Business Succession
Carry the company you built
into the next ten years.
Business succession can take five to ten years once you include the time needed to develop a successor. The moment you think “it’s still too early” is exactly when you have the most options. From valuing your company’s shares and estimating inheritance and gift tax to drawing up a succession plan, our Certified Public Accountant and Tax Accountant works alongside both the current owner and the successor.
- Does any of this sound familiar?
- Why preparation needs to start now
- Succession is more than handing over shares
- Three ways to hand over your business
- How Tokyo Mirai Accounting can help
- Five steps to succession and how we support each one
- Our business succession services
- 3-minute business succession self-check
- How the consultation works
- Frequently asked questions
- Free initial consultation on business succession
Does any of this sound familiar?
Because succession is also a family matter, many business owners end up carrying it alone.
- I don’t know where to start
- I don’t know who to ask for advice
- I have no idea what my company’s shares are worth
- I haven’t yet asked my children whether they want to take over
- I have no successor and want to consider employees or an outside buyer
- I worry that shares and assets will cause disputes among my heirs
- I’m not sure how to hand over my personal guarantees on company loans
- My heirs live overseas, or I hold assets outside Japan
If even one of these applies, now is the time to start preparing.
Why preparation needs to start now
Japan’s Small and Medium Enterprise Agency recommends that owners begin preparing for succession around the age of 60.
The average age of business owners in Japan has risen steadily and passed 60 for the first time in 2020.
Share of companies that closed or dissolved even though they were profitable in their final fiscal year.
Share of companies that needed three years or more from choosing a successor to completing the handover. Some took over ten years.
Share of owners planning to close who said their business could at least be maintained for the next ten years.
Source: Surveys cited in the Small and Medium Enterprise Agency’s “Business Succession Guidelines (3rd edition)”, revised March 2022.
Succession is more than handing over shares
Business succession means passing on the business itself. The resources to be handed over fall into three broad categories.
People (management)
Who will lead the company: selecting and developing a successor and transferring management control.
- Selecting and developing a successor
- Dialogue with the successor
- Gradual transfer of authority
Assets
Transferring company shares and business assets in a way that takes the tax burden into account.
- Company shares and business assets
- Funding (working capital, borrowings)
- Separating the owner’s personal and company affairs
Intellectual assets
Passing on the strengths and sources of value that never appear in the financial statements.
- Management philosophy and the owner’s credibility
- Relationships with clients and customer information
- Employees’ skills and know-how
Three ways to hand over your business
Succession within the family is declining, while succession to employees and to outside parties (M&A) is increasing. You are welcome to consult us even if no successor has been decided.
Within the family
Handing over to a child or other relative. It is readily accepted by stakeholders and allows a long preparation period. Planning for inheritance and gift tax, and fairness to other heirs, are key.
To employees or executives
Handing over to a non-family executive or employee. It helps keep management policy consistent, but funding the share purchase and gaining the agreement of family shareholders can be challenges.
To an outside party (M&A)
Transferring the company to a third party through a share or business transfer. Finding a buyer and negotiating takes time, so it is important to start increasing corporate value early.
How Tokyo Mirai Accounting can help
Transferring assets in a succession is technical and wide-ranging. Consulting a tax professional at the start of your preparation pays off.
Yoshihiro Horiki
Certified Public Accountant / Certified Public Tax Accountant
- Founded Tokyo Mirai Accounting in 2023 after working at Ernst & Young ShinNihon LLC
- MBA (Finance), Waseda Business School; graduate of Arizona State University, W. P. Carey School of Business
- Areas of expertise: business succession, inheritance, business valuation, international taxation
- Certified Management Innovation Support Organization (METI) / Member of the TKC National Federation
- A CPA’s view of what your company is worthBeyond share valuation for tax purposes, we draw on business valuation expertise to compare share value and tax burden across each succession option, from family succession to M&A.
- Monthly visits and business planning to strengthen your companyThrough monthly on-site visits and business planning with the TKC Continuous MAS system, we help build a company your successor will want to take over.
- Cross-border matters handled with careDepending on the residency and nationality of the owner and heirs, Japanese inheritance and gift tax may also apply to assets held outside Japan. We draw on our international tax experience to organize these issues.
- Working with partner professionalsWe work together with our partner judicial scrivener.
Five steps to succession and how we support each one
We follow the five steps set out in the Small and Medium Enterprise Agency’s Business Succession Guidelines.
-
STEP1
Recognizing the need to prepare
It starts with the owner recognizing the need to prepare early.
Our support: In a free initial consultation, we sort out your situation and issues and clarify where to begin. -
STEP2
Understanding the business and its issues
We review the company’s financial position, strengths and weaknesses, and the relationship between the owner and the company (loans, collateral, guarantees).
Our support: We review your financial statements, value your company’s shares, and estimate inheritance tax, putting the issues into numbers. -
STEP3
Improving the business
We strengthen the core business and financial position so that the company is worth taking over.
Our support: Through monthly visits, monthly closing and business planning, we help reduce excessive debt and dispose of assets not needed for the business. -
STEP4
Drawing up a succession plan (or matching, for M&A)
Together with the successor, we set out when and how the shares, business assets and representative authority will be handed over.
Our support: We build a ten-year succession plan together with both the current owner and the successor. -
STEP5
Executing the succession
The shares, business assets and management control are handed over according to plan, which is reviewed as circumstances change.
Our support: We handle tax procedures such as gift and inheritance tax returns and continue to support the business after the handover.
Our business succession services
We propose only what your situation requires.
Share valuation and simulations
We value your shares and show how the tax burden changes depending on the timing and method of succession.
Inheritance and gift tax planning
We review the owner’s personal assets as a whole and consider how to make lifetime gifts and prepare funds for tax payments.
Business Succession Tax System
We assess whether the deferral and exemption of inheritance and gift tax on unlisted shares can be applied to your company.
Succession planning
We create a plan covering the company’s medium- to long-term goals and the actions required of the owner, the successor and the company.
Visualizing and improving the business
Based on accurate financial statements and monthly figures, we support improvements before the handover.
Corporate valuation for M&A
If you are considering a sale to an outside party, we estimate corporate value as a reference for the sale price and calculate your after-tax proceeds.
* The Business Succession Tax System has requirements and deadlines, and its treatment may change with tax reforms. We confirm eligibility case by case under the latest laws and regulations.
3-minute business succession self-check
Based on the questions in the Small and Medium Enterprise Agency’s self-diagnosis checklist. Your answers are processed only on this screen and are never sent anywhere.
How the consultation works
Start by telling us about your situation. A consultation does not oblige you to sign any contract.
Contact us
Let us know your preferred dates by phone or using the form below.
Free initial consultation
We hear about your company and succession situation and outline the issues and a direction forward.
Review and estimates
Based on your financial statements, we value your shares, estimate the tax burden, and provide a proposal and quote.
Planning and execution
Once you are satisfied, we support you through drawing up and carrying out the succession plan.
Frequently asked questions
I haven’t thought about it in concrete terms yet. Can I still consult you?
Yes. In fact, we recommend consulting us early. Putting off preparation gradually removes options that would have been available with more time. We are happy simply to help you work out where to start.
I haven’t decided on a successor.
You can consult us before a successor is decided. We will look together at whether there are candidates among your family, executives or employees, as well as the possibility of handing over to an outside party (M&A).
I haven’t spoken to my children yet. Can I consult you without my family knowing?
Yes. The first consultation can be with the owner alone. As a CPA and tax accountant bound by professional confidentiality, we handle everything you tell us with strict care. We can also help you think about when and how to approach a potential successor.
I already have a tax accountant. Can I still consult you?
Yes. We handle everything from ongoing advisory engagements to one-off consultations, including standalone advice on business succession.
Can my heirs living overseas be involved?
Yes. Heirs living outside Japan or assets held overseas can affect inheritance tax and filing procedures. Please let us know the situation at your first consultation and we will organize the points to consider.
Is there a fee?
The initial consultation is free. If you ask us to carry out specific work such as share valuation or succession planning, we will provide a quote in advance and begin only once you agree. See our Fee page for reference fees for inheritance and gift tax returns.
Free initial consultation on business succession
Let’s talk about what succession would look like for your company. Feel free to get in touch.
Book by phone
+81-3-6271-8706Hours: 10:00–18:00 JST
(closed weekends and Japanese holidays)
Tokyo Mirai Accounting
4-16-6-903 Hongo, Bunkyo-ku, Tokyo 113-0033, Japan
Personal information you provide is used only to respond to your enquiry and is handled appropriately under our duty of confidentiality.
This page draws on the Small and Medium Enterprise Agency’s “Business Succession Guidelines (3rd edition)” (March 2022) and “Business Succession Manual for Owners” (March 2017). Specific tax matters will be explained at your consultation under the latest laws and regulations.