M&A Market Rebounds After 3 Years... Polarization Expected to Deepen Amid Recovery

The domestic mergers and acquisitions (M&A) market has returned to a growth trend after three years. As the two-year downturn comes to an end, there are expectations that the recovery will continue this year, while analysis suggests that the polarization phenomenon among investors will also intensify.

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According to the U.S. economic media Bloomberg on the 14th, the Korean M&A market in 2024 recorded a total of 3,103 deals worth $125.9 billion (approximately 185 trillion won). Compared to 2023, the number of deals and the transaction amount increased by 17% and 43%, respectively. The M&A market, which peaked in 2021 with a transaction volume of $181.4 billion (3,423 deals), experienced declines for two consecutive years in 2022 ($119.7 billion, 3,032 deals) and 2023 ($87.2 billion, 2,653 deals), before rebounding after three years. Bloomberg stated, "It showed a clear recovery compared to 2023," and "the number of deals in the market has been steadily increasing since the first quarter of 2025." Bloomberg compiles an M&A league table (performance ranking) every quarter.

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The largest deal by amount last year was the acquisition of SK Specialty by the private equity firm Hahn & Company. This company is the world's number one specialty gas provider and was put up for sale during SK Group's restructuring (rebalancing) process. Hahn & Company acquired an 85% stake for about 2.7 trillion won. The next largest deal was the acquisition of Ecobit, a subsidiary of the Taeyoung Group that underwent a workout. The consortium of private equity firm IMM Private Equity (PE) and IMM Investment acquired Ecobit, the number one waste disposal company in Korea, for 2.07 trillion won.

The commonality between these two deals is that large corporations handed over subsidiaries to private equity firms to overcome liquidity crises. This is a significantly different pattern from 2023. The largest deal in 2023 was the acquisition of Iljin Materials (now Lotte Materials) by Lotte Group for 2.5377 trillion won. It was a corporate-to-corporate transaction aimed at improving the group’s structure through business diversification. The presence of private equity firms has also grown stronger. In 2024, there were 10 'mega deals' exceeding 1 trillion won in transaction size, of which more than half?6 deals?were led by private equity firms. The remaining 4 deals were acquisitions by general corporations.

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The M&A market this year is widely expected to continue its apparent recovery following last year. There is an abundance of pending deals with valuations exceeding 1 trillion won. Companies either pushing for sales or considered potential targets include CJ CheilJedang’s bio business division, with a maximum sale price rumored to be up to 6 trillion won, DIG Airgas, the third-largest industrial gas company in Korea (5 trillion won), Lotte Card (3 trillion won), HPSP (2 trillion won), and Lotte Insurance (2 trillion won), totaling 10 companies. SK IT, Ourhome, Freed Life, Modern House, and Homeplus Express are also considered large-scale deals worth trillions of won.

As large corporations continue restructuring, more assets are coming to market, and private equity firms, the dominant players in the current market, are continuously seeking investment opportunities to deploy their dry powder (uncommitted capital). As of the end of 2023, private equity firms’ dry powder stood at approximately 38 trillion won. Jung Kyung-soo, head of the M&A Center at Samil PwC, said, "Due to significant domestic and international uncertainties such as political variables, the recovery will continue with a 'limited rebound.' The strong dollar will favor global houses over domestic ones, and polarization will intensify with capital concentrating in large houses with solid fundraising and dry powder, sectors symbolized by K (such as food, beauty, healthcare) that have strong export growth potential and global popularity, as well as specific fields like semiconductors and certain investors."

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