Insights

"If I just had this one last piece of information..."

In deals, that sentence is often a polite no. It belongs to the same family as "I'll think about it" and "Let me check with my boss." The buyer defers instead of declining, and the request sounds diligent enough that nobody calls it what it is.

The seller faces a bind. The information may be sensitive, or valuable enough to help the buyer build a competing business. Release it to a buyer who hesitates, or whose motives the seller doubts, and the seller takes real risk for no gain.

The seller can hand it over, slow the process, or ask for a commitment first, such as an indication of value or a dated milestone. The choice depends on whether the buyer is narrowing or stalling.

US sellers expect a funnel. A serious buyer opens with a long list, follows with a shorter round built on earlier answers, and ends with a few specific points. When each round arrives as long and broad as the last, the seller concludes the buyer is stalling.

The Japanese buyers I have advised often work the other way, with each round longer than the one before. They learn the business through the questions. Each layer of approval, from senior management to finance, legal and other support functions, raises issues the team that originated the deal never considered.

A US seller who applies the funnel test may dismiss a serious Japanese buyer. A stalling buyer repeats old questions. A buyer climbing the approval chain brings new ones, often from a new function.

As a seller, how do you distinguish a buyer who needs more information from one who needs a way to say no? And if you are a buyer, how do you communicate that you really do need that last piece of information?

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One owner wants out. The buyer only wants 20%.

Here's how that deal still gets done.

Many of the US businesses foreign investors target are owner-operated. The owner is management, and often he's ready to cash out and move on.

So why would he sell just 15–30% and keep running the company?

Start with the buyer. Foreign investors are often cautious about the US. The market is fast, competitive and unforgiving. They want to learn from a local operator before committing fully. A minority stake gives them 3–5 years to understand the business before taking control.

For the seller, the case rests on two points:

1. Strategic value. Access to credit, international markets, new customers. If the business doubles and he exits at the same multiple, his return far exceeds a sale today.
2. A built-in buyer. A partner who helped build the business knows it best, and will often pay a premium for the rest.

The costs are real. Expect someone looking over your shoulder, and tighter governance to fit a big-company partner.

The bigger risk: a foreign minority holder can scare off strategic buyers, leaving that partner as your only exit.

So protect the exit:

• Keep strong majority control and limit minority rights
• Don't grant the investor a ROFR or ROFO
• Secure drag-along rights so you can sell 100% on your terms

Done right, a minority sale isn't a delayed exit. It's a bigger one.

If you've been on either side of one of these deals, what made it work, or not?

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Most deals aren't a perfect fit. That's normal.

What matters is whether it's a size problem or a shape problem.

A round peg that's a little too big or a little too small for a round hole? With some finesse, we can make it fit.

A round peg in a square hole is different. No amount of negotiation fixes it. In cross-border deals, shape problems are there at the outset.

The real mistake is failing to diagnose the mismatch sooner. Unsure what the deal really is, the team orders one more report, builds one more model, and schedules one more meeting.

Most of that work answers a question they could have settled early on.

I often start by asking sellers, “If you could wave a magic wand, what three things would define a successful transaction?” If those answers don't resonate with the buyer, we face a shape problem.

This is where an experienced advisor adds the most value. As a seasoned eye, we can assess the situation within the first few conversations, saving you months of wasted effort, and freeing you to find the peg that fits you.

Size problems are worth solving. Shape problems can't be fixed.

What happened when you tried to force a round peg into a square hole?

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North America's largest natural gas producer agreed to pay $1.25 billion for a gas marketer. Expand Energy's deal for Twin Eagle shows where the margin in US gas sits.

Expand wants to capture value across the chain, not only at the wellhead. Japanese companies have long shared that view. Marubeni, Sumitomo, and Mitsui built their own US marketing businesses: MIECO, Pacific Summit Energy, and Mitsui Energy Marketing & Services. What has changed is the route, as Japanese investors now buy their way in. Tokyo Gas acquired 49% of ARM Energy Trading in 2024 and left ARM's management in charge. Mitsubishi closed its Aethon acquisition this year and took over Aethon's gas marketing arm, SCONA. Rumor has it SCONA has since merged into CIMA Energy, Mitsubishi's Houston marketing business.

Marketing and trading is where production turns into margin: transport capacity, storage, basis, customer books, risk management. Much of that value never shows up cleanly on a balance sheet. It walks out the door every evening with the traders, the counterparty relationships, and the feel for a market.

That makes these businesses tricky to buy. Expand plans to keep Twin Eagle's management, and Tokyo Gas chose a minority stake for the same reason. A structured partnership brings the learning, market access, and volume without burying a founder-led team inside a corporate approval process.

For US owners, the appeal runs the other way: patient capital, a long-term balance sheet, and a partner committed to the business for decades.

Partnerships like these rarely come through a bank-led process. They start with a direct conversation about each side's needs.

I'm working on some ideas now, and if you run or invest in a gas marketing business, I'd like to hear from you. What would a strategic partner have to bring to make a minority deal worth it?

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$550 billion pledged. $109 billion selected. $11 billion signed. Nobody knows how much has been spent. That isn't a failure of the deal. It's how Japan invests.

On Monday I wrote about the Japan Fund, Tokyo's state balance sheet backing American industry. The ledger behind it confirms what I often tell potential partners: return wouldn't make the top five on Japan's list of priorities.

@Jayprakash Mistry at Svatantra traced every dollar of the US-Japan trade deal through public releases. Fifteen months in, six projects have been selected and five have loan agreements, almost all of them gas plants feeding data centers. Last month JBIC tripled its loan to an Ohio gas plant, lifting the signed total from $6.9 billion to about $11 billion. NextEra's Texas and Pennsylvania hubs account for most of the rest. The reactor project, the largest at $40 billion, has no loan at all.

@Kousei Takeda-Mays at the East-West Center explains why. Japan fronts all the capital and takes half the profits until it recovers principal and interest, then a tenth afterward. The St. Louis Fed ran the present value and found it negative. The reactor is first-of-a-kind technology whose cost estimate has climbed sixfold since 2020, and the two governments still disagree over who pays for a meltdown.

Japan selected it anyway. A working reactor in Tennessee puts Hitachi and its suppliers at the center of a supply chain China wants, and gives Tokyo a safe demonstration as it rebuilds nuclear at home. None of that appears in the model.

Commerce picked the gas plants and the reactor on the same day in March. By August the gas plants had turbines on order and the reactor had nothing. Easy money moves first, as it always does. The hard money is the point, and Japan put it on the list knowing it would wait a decade.

Which tells you more about an investor: the deals it closes in a season, or the one it signs knowing it will wait ten years?

Mistry's research note: https://research.svatantra.ai/n/japan-us-investment-pledge-2026

Takeda-Mays's article: https://asiamattersforamerica.org/articles/the-configuration-of-550-billion-in-us-japan-energy-cooperation

My Japan Fund post: https://www.linkedin.com/feed/update/urn:li:activity:7517933083371687937/

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In the '80s, they called it Japan Inc.

Today, people around me call it the Japan Fund.

Same idea, new address: Tokyo's state balance sheet backing American industry.

In August, NextEra signed definitive agreements with the U.S. Commerce Department and the Government of Japan to fund up to 10 GW of new gas generation in Texas and Pennsylvania. About $3.3B is released up front for turbines and long-lead equipment.

It's one of the first big tests of Japan's $550B U.S. investment pledge, the price of 15% tariffs.

Here's what most people miss: a government can't run a power plant. So who carries it?

• NextEra builds and operates. The U.S. and Japan jointly own the projects through special-purpose vehicles.
• Japan's money is mostly not equity. Only 1–2% of the $550B is meant to be actual investment. The rest is loans and guarantees from state lenders JBIC and NEXI.
• The incentive is cheap, state-backed capital, plus data center customers who want to “bring your own generation.”

What if no one wants it? Japan can decline a project the President selects. But it forfeits its share and invites higher tariffs.

What if it loses money? Cash flows split 50/50 until Japan recoups, then 90/10 in America's favor. Most of the upside goes to Washington. The downside sits with Japanese state lenders, and ultimately Japanese taxpayers.

Japan Inc. exported cars. The Japan Fund exports risk capital.

Smart industrial partnership, or a tariff dressed up as investment?

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$350 billion of South Korean money is headed for the U.S.

But how much of it will actually build anything new?

Recently, the White House announced the first $200 billion tranche, and the President warned Seoul that if it doesn't commit to the ~$54 billion Alaska LNG project soon, he'll double tariffs.

A few days later, I sat down with someone sourcing investments on South Korea's behalf. We discussed some reasons that isn't so easy.

Two forces are pushing this capital toward assets that already exist:

The timeline. Deploying that much money fast means going where it can be absorbed now: operating projects, not ones still in development.

The risk appetite. Korean institutional capital tends to be conservative. It will accept a lower return in exchange for protection on the downside. It gives up upside to avoid losses, which means stabilized, producing assets, not development equity.

So the likely result is buying out projects that are already built, at low returns and compressed cap rates.

Inbound investment is still good news. But swapping one owner of a power plant for another doesn't add megawatts to the grid.

What the U.S. really needs is capital willing to take development risk: new generation, new transmission, new manufacturing. Projects that wouldn't happen otherwise.

A deadline can get dollars committed. It can't make investors comfortable with risk they've never wanted.

If you're in development or infrastructure finance: who is actually writing the risky development checks right now?

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I call these the 4 Ls, and many sellers who have courted a Japanese buyer know them well.

The process opens with meetings, then moves to site visits, due diligence requests, follow-up questions, and still more meetings. The buyer shows genuine interest, so the seller keeps opening the books.

Months pass, and no offer arrives.

For the seller, the experience is exhausting. Some begin to worry they have educated a future competitor. That rarely happens. More often, the interest is real, but the buyer never builds the internal consensus required to act.

The cost to the seller remains real: time, focus, and sometimes momentum with other buyers.

We can avoid the 4 Ls by setting clear milestones with firm timelines from the start, stopping the process if the buyer misses one. This discipline keeps both sides honest about where the deal stands and respects everyone's time.

Have you experienced the 4 Ls as a buyer or a seller? What moved the deal forward?

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