Consulting in Japan and Korea: how independent firms win clients

The clearest sign of change is shareholder pressure at annual meetings. Computershare’s 2025 Japan AGM season review reports that companies at Nikkei 225 level faced 110 shareholder resolutions in 2025, compared with 72 in 2024, 81 in 2023 and 63 in 2022. The number of companies targeted by activists rose 66.7% to 25 in the 2025 season, up from 15 in 2024. None of the 110 resolutions passed, and the highest support was 40.0% of votes cast. Activists are not winning votes, but they are shaping the agenda that boards must answer.

The Tokyo Stock Exchange’s push on capital efficiency adds to the pressure. According to the Japan Exchange Group’s follow-up materials, companies with price-to-book ratios below 1x accounted for 44% of Prime Market companies and 59% of Standard Market companies in the 2025 data. A ratio below one signals that the market values the company at less than its accounting net assets, which boards increasingly regard as a prompt to explain their plans for capital allocation, cross-shareholdings and returns.

Private capital is following. Private Equity Wire, drawing on Reuters reporting, says PE-backed buyouts in Japan reached US$27.6bn year-to-date through 20 August 2025, close to triple the US$9.5bn of a year earlier, and that take-private activity had earlier recorded US$40.3bn in 2023. For an independent firm, the pattern means demand for independent views on valuation, strategic options, shareholder engagement and defence preparation, all areas where local boards want an outside voice that is not their main bank or auditor.

What to do: define the Japan offer around one or two board-level problems where you can show specific methods, for example capital allocation reviews for companies trading below book value or engagement preparation for contested meetings. Test the offer with two or three senior Japanese practitioners before approaching any client. If they cannot say who in their network would buy it, the offer is not yet ready.

The Japanese context also has a cultural dimension that foreign advisers underestimate. Boards are often wary of being seen to respond to activists, and prefer to frame change as their own initiative. Advice that is delivered quietly, in Japanese, by someone who understands the board’s internal dynamics, can be accepted where the same advice delivered publicly by a foreign firm would be rejected. This is another reason to design the offer around private, advisory dialogue rather than public positioning.

Demographics are the slower but steadier driver. The World Economic Forum reports, citing a 2024 survey, that 52.1% of companies had no successor, and that government estimates say approximately half, or 1.27 million, of SME and small business owners over the age of 70 will have no successor by 2025. If nothing changes, the article warns, the country could lose around 6.5 million jobs and see a decline of approximately JPY22 trillion in GDP. These are projections, but they describe a very large pool of owner-managed businesses facing a transition.

Succession creates advisory demand in several forms: valuation and sale preparation, matching with strategic or financial buyers, management buyouts, operational improvement before sale, and post-merger integration. Many of these businesses are too small for the global investment banks and too complex for generalist accountants. Independent firms that can offer an end-to-end process, and that can introduce international buyers or technology to the target, can find a defined role between the large houses and the smallest brokers.

Trust matters even more in this segment. A founder planning succession is making a personal decision about employees, community and legacy, and will usually prefer an introduction from a known adviser, a regional bank or a business association. Foreign-branded firms are not usually the first call. The route in is a partnership with a local professional, such as an accountant, a regional adviser or an association leader, who brings credibility and relationships while the independent firm brings buyers, structuring skills and cross-border capability.

What to do: choose one region or sector, such as manufacturing suppliers in a particular prefecture, and build a pipeline with a local partner rather than approaching the national market. Estimate fee potential from realistic transaction sizes, not from the headline count of successor-less owners. Plan for long sales cycles; succession decisions can take years, and early relationship investment is usually unpaid.

Cross-border buyers are a distinctive contribution. Japanese SME owners often receive offers only from domestic acquirers, which may not pay a full price or preserve the business as the owner wishes. An adviser that can bring a foreign strategic buyer or an international investor, with a credible plan for employees and brand, widens the owner’s choices. Owners may still choose a domestic buyer, but the existence of alternatives improves terms. That is a clear, explainable benefit that a local partner can use in its conversations.

JETRO’s 2025 survey of foreign-affiliated companies in Japan, which received valid responses from 1,520 companies, found that approximately 60% intend to strengthen or expand operations in Japan and that 61.6% expect a profit for the current fiscal year. Nearly 40% expect negative impacts from US tariff policy. Japan has also raised its 2030 inward FDI stock target from 100 trillion yen to 120 trillion yen, aiming for 150 trillion yen in the early 2030s, according to JETRO’s Invest Japan Report 2025. Government policy therefore favours foreign entrants.

The same report identifies the main frictions. Companies most want improvement in securing general personnel, at 21.7%, and highly skilled personnel, at 18.0%. For advisory firms, talent is an even sharper constraint: bilingual professionals with senior credibility are scarce, and domestic firms compete hard for them. A foreign firm that plans to hire a local team from scratch should expect a slow start and high cost, which is another reason to start with partners.

Language also shapes what clients can buy. Norges Bank Investment Management’s May 2026 letter to Japan’s Financial Services Agency reports that only 27.5% of Prime Market companies provide simultaneous Japanese and English disclosure of the annual securities report, the Yuho, and that only 26.2% had majority-independent boards at the end of 2025. International investors see these gaps as obstacles to engagement, and Japanese boards are aware of them. Translation, investor communication and board-effectiveness advice are therefore real services, not courtesies.

What to do: audit your own capacity honestly. How many people on the proposed team can lead a board-level meeting in Japanese or Korean? Which materials will need professional translation, and who will check them? If the honest answer is few, make the local senior adviser the front of every client conversation and position the international team as a back-office resource, rather than the reverse.

There is a quieter point about data. The JETRO findings are drawn from questionnaires sent to foreign-affiliated companies, defined as those with a foreign ownership ratio of 25% or more, and the response rate was 19.7%. Respondents who answered are more likely to be engaged with Japan than those who did not. We therefore read the expansion figures as a sign of sentiment among established foreign companies, not as a forecast for all newcomers, and we advise clients to calibrate expectations accordingly.

Korea’s approach differs from Japan’s. The Corporate Value-up Program launched in February 2024, and JoongAng Daily noted that two months later only eight companies out of over 2,600 listed had participated, in contrast with Japan’s earlier programme. That voluntary start was widely seen as weak. Since then Korea has moved towards statutory change, which tends to produce faster compliance than guidance but also more disputes about interpretation.

Vontobel Asset Management, an investment manager and therefore an interested commentator, summarises the new rules: recently repurchased treasury shares must be cancelled within one year, large listed companies with total assets over KRW 2 trillion must allow cumulative voting, and independent directors must make up at least one-third of boards, with full implementation by July 2027. It adds that, as of early 2026, companies representing approximately 51% of the Korean stock market’s capitalisation have announced related measures. Timing and detail should be checked against official sources.

For advisers, the legal route changes the nature of demand. Companies must now decide how to cancel shares, restructure boards, handle cumulative voting and communicate with minority investors. Family-controlled groups face specific questions about control, succession and holding-company structure. These are problems where an outside perspective on international practice is valuable, but where the credibility of the person delivering the advice, and their understanding of Korean group dynamics, determines whether the advice is heard.

What to do: treat Korea as a second market, not a copy of Japan. Build a short briefing on the statutory changes and the timetable, test it with a Korean legal or corporate adviser, and identify the three or four companies whose circumstances make the reforms most pressing. Resist the temptation to import a Japanese playbook; the regulatory sequence, group structures and investor mix are different.

Investor expectations are also moving in Japan. The NBIM letter proposes raising the independent director requirement for Prime Market companies with a controlling shareholder from one-third to a majority, and urges lock-in periods for executive shares. Whatever the final code says, the direction of travel is towards stronger board independence and more transparent disclosure. Advisers with experience in board evaluation, remuneration design and investor communication can build practices around these topics without relying on any single regulatory outcome.

The sequencing of reform also affects timing for advisers. Japan’s programme has had several years to mature, so boards there are moving from disclosure to execution and need help turning stated targets into capital-allocation decisions. Korea is earlier in that cycle, with the statutory deadlines running to 2027, so demand in the near term is more likely to be for interpretation, compliance design and investor communication. An adviser active in both markets can transfer lessons between them, which is a genuine advantage for a cross-border independent firm.

The Korea Times reports that FDI pledges to Korea reached a record US$36.05 billion in 2025, up 4.3% from US$34.57 billion in 2024, and that the actual amount of investment arriving surged 16.3%. By origin, pledges from the United States rose 86.6 percent to US$9.77 billion and from the European Union 35.7 percent to US$6.92 billion, while those from Japan and China fell 28.1 percent and 38 percent to US$4.4 billion and US$3.59 billion respectively.

The investor mix matters for the adviser. Western investors, particularly from the US and EU, are likely to be less familiar with Korean corporate practice, regulation and relationship norms than regional investors, and they are the ones for whom interpretation is most valuable. An international independent firm that can speak the language of Western investment committees and also work through a trusted Korean partner is well placed to advise on market entry, partner selection, joint-venture structure and post-investment integration.

There is a cautionary reading too. Pledges are commitments, not completed investments, and they can be delayed or reduced. Sector composition is skewed, with manufacturing at US$15.77 billion and services at US$19.05 billion in the same data, so advisory demand will cluster around certain industries. Policy volatility has also been a feature of the period, with the Korea Times linking recovery in pledges to eased political uncertainty. Advisers should plan for lumpy demand rather than a smooth curve.

What to do: map the Western investors active in Korea in your target sectors, and the Korean counterparties they are likely to work with. Position the offer as a bridge: due diligence support, partner screening and integration planning for foreign investors, and capital access advice for Korean companies seeking foreign partners. Work with a Korean firm for local legal and regulatory matters and be explicit about the division of responsibility.

Another feature of the data is the size of the Japanese and Chinese decline. Falls of 28.1 percent and 38 percent in pledges from the two neighbouring economies show how quickly regional flows can change with geopolitics and trade policy. Advisers who build a book of business around one origin country are exposed to those swings. Diversifying across origins and sectors, and keeping relationships with both Korean and foreign principals, offers a more stable base than concentrating on the fastest-growing source in a single year.

Mordor Intelligence, a commercial research publisher whose estimates we treat as indicative, values the South Korean management consulting services market at USD 4.39 billion in 2025 and estimates growth to USD 4.82 billion in 2026 and USD 7.34 billion by 2031, an 8.78% compound annual rate. We could not find a comparably reliable, freely available figure for Japan, where public sources mask the data. The prudent assumption is that both markets are large, mature and served by strong domestic houses as well as global firms.

In a contested market, differentiation has to come from a specific problem, a specific buyer and a specific route to that buyer. Independent firms cannot match the brand or bench of the largest advisers, and they should not try. They can offer senior attention, speed, international network access and willingness to work in a partnership with domestic firms. These are not trivial advantages, particularly for mid-market clients who feel under-served by the big houses, but they need a credible local face.

Pricing and economics need testing early. Long sales cycles, translation and interpretation costs, local hiring and travel can make initial engagements unprofitable. Many firms underestimate the first-year investment required to build trust. A realistic plan includes a funded period of relationship building, a limited number of pilot engagements at fair rather than discounted fees, and a decision point at which the board reviews evidence of pipeline and referral before committing to further investment.

What to do: write a one-page market-entry thesis stating the buyer, the problem, the proof you can show, the local partner and the first-year economics. Include the investment you are prepared to lose if the market does not respond. Review it after six months with real data on meetings, referrals and proposals, and be ready to narrow, pivot or withdraw if the evidence is weak.

Technology is changing the competitive landscape too. Clients in both markets are using analytics and generative tools to prepare board papers, benchmark peers and draft documents, which reduces the value of generic research. What remains valuable is judgement, relationships and the ability to broker conversations between parties who do not yet trust each other. A positioning built on proprietary data or tooling should therefore be presented as support for those human capabilities, not as a substitute for them.

Bringing the evidence together, we recommend a four-part entry design. First, a senior local adviser or a small group of them who open doors, vouch for the firm and join client conversations. Second, a narrow offer tied to a visible reform or transaction trend. Third, a referral or alliance arrangement with a domestic firm that fills gaps such as legal, accounting or specialist sector knowledge. Fourth, a staged investment plan with explicit gates, rather than an office and a team on day one.

The structure of the relationship with the local adviser deserves care. Options range from a referral arrangement through a revenue-sharing agreement to a joint venture or equity participation. Each has different implications for control, liability, professional regulation and tax. Roles must be clear: who contracts with the client, who is responsible for the work and who carries the professional indemnity cover. Local counsel should review the structure, particularly where regulated professional services are involved.

Behaviour counts as much as structure. Responsiveness, punctuality, careful preparation, respect for hierarchy and a long-term posture are not decorative; they are part of how trust is built. Introductions should be reciprocated, with referrals and intelligence flowing both ways. Materials should be bilingual where the audience expects it. A single visible mistake, such as a poorly translated proposal or a bypassed senior contact, can undo months of effort, so quality control must be part of the process.

What to do: agree three gates with the board. Gate one is a signed partnership and a first pilot engagement. Gate two is a repeatable offer with at least two paying clients and measured referral flow. Gate three is a decision on dedicated local resource or a deeper alliance. Assign a senior executive to own the market and to visit regularly, because a relationship built by email alone will not last.

Finally, governance of the entry matters. Overseas expansion by advisory firms often fails because it is run as a side project by partners with full client loads. A named executive sponsor, a dedicated budget, a regular reporting rhythm and a clear exit decision protect the project from drift. We suggest quarterly reviews that ask three questions: are we meeting the right people, are they referring us to others, and is the partnership behaving as we agreed? If two of the three answers are negative for two quarters, the plan should change.

Karter McKinley’s International Expansion & Market Entry work helps advisory firm leaders test Japan and Korea before committing capital: market and competitor mapping, partner and senior-adviser identification, offer design, structuring of referral or joint-venture arrangements, and staged execution plans. We work with local counsel and operate through partners rather than claiming a local presence we do not have.