The power of M&A to accelerate growth - SHIFT’s global strategy and support for startups (Second in a two-part series)

JSTORIES ー In 2022, the Japanese government implemented the Startup Development Five-year Plan to increase investment in startups to 10 trillion yen by 2027. According to a report by the Ministry of Economy, Trade, and Industry, one of the key factors necessary for achieving this goal is the promotion of mergers and acquisitions (M&A) and global expansion.

Large corporations like GAFAM have been actively acquiring startups to achieve discontinuous growth. M&As are also seen as a strategic option for stable growth for startups. In fact, in the U.S., 90% of startups choose M&As as their exit strategy instead of an initial public offering (IPO). However, in Japan, there are still relatively few M&As involving startups. Most startups still aim for IPOs, and M&As are not actively utilized as a growth investment strategy.

Why are M&As still underutilized in Japan despite their importance for developing the startup ecosystem alongside international expansion? How can we unlock the potential for business growth through M&As and increase exit options for startups?

To explore these questions, Toshi Maeda, executive editor of JStories, interviewed an M&A expert in Japan.

(This is the second part of the interview. You can read the first part here.)

Hidetaka Kojima graduated from the Faculty of Foreign Studies at Tokyo University of Foreign Studies in 2003, completed an MBA at the Graduate School of Commerce and Management at Hitotsubashi University in 2009, and completed the Program for Leadership Development (PLD) at Harvard Business School in 2019.

After working at Daiwa Securities and GCA (now Houlihan Lokey), he joined Mitsubishi Corp. in 2011 to launch the Life Sciences Division and was involved in M&A/PMI. In 2020, he joined SHIFT and established the M&A/PMI system, leading the company’s remarkable M&A results. In 2022, he founded SHIFT Growth Capital and took on the role of Director/CEO of SHIFT USA in 2025 to oversee international strategies. Kojima is also involved as an adviser and angel investor for Japanese startups and aims to build Japan’s startup ecosystem.

SHIFT is a company that supports customers in creating "sellable services," with its base in software quality assurance. As of February 2025, the company has about 14,000 employees and 37 group companies. SHIFT aimed for 100 billion yen in sales by 2025 through its midterm growth strategy, "SHIFT1000," and hit this target by the end of fiscal year 2024. SHIFT is now focusing on achieving 300 billion yen in sales through its next strategy, "SHIFT3000," and is implementing various initiatives.

JStories Executive Editor Toshi Maeda (JStories below): I am pleased to welcome my guest today, Hidetaka Kojima, who has responsibility for M&A/PMI (post-merger integration) at SHIFT Group. SHIFT specializes in software quality assurance and testing, and its sales have been growing strongly for the last decade. In the second half of this interview, I’d like to ask about SHIFT’s overseas strategy, the startup ecosystem in Japan, and how to increase the number of unicorns. 

But first, let me ask about your career and what first made you interested in what’s happening overseas. Also, what specific work overseas have you been involved in? 

Hidetaka Kojima (Kojima below): When I was a university student, I studied in Washington state in the United States. From around that time, I thought that I’d like to work abroad someday. So, after I graduated, I kept asking to participate in overseas projects. My wish to really work overseas came true when I worked for Mitsubishi Corp. in the U.S., which I mentioned before. After I successfully closed the acquisition of a U.S. company, I was assigned directly to the company.

JStories: What specific things did you learn when working abroad?

Kojima: I was working as an assistant to the CEO. Specifically, I had a wide range of responsibilities, including organizing and facilitating management and board meetings, planning and executing M&A strategy for North America, PMI of acquired companies, and reporting management issues and our financial situation to the head office in Japan. The thing I learned from that was simple, i.e., that it’s vital to carefully listen to voices on the ground. This is true for external advisers, too, but although the HQ in Japan can read documents to understand surface issues and situations somewhat, they often don’t understand how employees on the ground feel as they do their work day to day. Naturally, sometimes it’s difficult to ask about people’s true feelings in a work-only relationship, so we were always working to build relationships of trust through company events such as team building.

JStories: I see. After that, you studied at Harvard Business School, didn’t you?

Kojima: Yes, that’s right. The things I learned at Harvard Business School greatly influenced my interest in overseas. Daily discussions with about 170 classmates from 37 countries made me more aware of myself as a Japanese person. At the same time, my wish to compete on the global stage became even stronger.

JStories: Am I right that the things you learned at Harvard Business School have helped you a lot in your M&A work?

Kojima: Yes, that’s right. At Harvard Business School, people come together from all over the world. There are alumni everywhere. My classmates know that I’m involved in M&A, so they often come to me and say, “How about this project?” Since information about projects is often closed to others, being able to enter that community and get information is critical.

Also, even now my classmates and I share updates and new business ideas. I get lots of energy from how everyone is active in their respective fields. Occasionally, classmates come to Japan for leisure trips, and I go with them to various places.

JStories: I see. On that topic, SHIFT recently announced business tie-ups with two U.S. companies and the establishment of SHIFT USA. It looks like the company has finally started to make concrete moves toward overseas expansion.

Kojima: Lately, more and more of SHIFT’s existing clients are asking if we can help with their overseas expansion. We wanted to properly respond to those needs, so we entered into a business tie-up with two U.S. companies last December and set up SHIFT USA in February. The first was EAI Technologies, LLC (Virginia, U.S.), a company with strong software development expertise and a large customer base in the distribution/logistics, telecommunications, and security markets. The second was Syscom Global Solutions, Inc. (New York state, U.S.). This company has strengths in infrastructure and security, and has many clients, from small to large, mainly in the financial, telecommunications, trading, and system integration sectors. Through business alliances with these two companies with different strengths, we have sought to build a relationship where we can not only introduce projects to each other and share resources, but also work together on rolling out our own services.

JStories: Are you focusing on the U.S. as a region for business expansion?

Kojima: First of all, we are working on targeting the largest market, which is the United States. We have done a lot of research and talked a lot within the company about regions, but considering SHIFT’s current capacity, we decided that it would be too difficult to expand in all directions from the start. Once our U.S. business has seen some expansion, we intend to expand into other regions, too.

JStories: I’m looking forward to that overseas expansion. What measures are you considering as part of SHIFT USA’s future strategy?

Kojima: There are three pillars to the SHIFT USA strategy.

The first is “supporting our customers’ overseas expansion”. As I mentioned earlier, as our business expands, we’ve recently been receiving more inquiries and consultations about overseas projects. On the other hand, up to now we lacked overseas offices and networks, so couldn’t respond properly to such inquiries. So, first we pushed forward with tie-ups with overseas companies and established overseas subsidiaries.

The second pillar is “promotion of overseas M&A.” In Japan, our setup allows us to consider around 300 M&A per year, but there is still almost nothing overseas. We have sourced projects by tapping our network of overseas members, including me, and some deals have completed due diligence and reached the final pre-contract exchange stage. Unfortunately, however, due to the terms and conditions not being favorable, no deals have been closed as of yet. We intend to strengthen our M&A promotion structure by making use of our overseas offices, tapping local networks more deeply, and — as we do in Japan — formulating highly reproducible sourcing strategies. I believe that M&A is an effective way to both strengthen overseas expansion and establish a competitive advantage in overseas markets.

The third pillar is “discovering new overseas technologies.” We are aiming to be in a situation where we can consider collaborations and investments with promising startups, such as vendors of next-generation test tools and AI, and monitor the latest trends.

JStories: Speaking for myself, I’m excited to hear how you, Japan’s M&A king, are finally moving into the U.S. and other overseas markets!

Kojima: Thank you very much.

JStories: By the way, you are the author of “Contract Practice in Cross Border M&A” (Chuokeizai-sha). Was the book based on your experiences overseas?

Kojima: Mikiharu Mori, who heads the Tokyo International Law Office, approached me to write a book for them about the things I’ve learned from cross-border M&A/PMI deals, both as an adviser and from within an operating company. That led to me co-authoring the book with people from the law office. Mori and I had a meeting of the minds over our shared vision of “increasing the number of Japanese companies that can compete on the global stage through skillfully using cross-border M&A.” We were sharing various thoughts even before the office was established.

JStories: What was the key thing you wanted to convey in your book?

Kojima: I wrote this book about how to source M&A overseas and how to efficiently increase value (PMI) from the perspective of an operating company and mainly with a focus on my experiences overseas.

For example, when it comes to sourcing projects outside Japan, generally companies lack the kind of established networks they have at home, so they rely on projects brought to them. But I think it is best that companies actively search for their own projects. What kind of structure is best for that? Because it is overseas, there are more things that companies don’t understand than in Japan. The most important thing is to target companies that you can properly understand. Also, when it comes to increasing value, there are many areas where it is necessary to set up a governance structure different from that of Japanese companies, such as corporate culture and organizational structure. So, in the book, I wanted to explain how Japanese companies could handle that while also tapping their own strengths.

JStories: SHIFT has also grown its business in Japan. To a certain extent, it is possible to do business relying only on the domestic market, and there are many startups that compete only in the Japanese market. Nevertheless, when you looked to the future, did you decide that it was important for SHIFT to approach overseas markets?

Kojima: Last fiscal year, SHIFT achieved its midterm growth strategy, SHIFT1000, which targeted sales of 100 billion yen. Now it is looking at strategies to achieve sales of 300 billion yen and more. I believe that “overseas strategy” is a topic that can’t be ignored when we consider future growth. SHIFT addresses a market that still has sufficient potential for growth in Japan, but I think that if we become able to approach overseas markets, too, our perspective will change a lot. Following the recent announcement of SHIFT USA’s establishment, I spoke with both domestic and foreign investors. They have high hopes for SHIFT’s overseas expansion.

All the same, we fully recognize that Japanese startups are struggling to expand overseas, and that SHIFT still lacks knowledge and internationally diverse staff. Until one year ago, when we set up a team called the "Overseas Business Promotion Office", we didn’t even have an overseas strategy. However, one of the challenges I’d like to take up is for Japanese companies, whose presence on the global stage has become weaker, to be active abroad, and particularly for startups to expand overseas. I would definitely like to make that happen at SHIFT.

JStories: Finally, I’d like to cover a slightly broader theme, which is the challenges facing Japan’s startup ecosystem. Recently, the national government and local authorities have begun to offer real support in order to increase the number of unicorns. What are your thoughts on that?

Kojima: I feel like the startup environment has improved quite a lot these last few years. The amount of startup funding has increased about 10 times over the last decade, and outstanding talent is flowing into startups. The Japanese government has created a five-year plan for startup development with a goal of increasing the number of startups 10 times over five years.

What’s more, not only are operating companies like ours considering startups for M&A, but in recent years, more startups have been partnering with private equity funds, and there has been progress on deregulation of buying and selling unlisted stocks, including in startups.

JStories: On the other hand, there are fewer unicorns in Japan than in other countries. You have been an adviser to startups and also an angel investor. What do you think are the issues faced by those who manage startups?

Kojima: As you say, the number of unicorns in Japan is far fewer than in other countries. My work gives me many opportunities to talk with startup managers. Some issues that often come up are “how to create a system for scaling up the business,” “human resource development,” “lack of mentors for senior management,” “communication with investors,” and “too much focus on an IPO as an exit strategy.” I think these issues intersect to create a structure characterized by small IPOs, subsequent absence of market capitalization growth, and unicorns not being created. In fact, over half of the companies listed on the TSE Growth Market have a market capitalization below their initial listing. It even begs the question, why are they being listed?

JStories: When I talk to overseas investors, they sometimes tell me that startups must use M&A well to become unicorns. I’ve heard from some that it is virtually a must, or that it’s impossible to become a unicorn without M&A. But what do you think?

Kojima: M&A is just one tool of management strategy, so I don’t think they can become a unicorn just through M&A. However, if they can use M&A skillfully, there is no doubt that their business will scale more quickly. Many of today’s startups recognize that, and we get more consultations every year. For example, in March 2022, we invested in the Next Generation Technology Group Inc., headquartered in Shibuya, Tokyo, and led by Representative Director and President Eiichi Arai, who expressed a desire to learn about SHIFT’s approach to M&A and PMI (Post-Merger Integration). They went public on the Tokyo Stock Exchange Growth Market in February 2025. So far, they have announced 10 M&A deals, and their stock price has remained strong even after going public. I think this is a great example of how M&A can be leveraged to successfully scale a business.

JStories: In that situation, there’s a need for support from people like you, individuals with much experience and expertise to offer. 

Kojima: Right now, I’m an adviser to two companies: Asuene Inc. (HQ in Minato-ku, Tokyo, Founder & CEO Kohei Nishiwada), a climate tech company, and FLUX Inc. (HQ in Shibuya-ku, Tokyo, CEO Genji Nagai), which provides business operations optimization. The senior management of both these companies includes longtime acquaintances of mine or junior colleagues from my former company. I became an adviser after they approached me directly. I’ve been giving both companies hands-on advice since they launched their M&A teams around one year ago. In that year, Asuene announced three M&A and FLUX two. I am always thinking about “reproducible strategies,” so I do my advisory work with the confidence that I can achieve the same results for other startups, not just for SHIFT. Both companies are aiming for extremely strong growth while making use of M&A/PMI strategies.

JStories: You are thinking about reproducible strategies, but I don’t think that can happen overnight. So, it seems that the role of advisers like you will keep becoming more significant. 

Kojima: Outside Japan, entrepreneurs and experienced businesspeople often act as mentors for startups. They share their own successes and failures, and even provide a network. In that way, startups can rapidly create reproducible strategies without making the same mistakes. Through advising startups and various other activities, I want to make my own small contribution to helping the startup ecosystem in Japan develop.

JStories: I see. That’s wonderful. At J-Stories, we have expertise in overseas business expansion and communication with people abroad, but we are completely new to M&A. I was hoping we might work with you to support companies through seminars and workshops.

Kojima: I know that J-Stories is run as a media outlet that aims to tell the world about innovative and ambitious projects from Japan. We have talked several times before about the current situation of startups in Japan, what we think the issues are, and the direction Japan should aim for. I really hope we can keep working together in various ways to support Japan’s ambitious startups and help Japan prosper.

JStories: Thank you for your encouraging words! Finally, what are your aspirations moving forward?

Kojima: SHIFT will keep working closely together as a team while reviewing its M&A strategy and delivering solid results. We’ll steadily step into the overseas market, starting with SHIFT USA. There’s also the issue I mentioned before, namely that Japan’s startup sector has extremely few unicorns. I hope that sharing the experiences I’ve collected in Japan and abroad with as many startups as I can might lead to as many unicorns as possible and increase the number of companies competing on the international stage.

JStories: Thank you for taking the time to talk to us today. Since joining SHIFT, you have constantly taken on new challenges in various roles, such as setting up M&A/PMI structures and overseas teams, establishing SHIFT Growth Capital and SHIFT USA, lecturing at universities, and acting as a startup adviser and angel investor. I really hope you will keep applying that knowledge to constructing a startup ecosystem in Japan!

Translated by Tony McNicol

Edited by Mark Goldsmith

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