Many see Japan as a value play. The real opportunity is its high number of quality companies (250+ with >40% gross margins) that were historically mismanaged. Ongoing governance reforms are now unlocking the potential of these high-margin franchises.

Bain Capital sees Asia as a highly fruitful market because it is still dominated by banks and lacks a developed private credit or hybrid capital ecosystem. This creates a significant opportunity for firms to provide structured, value-add financing solutions to founders and public companies in the region.

A unique consequence of Japan's aging population is that many profitable businesses, like factories, are shutting down simply because owners retire without a successor. This creates a massive, overlooked opportunity for entrepreneurs to acquire and modernize these cash-flowing but 'orphaned' companies.

The easy money in large-cap Japanese activism is made. The next wave of opportunity is in smaller, sub-billion-dollar companies based outside Tokyo. These firms are slower to adopt corporate governance reforms, leaving them undervalued and ripe for engagement.

For years, Japan was a value trap: cheap companies with poor governance hoarded cash. The game changed when Prime Minister Shinzo Abe introduced stewardship and governance codes, creating a top-down, government-backed catalyst for companies to finally improve capital allocation and unlock shareholder value.

When investing in markets with potential governance hurdles, like regional Japan, the "deep value" principle is key. Purchasing assets at a fraction of book value creates a margin of safety. Even if activism takes longer or yields less, the low entry price can still generate an acceptable return while risking no capital.

Japan's buyout market is booming, driven by government-supported corporate reforms and increased shareholder activism. This is creating a rare opportunity for classic PE strategies—unlocking value in under-managed corporate assets—that are now harder to find in more efficient Western markets.

A small acquisition in a new sector can be a strategic play to gain market entry. The value isn't just in the target's direct earnings but in its potential for "pull-through" work, where an initial relationship creates a direct channel to bid on much larger projects.

The strategy involves acquiring multiple small, local businesses (e.g., laundromats) and applying principles like operational efficiency and economies of scale, mirroring the playbook of large private equity firms but at an accessible level for individual entrepreneurs.