Due to IPO Market Contraction... Venture Business Association Plans Over 20 M&A Consultations in Second Half

18 M&A Strategy Consultations in the First Half of the Year
"More Suitable than IPO for Rapid Growth"
"Actively Utilize as an Exit Strategy"

[Asia Economy Reporter Kim Bo-kyung] The Korea Venture Business Association announced that it will provide M&A strategy consulting and advisory services to more than 20 companies in the second half of this year. This is because the IPO market is shrinking due to the domestic and international trend of interest rate hikes, making support for the activation of M&A among venture companies necessary.

According to the 'Venture M&A Report' published by the Korea Venture Business Association, the association provided consulting and advisory services by connecting 18 small and venture company members with M&A specialized institutions in the first half of this year. Among the companies that received M&A consultations, 15 were sellers and 3 were buyers.

The businesses operated by the consulting companies were diverse, including manufacturing, platforms, semiconductors, digital therapeutic software, and smart factories.

The reasons these companies are pursuing M&A include △exploring new businesses due to the sharp rise in raw material prices △business expansion through young and well-capitalized management △legal issues arising from business characteristics.

In the second half of this year, the association plans to provide M&A strategy consulting support to more than 20 companies pursuing M&A.

In this regard, the government operates a 'tax credit system for technology innovation-type mergers' to activate venture company M&A. When a domestic corporation merges with a technology innovation-type small and medium enterprise such as a venture company, 10% of the technology value amount among the transfer price is deducted from corporate tax.

Kang Sam-kwon, Chairman of the Korea Venture Business Association. / Photo by Dongju Yoon doso7@

With the IPO market shrinking due to recent interest rate hikes and fiscal tightening, the activation of M&A among venture companies is becoming even more necessary.

Ha Jin-bong, CEO of KOC Partners, said, "If a company has outstanding technology recognized for special listing and has reached a certain level of sales and operating profit, it can try to pursue an IPO even if it takes time, but if the company wants rapid growth, M&A is appropriate."

KOC (KAIST One Club) Partners is an accelerator established by KAIST alumni involved in the venture ecosystem. It provides incubation, investment, and M&A advisory services to early-stage startups.

He emphasized that domestic entrepreneurs need to understand the positive aspects M&A brings to the growth of entrepreneurs and companies, rather than viewing M&A as the last escape route for companies.

CEO Ha stressed, "M&A offers entrepreneurs the opportunity to start new ventures again, and for investors, it enables new investments by providing profits and quick exits (investment recovery), satisfying all stakeholders."

Finally, he urged, "We ask companies to actively utilize M&A as an exit method to promote sustainable growth and to be key players in a virtuous cycle that contributes socially."

This content was produced with the assistance of AI translation services.