Has the Era of 'IPO or Bust' Truly Ended? The Current State of Startup EXITs

A quiet change felt amidst the heat of Kyoto

For three days starting July 1, 2026, "IVS2026 was held in Kyoto. This year's theme was "Japan is Back." 340 startups gathered at the venues, Miyako Messe and ROHM Theatre Kyoto, and the atmosphere was as vibrant as ever with discussions on fundraising and business partnerships.

However, walking through IVS this year, I felt a slightly different atmosphere than before. Looking at the lineup of official side events, sessions dealing directly with M&A were clearly on the rise, such as "The Frontline of IPO x M&A: Changes and Strategies 2025→2026" (hosted by Strike Co., Ltd. x East Ventures) and "XDEAL," which specializes in M&A and acqui-hires for contract-based companies. Even in the main IVS sessions, the management decisions of companies that increased their market capitalization by utilizing M&A after going public were explored in depth with capital market professionals, giving the impression that M&A as an EXIT strategy has been upgraded from a "sub-theme" to a "main theme."

As StaM (Startup M&A Inc.), standing in a position where we face startup capital policy and EXIT consultations daily, this atmosphere perfectly matches our gut feeling. In this article, using IVS2026 as an entry point, I would like to organize "why M&A is becoming a realistic option now" from both institutional and market data perspectives.

Background 1: Tightening of 'Continued Listing Criteria' for the Growth Market

The biggest structural change is the Tokyo Stock Exchange's review of the continued listing criteria for the Growth Market. The previous criteria of "market capitalization of 4 billion yen or more 10 years after listing" will be raised to "market capitalization of 10 billion yen or more 5 years after listing" under the new system. Although it will be applied from March 1, 2030, the content forces non-linear growth, as the deadline for achievement is halved and the required market capitalization is 2.5 times higher.

The magnitude of the impact is also reflected in the numbers. According to one estimate, 423 of the 612 companies currently listed on the Growth Market have a market capitalization of less than 10 billion yen, meaning that if the new criteria were applied as is, nearly half of the listed companies would face the risk of transitioning to the Standard Market or being delisted. The TSE itself has clearly stated that the aim of this review is not only "early growth to a scale that can be an investment target for institutional investors" but also "from the perspective of promoting M&A between companies and the next entrepreneurship of entrepreneurs," showing that the authorities have clearly shifted to a stance of supporting M&A.

In fact, companies preparing for an IPO are also reconsidering their options. For companies that find it difficult to coordinate with lead underwriters or create growth plans in anticipation of the new criteria, three directions are being discussed: (1) reviewing business plans and listing timing, (2) listing on the Tokyo Pro Market or regional markets, and (3) selling through M&A. Some audit firms point out that (3) M&A is becoming a practically viable option. In the first half of 2025, a reversal occurred where the number of new listings on the Tokyo Pro Market (21 companies) exceeded those on the Growth Market (18 companies). The structure that was once "Growth Market or nothing" is quietly beginning to crumble.

Background 2: The M&A market itself is at an all-time high

Not only changes in the system, but the momentum of the entire M&A market cannot be overlooked. According to RECOF Data, the number of M&A deals by Japanese companies from January to December 2025 reached 5,115, surpassing 5,000 for the first time, an 8.8% increase from 2024 (4,700 deals), marking a record high for the second consecutive year. It is also reported that the transaction value reached the 33 trillion yen scale, hitting a record high for the first time in seven years.

M&A for the purpose of business succession alone reached a record high of 1,028 deals in 2025 (+11.4% year-on-year). In addition to structural factors such as the aging of business owners and the lack of successors, the movement of large companies choosing to go private has overlapped, and M&A is finishing its transition from a "special option" to a "standard management tool."

In response to this trend, the Ministry of Economy, Trade and Industry (METI) released the "Startup M&A Guidance" in May 2026. In the guidance, METI clearly states that although IPOs have mainly been aimed at as a means of growth for startups, "there is still significant room for M&A to be further utilized as a means of growth for startups in the future," and systematically organizes the matters that both sellers and buyers should keep in mind. The fact that the government is taking the lead in revitalizing M&A is also a clear change in the last few years.

So, is the IPO 'over'?

What I want to emphasize here is that this is not a simple story that "IPOs have become a thing of the past." Even at IVS2026, the management decisions of a company that went public at about 3.4 billion yen and grew to a market capitalization of 600 billion yen in 10 years were discussed as a strategy for the next 1 trillion yen company, and for companies that can achieve large-scale and non-linear growth, an IPO is still the strongest EXIT means.

What has changed is the premise itself that "an IPO is no longer the only correct answer." With the tightening of continued listing criteria, the market is changing into one where "it's not the end once you go public" but "only companies of a scale that can keep running after going public can survive." Managers are being forced to calmly assess from an early stage whether "their company is suitable for an IPO, or whether it is better to enter under a large umbrella through M&A to grow the business."

Perspective as StaM

We at StaM are involved in M&A advice for a wide range of phases, from growth-stage companies after Series B to the transfer of technology/teams at the seed stage (acqui-hire). What I feel in the field is the speed of the change in consciousness on the management side. Until a few years ago, the image of "M&A = the last resort when business didn't go well" was deeply rooted, but now, as an "active option to accelerate growth," there are clearly more managers considering M&A on the same level as fundraising rounds.

The phrase "Japan is Back" spoken at IVS2026 contained the will of the entire Japanese startup ecosystem to move to the next stage. In that next stage, IPOs and M&As are no longer conflicting options, but are becoming part of a parallel management strategy that can be chosen according to the growth stage of the business and the vision of the manager. I believe that is the current state of startup EXITs as of the summer of 2026.

This article is brought to you by Startup M&A Inc. (StaM) for managers and investors considering growth strategies and EXIT strategies through M&A. Please feel free to contact us for consultations regarding your company's capital policy or EXIT options.