Demographics drives a lot of things including Mergers and Acquisitions (M & A) activity. That is a lesson we are now learning from Japan, where there are apparently too few heirs to take over large companies as their boomer-aged Chief Executives head for retirement.

This piece from the Financial Times looks at what is going on, but the story is a simple one. Plenty of Japanese CEOs are baby boomers, meaning they are at retirement age or heading there soon. Whether they are company owners who do not have children at the ready to take over or simply in companies without a strong layer of younger managers, many do not have obvious successors. As a result, they are turning to advisory firms that can help them arrange mergers.  The stocks of such advisory firms are on the rise and no wonder: Nomura Securities estimates that between now and 2040, there will be 40,000 companies per year in Japan facing succession and many of them will need help in arranging it.

Japan is an example of population aging gone crazy. In 2016, births fell below 1 million for the first time since births began to be recorded in 1899.  It has become a vicious circle. Births have been low for years, which means there are few young women to have babies. Those that could are discouraged from doing so by a society where childcare for working mothers is very expensive. As a result, the fertility rate in Japan (the number of children the average woman has over her lifetime) was 1.45 in 2015,  as compared to 1.86 in Canada and about 1.89 in the United States, and the number of births keep declining.

As in Japan, the fertility rates for Canada and the U.S. are below the ‘replacement level’ of two 2.0, but unlike Japan those countries rely on immigration to fill some of the gaps as do many industrialized countries.  Japan frowns on immigration, however, meaning that the foreign born population in the country is less than 2 percent, compared to about 13 percent in the U.S. and over 20 percent in Canada. The end result is that the entire population is aging quickly, and the age of executives is as well.

Whether Japan is a unique case or there are lessons for North America here remain to be seen. Certainly there are huge differences in culture that suggest an-aging-CEO led M & A boom is not as likely in the U.S. or Canada. For one thing, Japan values having family-run companies more than most companies do, with many in that country boasting that they have been ‘family run’ for generations. The importance of being able to make that boast, however, makes that in many cases Japanese CEOs have gone as far as adopting an adult male. In fact, an astounding 90 percent of adoptees in Japan are apparently actually males between the ages of 25 and 30.  Since being family-run does not matter as much in North America, there is no need for mergers to make it happen. As well, there are few large companies within North America that do not have a clutch of in-house candidates vying for any stray CEO openings.

Although North American companies may not merge between themselves immediately because of population aging, they may find themselves merging with Japanese ones.  Given that the market within Japan for any products is also shrinking due to population aging, mergers with non-Japanese companies are also increasingly on the table. We saw a huge hint of things to come with the purchase of premium-spirits company Jim Beam by Japanese company Suntory holdings in 2014, but there may be much more to follow.

The way that aging affects North American companies may be different than the way that it does Japanese ones, but there are lessons to be learned from Japan just the same. Fewer people joining the workforce means the options for how to conduct business have to change. Mergers may be one unexpected thing to come out of population aging, but there will certainly be more – and more business opportunities – as boomers age in every country.