M&A Lawyers and Legal Due Diligence in Japan

Is slow legal work stalling your deal?

It can take one to two months from receiving disclosure materials to getting a legal DD report, and during that time neither price negotiations nor the closing schedule can move. Under hourly billing, the total legal cost is not fixed at the start, which delays the decision to engage counsel in the first place.

Legal DD takes so long that the whole deal stalls
Legal costs are hard to predict, so you hesitate to engage counsel
You are unsure how to reflect DD findings in the SPA

Why LegalAgent

With LegalAgent, your deal moves faster

We finish legal DD quickly and fix the fee before we start. The same attorney team handles everything from SPA negotiation to the LBO loan agreement.

01Timeline

From disclosure materials to DD report~~1–2 months~~

LegalAgentAs little as 2 weeks^*1

Start price negotiations sooner and lock in the schedule

The AI Agent organizes the disclosure materials and spots issues, so attorneys can focus on assessing the risks and deciding what to do.
02Cost

Hourly billing~~Total unknown at the start~~

LegalAgent (fixed fee)From JPY 500,000^*2

Legal fees are fixed before engagement

We confirm the scope and the amount before we start, so there are no surprise hourly bills.
03End to end
- Legal DD
- SPA
- LBO loan
- Closing
DD findings carry through to the SPA and the LBO loan

The same team reflects legal DD findings in the SPA terms and coordinates so that the LBO loan's conditions to drawdown are also met on the closing day.

*1 The DD completion period runs from the kickoff meeting and assumes that disclosure materials from the target company are in place. It varies with the volume of materials and the scope.
*2 The minimum fee of JPY 500,000 (tax excluded) applies to summary-format DD for target companies incorporated within the last three years. We quote a fixed fee before engagement based on the target's size and the scope.

How it works

Legal due diligence: scope, process and timeline

The AI Agent organizes disclosure materials and spots issues; attorneys judge the legal risks. Within as little as two weeks of kickoff^*1, we report our findings and how to address them in the SPA.

Legal due diligence (legal DD) is the buyer's review of the target company's shares, contracts, labor matters, intellectual property, licenses and disputes, through disclosure materials, Q&A and interviews, to identify the legal risks the buyer may take on after the acquisition. Its purpose extends to deciding who bears each risk, and how, and reflecting that in the deal terms.

Whether to proceedIf a serious issue is found, the parties consider calling off the deal or redesigning the structure.
Price and price adjustmentRisks whose losses can be quantified are deducted from the price or reflected in a price adjustment clause.
SPA provisionsOther findings are allocated to conditions precedent, reps and warranties, special indemnities and post-closing covenants.

AI Agenthandles the work

Organizing large volumes of disclosure materials
Issue spotting and reference to past DD matters
Identifying missing materials

Attorneysmake the calls

Assess the risk of each finding
Decide how to address it in the SPA
Explain the findings to management at the report meeting

KickoffReport in as little as 2 weeks

STEP 01Kickoff
Fix the scope, present the disclosure request list and set a schedule worked back from closing
STEP 02Disclosure and review
Organize the disclosed materials, spot key issues and request missing materials
STEP 03Q&A and interviews
Prepare question lists and interview the target's management
STEP 04DD report
Report findings and how to address them in the SPA, and explain them at the report meeting

Six areas of review, and where findings go

Area	Main items checked	Where findings mainly go
Corporate and shares	Corporate registry, articles, shareholder structure, transfer restrictions, past issuance procedures	Conditions precedentReps and warranties
Material contracts	Contracts with key customers and suppliers, change-of-control clauses, anti-assignment, non-compete	Covenants (consents)Conditions precedentPrice
Labor	Employment contracts, work rules, unpaid overtime, social insurance	Special indemnityPrice adjustment
IP and data	Ownership of trademarks and patents, employee inventions, OSS, personal data	Reps and warrantiesRemedial covenants
Licenses and compliance	Required licenses, history of administrative sanctions, regulatory compliance	Conditions precedentSpecial indemnity
Disputes and contingent liabilities	Pending litigation, claims, guarantees and security, tax audits	Special indemnityPrice

Attorneys make the final callAn attorney checks every deliverable and takes responsibility for it.
Your inputs are not used to train AIOn top of attorneys' statutory duty of confidentiality, we work in an environment where your inputs are not used to train AI.
An AI Agent built in-houseOur own engineers develop it. Information Security Policy

*1 The DD completion period runs from the kickoff meeting and assumes that disclosure materials from the target company are in place. It varies with the volume of materials and the scope. For more, see What is legal due diligence?

Process

Our support from initial review to PMI

The same attorney team handles everything from structuring the transaction to post-closing integration. The two critical phases are legal DD and contract negotiation.

Phase 01Initial review
- Structuring
- NDA and letter of intent (LOI)
- Disclosure request list
Critical phasePhase 02Legal DD
- Reviewing disclosed materials
- Q&A
- DD report
Phase 03Negotiation
- SPA or business transfer agreement
- Reps, warranties and indemnity design
- LBO loan agreement and security
Phase 04Closing
- Satisfying conditions precedent and conditions to drawdown
- Funds flow memo and closing-day run sheet
- Closing documents and registration
Phase 05PMI
- Contract transfers and change-of-control
- SPC merger and covenant management
- Integrating rules, labor and governance

Buy-side and sell-side support

Side	Main attorney work	What to settle early
Buy side	Conducting and reporting legal DD; reflecting findings in the price, conditions precedent, reps and warranties and special indemnities; drafting and negotiating the SPA; managing closing conditions	The DD scope, priorities for the disclosure request list, and target dates for signing and closing
Sell side	Preparing disclosure materials and setting up the data room; answering Q&A; checking that disclosed materials match the reps and warranties; negotiating the SPA's reps, warranties and indemnities; preparing for closing	Organizing the shareholder register, issuance resolutions and key contracts in advance; what to explain to prospective buyers; preparing the disclosure schedule

If legal DD and the SPA are handled by different teams, risks found in DD may not make it into the contract. At LegalAgent, the same attorney team handles legal DD, SPA negotiation and closing.

Acquisition finance

Acquisitions financed with LBO loans, supported together with the SPA

In an M&A deal financed with an LBO loan, the SPA's conditions precedent and the loan agreement's conditions to drawdown must both be satisfied on the same closing day.
We run the two tracks in parallel, with the same team through to the funds settlement on the day.

Share purchase agreement (SPA)Buyer ⇄ Seller

Conditions precedent
Reps and warranties
Termination events

LBO loan agreementBuyer (SPC) ⇄ Lenders

Conditions to drawdown
Financial covenants
Events of default

Closing day Everything settles on one day

Loan drawdown
Payment of the purchase price
Repayment of existing debt
Delivery of security documents

We manage the order of remittances and the required documents with a funds flow memo and a closing-day run sheet.

Term sheet and loan agreement: We check the conditions to drawdown, financial covenants, restrictions on dividends, investments and additional borrowing, and mandatory prepayment clauses against the business plan, and set the approach for negotiating with lenders.; Negotiation memo / list of requested changes
Security, guarantees and target company procedures: We examine share pledges and other security, the timing and corporate approvals for security and guarantees provided by the target, and restrictions on granting security in existing contracts.; Security timetable / draft minutes
Repaying existing debt and releasing guarantees and security: We sort out whether prepayment is allowed, how the payoff amount is fixed and the conditions for releasing personal guarantees and security, and settle which documents to obtain from lenders.; List of existing debt, guarantees and security / release document checklist
Post-closing management: We manage the merger of the SPC and the target after the acquisition, additional security, and covenant reporting deadlines.; Procedure schedule / covenant tracker

We act for buyers, borrowers and target companies. Fees for deals with LBO loans are quoted individually after we review the structure, the volume of documents and the time to closing. For more, see LBO and Acquisition Finance.

Pricing

Legal DD and M&A fees: market rates, and a fixed fee set before engagement

Legal DD fees range from several hundred thousand yen to several million yen depending on the target's size and the scope, and under hourly billing the total is not fixed at the start. LegalAgent fixes the fee before we begin.

Legal DDFrom JPY500,000(tax excluded)^*2

Fixed before engagement

*2 The minimum fee of JPY 500,000 (tax excluded) applies to summary-format DD for target companies incorporated within the last three years. We quote before engagement based on the target's size, the volume of disclosure materials, focus areas and the report format.

The fee is fixed before we startNo surprise hourly bills.
A flexible scopeFrom full-scope DD to red-flag DD, SPA review only or closing support only.
A schedule worked back from closingAt the first consultation, we present a legal schedule worked back from your planned closing date.

Our approach to fees is explained in How much do M&A attorney fees cost?

What drives legal DD and SPA fees

Size and business of the target: The number of subsidiaries and businesses, whether licenses are required and the state of labor matters change how much needs to be reviewed.
Volume and organization of the materials: Even with the same volume, materials that list each contract's parties, date and term take less time to review than materials where we first have to find out what is missing.
Report format: A red-flag report focused on serious issues, a full report covering the findings broadly, and a mainly oral report each take different amounts of time to prepare.
Additional review areas: English-language contracts, overseas subsidiaries, sector regulation, and antitrust or foreign exchange law reviews tend to increase the team size and the fee.
SPA drafting and negotiation: Whether we draft from scratch or review the other side's draft, the number of negotiation rounds, the design of price adjustment and indemnity clauses, and whether preferred shares, stock options or J-KISS remain outstanding.

Information we ask for when quoting

Side and structure: Buy side or sell side; share transfer, business transfer or another structure
The target: Business, size, and any subsidiaries or overseas locations
Status: Progress on the letter of intent, the data room and legal DD
Scope you need: Review scope, report format and how far we handle the contracts
Schedule: Internal investment decision date, planned LOI and SPA signing dates, and planned closing date
If not yet decided: We can also help design the structure and the review scope from the start.

Team & Record

Attorneys who know M&A and financing handle your deal

Legal and investment DD: 20+
M&A and capital transactions: 20+
Financing matters: 65Since 2024
Contract reviews and drafts: 2,000+

* Approximate figures based on matters handled by our firm; the scope of support varies by matter.

Engineers

Shinya Makita and Sota Miya build our product on the same team as the attorneys.

M&A legal guide

Legal DDWhat Is Legal Due Diligence (Legal DD)? Key Points on Its Purpose, Investigation Items, Process, Timeline and Reflection in the Contract

The items a buyer checks in legal DD, and where the findings are reflected.

FAQ

Frequently asked questions

What is legal due diligence (legal DD)?

It is the buyer's review of the target company's shares, contracts, labor matters, intellectual property, licenses and disputes, through disclosure materials, Q&A and interviews, to identify the legal risks the buyer may take on after the acquisition. The findings are used to decide whether to proceed, the price and any price adjustment, and the SPA's conditions precedent, reps and warranties and special indemnities.

At what stage can we engage you for M&A legal work?

From the initial review stage. We can start with structuring the transaction, reviewing the NDA and letter of intent (LOI), and designing the disclosure request list and the legal DD scope. Starting at the initial stage lets us settle the DD scope, who prepares which materials, and target dates for signing and closing at the outset.

Can we engage you for legal due diligence only?

Yes. Depending on the target and the deal size, we can also conduct red-flag DD focused on priority areas such as contracts, labor and licenses.

What do M&A lawyers typically charge?

Legal DD alone ranges from several hundred thousand yen to several million yen depending on the target's size and the scope, and under hourly billing the total is not fixed at the start. At LegalAgent, summary-format DD for target companies incorporated within the last three years starts at JPY 500,000 (tax excluded), with a fixed fee quoted before engagement.

What determines the fee for legal DD?

The workload depends on the number of subsidiaries and businesses, whether licenses are required, the volume and organization of the disclosure materials, the report format, and additional review areas such as English-language contracts or overseas subsidiaries. LegalAgent checks these points and quotes a fixed fee before we start.

How long does DD take?

We can complete DD in as little as two weeks from the kickoff meeting, provided that disclosure materials from the target company are in place. The timeline varies with the volume of materials, the scope and the Q&A process.

What happens if legal DD finds a problem?

We allocate each issue according to its seriousness. Curable defects become a condition precedent that the seller must fix before closing; quantifiable losses are deducted from the price or reflected in a price adjustment clause. Future risks are covered by reps and warranties, special indemnities and post-closing covenants, and an issue that threatens the continuity of the business may lead the parties to call off the deal or redesign the structure.

Can you support acquisitions financed with an LBO loan?

Yes. Together with legal DD and the share purchase agreement, we support the LBO loan agreement, security and guarantees, repayment of the target's existing debt and release of its guarantees and security, and the funds settlement on the closing day, as one engagement.

Can you act for sellers?

Yes. We support sellers with preparing disclosure materials, setting up the data room, Q&A, negotiating the SPA's reps, warranties and indemnities, and preparing for closing.

How is confidentiality protected?

On top of attorneys' statutory duty of confidentiality, our AI Agent runs in an environment where your inputs are not used for training. Please also see our Information Security Policy.

Contact

Tell us about your deal

Whether you have yet to submit a letter of intent or just want a sense of legal DD costs, tell us about the transaction and we will propose the work needed and a quote.

Your first consultation is a free 30-minute online meeting
You can consult us at the earliest stage of an acquisition
You can consult us after receiving an LBO loan term sheet
We work with financial advisors, intermediaries, tax accountants and CPAs