g., the Loan Market Association\u2019s LMA form), traditional Japanese forms impose broader negative covenants without default carve\u2011outs, giving lenders greater discretion over drawdowns and waivers. Lead arrangers often act as facility agent and as the target group\u2019s main (relationship) bank, and are generally willing to approve exemptions and waivers for non\u2011material breaches. Recently, inbound PE sponsors increasingly request LMA\u2011based agreements or the inclusion of borrower\u2011friendly terms common in the global market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What have been the key areas of negotiation between borrowers and lenders in the last two years?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The conditions precedent to drawdown are among the most heavily negotiated provisions. Typical conditions in Japanese acquisition financings include:<\/p>\n<p>\u2022 no breach of the finance documents by the borrower and target group;\u2022 no event of default;<br \/>\n\u2022 no material adverse change in the target group\u2019s assets, financial condition, business or prospects (Target MAC); and<br \/>\n\u2022 no material adverse change in financial or market conditions (Market MAC).<\/p>\n<p>Recently, sponsors have pushed to limit the number of CPs by adopting \u201ccertain funds\u201d provisions commonly used in US\/UK deals. Sponsors typically seek, for example:<\/p>\n<p>\u2022 exclusion of target-related matters from the scope of representations, undertakings and events of default required as CPs; and<br \/>\n\u2022 removal of the Target MAC and Market MAC from the CP list.<br \/>\nThis trend is especially common in transactions involving global sponsors (and major co investors) or foreign sellers.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Have you seen an increase or use of private equity credit funds as sources of debt capital?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. Private credit funds are increasingly used as a source of acquisition debt, though their overall number remains limited. Because direct lending would require a money\u2011lending business license in Japan, these funds often provide capital by acquiring existing loans (for example, via loan assignments or loan participation agreements) or by underwriting corporate bonds registered with JASDEC.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">2697<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/124630","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=124630"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}