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The purpose of this study is to shed light on the impact of the COVID-19 pandemic on cross-border M&A advisory business in Japan.

Using the grounded theory approach and trust embedded in network theory, the authors conducted interviews with 12 Japanese senior M&A advisors from 8 different advisory firms, categorizing the results into three general themes.

The first theme comprises deep insights contributing to a “decrease in M&A deals” during the COVID-19 crisis as not many deals could be advised while several were canceled. The second theme is “time delays,” with ongoing deals taking more time to be completed. The third gen-eral theme concerns the “new normal” after the COVID-19 era, as M&A advisors have learned to cope with their challenges and are subsequently more efficient, especially time-wise, in dealing with clients.

The research was based on qualitative data gathered from only 12 interviewees from 8 different consultancies who were Japanese senior M&A advisors.

The practical implications of this research go beyond the findings of M&A studies conducted during and soon after the COVID-19 pandemic. Consulting firms commonly report on the COVID-19 impact on M&A markets or client firms but are silent about their own hardships in establishing trustful relationships with clients during the COVID-19 pandemic. In contrast, we turn the spotlight on the consulting firms themselves to understand their challenges.

The originality of this research goes beyond previous studies on the economic impact of firms; the authors lay out the foundation for the hardship of establishing trustful relationships between M&A advisors and their clients during the COVID-19 crisis. The three general themes elucidated the impact of the pandemic, highlighting the challenges confronting the Japanese M&A advisory business. These themes thus provide a more nuanced understanding of the COVID-19 impact.

This study investigated how the Covid-19 pandemic impacted cross-border acquisitions. Though literature suggests that cross-border investments decreased during the pandemic, there is little conclusive evidence on specific characteristics in the execution of particular acquisitions during such times. We applied the case study format to conduct our investigation by (1) providing a classification of influences on cross-border procedures and (2) highlighting critical characteristics during three phases of acquisitions, namely, search, negotiation and integration periods.

The grounded theory approach was applied to three in-depth case studies of German companies that acquired Japanese targets during the Covid-19 pandemic. Data were supplemented by information received through additional case studies of German subsidiaries in Japan and interviews with consultants.

Firms had already intended to acquire their respective targets, with their decisions having been made prior to the Covid-19 pandemic. Thus, the pandemic had no impact on target selection in the case firms. Owing to travel restrictions, information exchange was limited which inevitably led to higher usage of digitalization. While several barriers led to delays in negotiations, prevailing mutual trust and assistance from consultants helped to reduce difficulties. During the integration period, we found delays in synergy creation and increases in remote communication. Nevertheless, the digital workflow improved the efficiency.

Our study provides novel insights into the execution of cross-border acquisitions impacted by the Covid-19 pandemic. We discuss new implications for mergers and acquisitions (M&A) research and practice for the post-pandemic era, focusing on German firms acquiring Japanese targets.