Driving value in cross-border M&A deals

Cross-border M&A: A central but challenging pillar of global growth strategies

In Japan, outbound deal activity has accelerated sharply, supported by governance reform, increased private equity participation, and greater willingness to pursue complex carve-outs and take-private transactions.¹ For Japanese organizations, particularly in life sciences, M&A has become a critical mechanism to access global markets, innovation, and talent, as articulated in Deloitte’s “Beyond borders” publication.²

Yet despite these trends, along with experience and capital, executives continue to report uneven value realization related to cross-border M&A. They are seeing missed synergies, slower integration, and momentum loss after close. To understand why, we surveyed 126 global life sciences executives who have direct experience in cross-border M&A involving Japanese and non-Japanese organizations. We also interviewed a dozen more in the US, Europe, and Asia Pacific. The results point to a clear conclusion: Organizations broadly agree on what makes cross-border M&A difficult, but they diverge sharply on the reasons deals struggle and where in the process they are actually losing value.  

What makes cross-border M&A so difficult?

At a surface level, executives across nationalities cite familiar challenges that align with decades of cross-border M&A research:³ regulatory complexity, communication barriers, and post-merger integration (PMI) risk. Figure 1 shows⁴ that Japanese and non-Japanese respondents largely agree on which challenges make cross-border M&A difficult but differ in the relative emphasis they place on each of them.

In particular, non-Japanese respondents are more likely to focus on culture- and governance-related challenges, while Japanese respondents more frequently point to coordination and communication breakdowns. On its own, this difference reflects where the friction is most visible, yet not how to interpret it.

Figure 1: Cross-border M&A challenges are widely recognized, but interpreted differently

Japanese and non-Japanese executives cite similar challenges but diverge on root causes. Non-Japanese respondents emphasize culture, communication, and capability gaps, while Japanese respondents more often experience governance and decision-making friction. Regulatory complexity is widely cited by both groups.

When does cultural integration come into play in life sciences M&A?

Non-Japanese respondents are significantly more likely than Japanese respondents to identify cultural integration and alignment as a primary PMI challenge. Non-Japanese respondents also raise cultural and communication barriers more frequently during negotiation and structuring, and place greater emphasis on cultural and organizational assessment during diligence (figure 2).

Survey responses help explain this gap. Non-Japanese executives repeatedly use the term “culture” as shorthand for decision rights, escalation paths, and risk tolerance—the ways work gets done in practice. Japanese executives, by contrast, often describe culture through the lens of process friction and communication breakdowns rather than root-cause operating constraints.

Figure 2: Cultural friction emerges across the deal life cycle, not just during integration

Cultural and organizational challenges surface at every stage of M&A. Non-Japanese respondents consistently flag culture earlier and more often, while Japanese more frequently experience its impact at closing and integration, suggesting culture is an execution constraint throughout the deal, not a post-close issue.

What are common life sciences M&A challenges early in the deal life cycle?

Non-Japanese respondents more frequently identify capability gaps—such as repeatable integration processes, governance infrastructure, and internal M&A muscle—as core challenges. Japanese respondents, meanwhile, more frequently cite late-stage communication breakdowns, particularly at closing (figure 3).

Experience further sharpens this contrast, but not in the ways often assumed. More experienced dealmakers are more likely to identify cultural differences as material drivers of cross-border difficulty. Less experienced participants report cultural and communication barriers at similar levels. This suggests that experience does not eliminate cultural friction, but rather reframes it from a surface coordination or unilateral execution challenge into a structural execution issue tied to decision rights, governance, and operating model design.

Figure 3: Deal experience reshapes how executives diagnose cross-border M&A challenges

Less experienced dealmakers focus on visible friction such as communication and coordination. More experienced leaders increasingly diagnose governance, decision-making, and capability gaps as the true constraints on execution. Experience shifts attention from symptoms to structural causes.  

What are key causes of post-merger value erosion in life sciences M&A?

When respondents ranked post-merger challenges, culture, decision-making, and integration design consistently outranked technical or financial issues.

These findings are consistent with Deloitte’s experience advising complex cross-border transactions. In practice, value leakage rarely results from a single execution failure. Instead, it emerges when organizations defer early design choices or leave them implicit—for example, governance, operating model, or decision-making authority. This can allow friction to compound across the deal life cycle.

For senior executives, this is a critical insight. Financial and operational issues are easier to measure, which makes them easier to see. Value erosion, by contrast, usually starts elsewhere: decisions that drift, authority that is assumed rather than defined, and expectations that are never fully aligned (figure 4).

Figure 4: Value erosion in cross-border M&A is driven by execution, not mechanics

Post-merger value erosion is driven primarily by cultural alignment, decision-making, and integration execution rather than technical or financial issues. These challenges compound over time, delaying synergies and undermining momentum. Most value leakage reflects execution design, not deal strategy.

How can life sciences M&A leaders assess cross-border deal readiness before signing?

The preceding sections point to a consistent pattern: What executives experience as cultural friction, broken communication, or slow integration is often the cumulative downstream effect of unexamined assumptions about the ways decisions will be made and enforced across borders.

For leaders, the takeaway is not just to “manage culture” more forcefully. Nor is the answer simply to spend more time building alignment after the fact. It is to assess readiness earlier—before assumptions about governance and decision-making harden into execution constraints.

Taken together, these findings suggest that many cross-border M&A challenges are not isolated failures, but predictable outcomes of the ways teams design and govern deals. Clarity must be established before signing, then tested and refined through sign-to-close, before execution pressure takes degrees of freedom away.

For leaders responsible for shaping or executing M&A strategy, the takeaways are clear:

• Culture is not a downstream integration issue. It is an operating priority—or constraint—that must be understood and designed around early.
• Many integration challenges are locked in before close through implicit assumptions about governance and control.
• Experience does not eliminate risk, but it does help leaders better understand where to focus. As organizations increasingly rely on M&A as a core growth and globalization lever, the differentiator will not be deal volume or ambition, but the ability to align operating models, decision-making architecture, and governance with the realities of cross-border execution.

For leaders who shape or execute cross-border M&A, these findings offer a lens to reassess where risk may already be embedded and where early design choices can still be adjusted to protect value.

Endnotes:

1. Manuel Baigorri, Pei Li, and Dong Cao, “Record $350 billion deals boom fuels rosy Japan M&A outlook,” Bloomberg, December 19, 2025; Anton Bridge and Miho Uranaka, “Private finance structures to drive bumper Japan M&A into 2026, Goldman says,” Reuters, December 12, 2025; Anton Bridge and David Dolan, “Seven & i shows Japan M&A is still not easy, even with better governance,” Reuters, July 17, 2025.

2. Catharina Lurken, Hanno Ronte, and Shoichi Negishi, “Beyond borders: Japanese life sciences organizations evolving for global growth,” Deloitte, 2025.

3. Deloitte, “Cross-border M&A: Springboard to global growth,” 2017; Mark Jamrozinski, “Planning successful cross-border mergers and acquisitions,” Deloitte, August 10, 2018.

4. Throughout this article, exhibits reflect multi-select survey responses; percentages indicate frequency of selection rather than relative importance and are best interpreted directionally and comparatively across segments.