Kota Kinabalu: Sabah’s potential for sustained growth in energy, agriculture, fisheries and tourism could attract Japanese companies seeking profitable and expanding business opportunities, according to Nihon M&A Centre Malaysia Sdn Bhd Deputy Director Ryosuke “Rio” Sakamoto.
He said Japanese and other foreign investors would be interested in Sabah if local businesses demonstrated strong growth potential, profitability and sound business fundamentals.
“I think it’s growth, growth. It’s potential growth,” he said at the CEO Masterclass 2026 at Sabah International Convention Centre (SICC) here Tuesday, when asked about the factors that could encourage Japanese companies to invest in Sabah.
Sakamoto said the sectors with particularly strong potential included energy, agriculture, fisheries and tourism.
He said the location of a company was ultimately less important to investors than whether it represented a profitable and growing business.
“If there’s a profitable, growing, good business, they will still invest,” he said.
Sakamoto also said there were opportunities for major Japanese companies, including those in the technology, media and entertainment sectors, to explore Sabah, although Japanese companies currently tended to focus their overseas investments more on Europe and the United States.
He said he intended to engage with more Sabahans and bring their business stories back to Japan in an effort to encourage greater Japanese investment in the State.
“It’s actually my job to speak to as much Sabahans today or tomorrow, as much as possible, and to bring back the stories to Japan and to persuade Japanese to invest in Sabah,” he said.
Sakamoto also stressed that Sabah businesses should be prepared to seize opportunities when they arise by strengthening their businesses and reducing risks that could discourage potential investors.
He said businesses seeking higher valuations needed to address key risks, including excessive dependence on founders, operational and legal issues, as well as over-reliance on individual customers or suppliers.
“It’s important to be prepared so that you can have more options and be ready when the right opportunity arises,” he said.
He was speaking during a session on succession, exit and growth strategies, which discussed how mergers and acquisitions (M&A), strategic investment and other approaches could help businesses expand and prepare for their next stage of development.
Sakamoto said business owners should start planning for succession, retirement or an eventual exit well before personal or business problems arise.
He said common triggers that prompted founders to think about what would happen to their businesses after retirement included health problems, declining business performance and children choosing careers outside the family business.
Succession planning should not only focus on who would take over the company, but also on how ownership and management would be transferred smoothly.
He said family succession or management succession could be good options when family members or existing managers were willing to take over, but owners needed to begin discussions early.
“Especially for second generation, third generation, they might have different passion, different value, and although they can continue operating or managing the business, it doesn’t necessarily mean that they can own the business,” he said.
Sakamoto said ownership and management were two different matters and required careful planning to ensure a smooth transition. He also cautioned that succession could become difficult when founders were unwilling to relinquish control, particularly when the next generation was expected to manage the company but continued to operate under the founder’s direction.
Conversely, he said succession could be easier when founders were willing to empower their children or successors to make decisions and run the business.
On exit options, Sakamoto said owners could consider M&A, an initial public offering (IPO), management succession or winding down the business, depending on their personal objectives.
He said IPO was not necessarily an exit from the business as it marked the beginning of a new chapter, requiring the company to continue building momentum and delivering growth for shareholders.
“If you just want to grow, need capital, need a brand of being a listed company, IPO probably is a better option. While if you’re looking for a retirement, or if you’re purely looking for a strategic partner, M&A,” he said.
He said M&A also did not require owners to sell their entire business, as they could divest a minority or majority stake, sell 100 per cent, remain with the company and grow alongside the investor, or negotiate a retirement period of two or three years.
Sakamoto said owners should therefore determine their desired role after selling before choosing a buyer, whether they wanted to retire, remain involved in growing the company or serve as an adviser.
He said valuation was important when choosing a buyer, but it should not be the sole consideration.
M&A, he said, was similar to a marriage between companies, requiring owners to assess whether the potential buyer fitted their company’s culture and vision, as well as the synergies, assets and capabilities the investor could bring.
Sakamoto also advised business owners seeking better valuations to reduce three major risks, namely key-man dependency, operational and legal risks, and customer or supplier concentration.
He said businesses that depended heavily on founders posed a key-man risk to potential buyers, while companies needed to maintain proper licences, compliance and transparent operations.
He also recommended diversifying customers and suppliers, noting that ideally the top three customers should account for less than 50 per cent of a company’s portfolio.
For founder-dependent businesses, Sakamoto said owners should gradually develop a second layer of management by bringing sales, procurement and other managers into meetings with customers and suppliers and progressively delegating decision-making authority.
“It is a process. It takes time. And you can start from tomorrow,” he said.
He said building a capable second layer of management was among the most important steps in making a business less dependent on its founder and more attractive to potential investors.
