Practical Guide to Transfer Price Benchmarks in Company Splits: Expert Insights for Medical M&A

📖 Approx. 3 minutesPublished: 2026.05.29

This article explains the key considerations for company splits in business succession and medical M&A, focusing on transfer price benchmarks, from a practical perspective by M&A advisors specializing in the healthcare industry. We will cover appropriate valuation, market benchmarks, valuation methods, and specific strategies that take into account the restrictions and utilization of the Medical Care Act.

1. Industry Background of Transfer Price Benchmarks in Company Splits

According to the Ministry of Health, Labour and Welfare’s Survey of Medical Institutions, the management environment for medical institutions, including transfer price benchmarks, has become increasingly challenging in recent years due to a combination of factors such as revisions to medical fees, rising labor costs, and the burden of capital investment. Interest in third-party succession M&A is growing, particularly from the perspectives of appropriate valuation, market benchmarks, and valuation methods.

Simultaneously, company splits are a significant issue in the practical aspects of medical M&A. By appropriately designing the utilization and restrictions under the Medical Care Act, a succession that benefits both the transferring and acquiring parties can be achieved.

2. Key Practical Points

1. Preparation: Clarify transfer conditions by organizing the unique business flow, patient base, and facility status specific to transfer price benchmarks.
2. Business Valuation: Calculate an appropriate transfer price range considering the characteristics of each medical specialty. For transfer price benchmarks, appropriate valuation, market benchmarks, and valuation methods are key to the assessment.
3. Company Split Design: Select the optimal scheme considering the restrictions and utilization under the Medical Care Act. Verification from tax, legal, and labor perspectives is also necessary.
4. Target Search & Matching: Select acquiring candidates nationwide that match the characteristics of the medical specialty. Carefully coordinate desired conditions.
5. Due Diligence: Conduct thorough investigations from financial, legal, labor, and medical practice perspectives. Also, confirm licenses and facility standards unique to transfer price benchmarks.
6. Final Agreement & Closing: Conclude the final agreement, including representations and warranties, and indemnification clauses. Simultaneously proceed with license transfers and staff communication.

3. Specific Points of Caution for Transfer Price Benchmarks

In medical institution M&A involving transfer price benchmarks, appropriate valuation, market benchmarks, and valuation methods are key to successful succession. Numerous individual issues exist depending on the medical specialty, such as the continuity of the patient base, retention of staff (doctors, nurses, paramedical staff), condition and renewal plans for equipment, and maintenance/acquisition of facility standards.

Furthermore, strategic design that considers the market characteristics unique to transfer price benchmarks, such as the composition of insured and self-pay medical services, the status of regional medical cooperation, and relationships with nearby competing medical institutions, is crucial. Leveraging our track record in supporting successions involving transfer price benchmarks, we provide practical support from an industry-specialized perspective.

4. Detailed Practical Aspects of Company Splits

Company splits require specialized consideration in medical M&A. Design that takes into account the restrictions and utilization under the Medical Care Act is key to success.

• Confirmation of Relevant Laws and Practical Standards: Compliance with the Medical Care Act, tax laws, and labor laws.
• Collaboration with Specialists: Cooperation with certified public accountants, tax accountants, lawyers, and labor and social security attorneys.
• Risk Assessment: Identification of potential risks and formulation of countermeasures.
• Consensus Building Among Parties: Design of terms that provide a sense of satisfaction for both the transferring and acquiring parties.
• Appropriate Documentation: Explicit statement in the Letter of Intent and Final Agreement.

Frequently Asked Questions

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