Updated: July 2024, 3

(Updated: January 2021)

I would like to talk about M&A in the transportation industry from the perspective of licensing.

(Please see our specialized page for information on obtaining permits for the transportation industry.)

Barriers to entry in the transportation industry market are extremely high, and there are some industries where new entry is virtually impossible. The main reason why the barrier to entry in the transportation industry is high is① Strict laws and regulationsThat② Requires huge initial investmentThere is a particular thing.

To operate a transportation business, you must obtain permission from the Ministry of Land, Infrastructure, Transport and Tourism. The requirements for obtaining permission are extremely strict, and a business must pass a rigorous examination from the perspectives of people, money, and goods. In addition, the ``financial cost'' of meeting the requirements and the ``time cost'' of meeting the requirements and obtaining permits are extremely high.

As mentioned above, entry into the transportation market is said to be difficult, butM&A may be a solution.. By overcoming high barriers to entry and purchasing the ``business itself'' from companies that have already obtained permission, it is also possible to enter the market at a lower cost than starting up your own company from scratch.

M&A from the “seller side” perspective

● Benefits

・Funds can be raised by selling the business.

・The risk of future losses can be reduced.

・Loss can be minimized by cutting off unprofitable businesses.

・Business continuity is possible through a change of management.

● Disadvantages

・There is a possibility that the contract will be concluded at a lower price than the desired sale price.

・Cultural friction may occur with the company being sold to.

● Notes

・Set a minimum selling price

・Understand the corporate culture of the company you are selling to.

M&A from the “buyer side” perspective

●Benefits

- Entry costs can be reduced by purchasing a business that has already received permission.

- Business transfer approval specific to the transportation industry allows for smooth succession of permissions.

● Disadvantages

- You may have to take over the debts of the company you purchase.　

・There is a possibility of inheriting non-financial risks that cannot be read from financial statements.　

・Due to price negotiation, you may not be able to purchase at the desired price.

● Notes

・Obtaining an expert's opinion on the financial situation of the purchasing company

・Obtaining information not only about financial statements but also about the company's internal situation

・Set an upper limit on the purchase price

What do you think of the above?

We will continue to share various information on M&A related to the transportation industry.