Approx. 60% of Tokyo Growth Market Firms Below ¥10 Billion Market Cap—New Sourcing Service to Support Japanese Companies' U.S. M&A with Local Network and AI

Japan's stock market is experiencing polarization amid yen depreciation, rising interest rates, and AI advancements. While large exporters benefiting from AI and a weak yen are thriving, the Tokyo Growth Market faces tightening listing requirements (the so-called '¥10 billion wall'), narrowing growth and exit options domestically. The ability to generate foreign revenue has become crucial for corporate growth, elevating the importance of M&A as a strategic tool.

WellBear Inc. (Headquarters: Meguro-ku, Tokyo; Co-CEOs: Kazuyoshi Okuma and Yuta Sakurai), a cross-border M&A matchmaking and advisory firm, will officially launch a fully customized 'sourcing service' in February 2026 by establishing a local subsidiary in Colorado, USA (Denver area), to support Japanese companies in acquiring U.S. businesses. By combining local M&A advisor networks with proprietary sourcing systems powered by AI such as Claude, WellBear delivers high-potential deals that are difficult for Japanese firms to access, with enhanced accuracy.

Service Overview

Background: Market Polarization and Characteristics of Growing Companies

Japan's stock market is clearly polarized. While the Nikkei 225 and TOPIX continue to hit record highs, the Tokyo Growth Market 250 Index—focused on emerging companies—remains below its base level of 1,000 points (approximately 710 points as of June 2026), only about one-fourth of the peak value of its predecessor, the Mothers Index, in 2006. Stock gains are driven primarily by select large-cap stocks such as semiconductors benefiting from AI demand and banks benefiting from rising interest rates. However, not all Growth Market firms are struggling; some continue to raise capital even in adverse conditions. The common denominator among these successful firms is their ability to demonstrate 'certainty of future earnings'—such as profitable high growth or revenue generation through overseas operations and M&A. The market is now intensifying its selection process. The yen weakened to around 160 per dollar in 2026, and as domestic market growth becomes increasingly concentrated, the ability to generate foreign currency earnings has become a key determinant of a company's next phase of growth.

Domestically, growth conditions are becoming stricter. The Tokyo Stock Exchange has raised the listing maintenance standards for the Growth Market, requiring firms to achieve '5 years listed and market capitalization of ¥10 billion or more' from March 2030 (currently 10 years and ¥4 billion—achieving 2.5x market cap in half the time). As of early 2026, approximately 60% of Growth Market companies (around 370 firms) remain below ¥10 billion in market cap. New listings are declining; domestic IPOs in 2025 totaled 66, the lowest since 2013 (down from 86 the previous year), with only 41 on the Tokyo Growth Market. With IPO activity slowing and delistings increasing, the number of listed companies on the Growth Market peaked at 614 in late 2025 and has since begun to decline. Both startups and already-listed firms now face a reality where they cannot rely solely on domestic growth for their next stage.

Not all Growth Market firms are uniformly struggling—some growing companies still attract funding despite headwinds

In contrast, the U.S. market, with a nominal GDP of approximately $29.3 trillion—about seven times Japan's size—is the world's largest and, among developed nations, the only one projected to experience long-term population growth. Japanese M&A activity reached a record high in 2025 with 5,115 deals totaling ¥35.7 trillion. However, overseas acquisitions (inbound and outbound) are dominated by large-scale, high-value projects, concentrating M&A opportunities among large corporations. Meanwhile, high-quality U.S. sell-side opportunities at the mid-to-small scale remain difficult for Japanese firms to access. WellBear aims to fill this gap by combining local networks with AI.

Simplified Positioning Map of Our Service

Establishment of U.S. Subsidiary: Sourcing from the Ground Up

In February 2026, WellBear established a local subsidiary in Colorado, USA (Denver area). Co-CEO Yuta Sakurai will serve as the local representative, enabling continuous engagement with the U.S. M&A community to directly build relationships with hard-to-reach sellers and sell-side advisors. Colorado, including Denver, has become a hub for startups and technology firms in recent years, with excellent access to various regions across the U.S., making it an ideal base for North American sourcing.

New Service: 'Customized Sourcing Service for U.S. M&A'

This service is a fully customized sourcing solution that does not distribute pre-made deal lists. Instead, it forms dedicated teams for each buyer company to systematically identify U.S. acquisition targets optimized to their strategy and investment criteria. The service supports the entire process from target identification to initial outreach and first-round interviews.

- Strategy Formulation and Publication: We gather the buyer's acquisition strategy and criteria, publish them as English articles on Cross Border M&A Hub, and disseminate them to U.S. sellers and financial advisors (FAs).

- Candidate List Generation: In addition to responses to published articles, we combine proprietary on-the-ground, offline primary data, paid international databases, and our locally built network of overseas FAs to generate and present a longlist of candidates.

- Outreach and Filtering: Using primary data obtained offline and a sourcing system integrated with international data, we conduct outreach. Local U.S. team members schedule online and offline initial interviews (typically 5–20 companies) and perform qualitative filtering.

- Negotiation Support and Flexible Engagement: If needed, we can also take on full advisory responsibilities, including negotiation support. We can initially join the M&A process as operational staff and respond flexibly as required.

By combining U.S. sell-side networks that are difficult to access through domestic M&A intermediaries with AI-powered high-precision candidate screening, we achieve scalable sourcing while maintaining a tailored approach for each client.

※ The number of companies mentioned in the text and figures (e.g., longlist size, number of initial interviews) are estimates and may vary depending on deal conditions and buyer/seller circumstances. We do not guarantee specific numbers.

Technology: AI such as Claude × International Databases

WellBear has developed and operates an in-house proprietary sourcing system that integrates AI—including Anthropic's 'Claude'—with primary data collected directly on the ground and international corporate databases. This system accelerates the collection, analysis, and identification of vast amounts of company information, efficiently identifying suitable acquisition targets based on each buyer's criteria. AI serves solely as a support tool for exploration and analysis. Initial outreach, negotiation support, and due diligence (DD) during project execution are handled responsibly by experienced advisors.