Future-ready private equity leadership in Japan: Four considerations

Private equity is growing at an accelerated pace in Japan, and while there is ample opportunity for value creation, seizing on these opportunities will require firms to have the right leaders in place to manage both investment and operations. PE firms and their portfolio businesses must attract, hire, develop, and retain well-qualified, future-looking executives to maximize returns for all stakeholders.

Indeed, PE firms that hire for potential as much as track record; seek communication, interpersonal, and cultural skills; consider structural, sequenced leadership solutions; and prioritize establishing a high-performing C-suite—especially by securing a strong CHRO—will be best positioned for success.

Private equity in Japan: A growing, evolving market

Japan’s PE sector began in earnest about 20 years ago, with little fanfare. For years afterward, companies across sectors were largely reluctant to seek or accept PE funding, due to its newness, and the industry grew at only a modest pace.

That has changed dramatically in the past few years, as Japanese businesses now see PE buyout or investment as much more favorable, and such transactions as well-established components of the country’s economic infrastructure. Thus stakeholders on all sides—PE firms, target companies (including well-established ones), bankers, advisory and consulting firms, and others—are eager to explore collaborative opportunities for acquisition, growth, and exit.

Indeed, all indicators suggest PE is exploding in Japan. Well-known players including Bain Capital, KKR, and Carlyle are growing their Japan-focused funds and teams, as others like Warburg Pincus and Hillhouse enter or return to this market. Domestic players, too, are rising, including Integral and J-GIA.

This trend has meant a large jump in PE transaction volume, with PE representing about 30% of all M&A transactions¹ in the country in 2024, with total deal value over JPY 3 trillion²—the fourth consecutive year the transaction total went over that milestone figure. Meanwhile, the total value of PE and VC investment in Japan increased 40% from 2023 to 2024,³ representing over 15% of all such investment in the Asia-Pacific region (up from 10.6% in 2023).

Fundraising is growing as well, as much of the global focus shifts from China to Japan, which has an expanding, attractive PE footprint as noted earlier. As signs of this trend, investor allocations for Japan are larger than in previous funds, and several firms including Apollo and Ares have relocated from Hong Kong to Tokyo. Effective fundraising requires a strong on-the-ground presence, and nearly 100% of the fundraising executives we know in this space are Japanese natives.

The fast acceleration of PE activity and maturity in Japan means rising opportunity for all stakeholders, but also mounting competition for talent, whether investment executives or leaders of portfolio businesses, carve-outs, or other operations. Taking a proactive, strategic approach to talent is paramount.

Take a strategic approach to PE talent

We are seeing a tight market for well-qualified PE executives in Japan. Top-tier investment executives who have track records identifying promising targets, closing high-value deals, and winning business for PE sponsors are understandably in high demand, as are those who can step into CEO, CFO, CHRO and other senior manager roles to drive value for portfolio businesses.

Firms can locate and evaluate the best possible talent with the following four considerations in mind:

1. Hire for potential as much as track record: While a leader’s experience and expertise matter, also seek candidates with a transformational mindset and ability to manage high complexity in growing organizations that may be resistant to change. Our work highlights the qualities of future-ready leaders—the ability to mobilize, execute, and transform with agility.⁴ By seeking these capabilities that underlie impact, you can hire not only for “what” leaders have done but “how” they’ve done it and will do it for your business.⁵
2. Seek communication, interpersonal, and cultural skills: In line with the point above, soft skills represented by a high EQ are also critical to creating PE value. In Japan’s multicultural business context, language is an especially valuable tool. Look for bilingual leaders with a proven ability to work across cultures and gain buy-in from wide-ranging stakeholders including investors, portfolio teams, advisors, and partner businesses.
3. Consider structural, sequenced leadership solutions: It’s not just about hiring high-potential leaders but also setting them up for success. For first-time portfolio-company CEOs, for example, it may make sense to appoint an executive chair or other experienced senior advisor and mentor to guide the new executive through their early tenure. In other situations, it may be of benefit not to hire a CEO immediately, instead controlling the portfolio business through a board and other C-team leaders, enabling the organizational structure and leadership group, including what’s needed in the top executive, to evolve over time to match business needs.
4. Don’t forget about the CHRO: The chief people officer is a critical hire and executive in any business, but especially a growing portfolio company—because they are the ones expected to drive cultural transformation and help recruit other top leaders. Finding capable CHROs can be challenging, but it’s well worth the effort, and again should target future-focused, agile executives.

PE represents large, rising opportunity in Japan. Firms that incorporate these four considerations into their business and talent strategy will be best prepared to maximize value creation for the long term.

About the authors

Sari Hattanda (shattanda@heidrick.com) is a principal in Heidrick & Struggles’ Tokyo office and a member of the Financial Services Practice.

Aya Iinuma (aiinuma@heidrick.com) is a partner in Heidrick and Struggles’ Tokyo office and a member of the Financial Services Practice; she is focused on recruiting in the PE sector in Japan.

References

¹ Sebastien Lamy, Azusa Owa, and Jim Verbeeten, “Competition to heat up as Japan takes private equity pole position in Asia Pacific,” Bain & Company, press release, May 31, 2024, bain.com.

² Sebastien Lamy, Azusa Owa, and Jim Verbeeten, “Japan private equity off to a strong start in 2025, continues to be a hotspot for investors,” Bain & Company, June 5, 2024, bain.com.

³ Dylan Thomas, Neel Hiteshbhai Bharucha, and Yuzo Yamaguchi, “Private equity investment in Japan soars,” S&P Global, January 28, 2025, spglobal.com.

⁴TA Mitchell, Sharon Sands, and Naomi Record, “Developing future-ready leaders,” Heidrick & Struggles, heidrick.com.

⁵ For more on hiring for the “how” instead of the “what,” see Jason Henderson and Amanda Worthington, “The landscape for hiring a PE operating company CEO is changing fast—hire for ‘how’ to navigate it successfully,” Heidrick & Struggles, heidrick.com.