[Invest Korea] An Introduction to the Global M&A Center

On January 1, the Korea Trade-Investment Promotion Agency (KOTRA) launched the Global M&A Center to address the increase in global mergers and acquisitions (M&A), growing desire among Korean smalland medium-sized enterprises (SMEs) to pursue crossborder M&A transactions and the new government’s pledge to activate the M&A market in Korea. The Center will assist Korean companies pursuing small- to medium-sized cross-border M&A transactions not covered by global investment banks or other firms.

As interest in expanding into foreign markets through M&A grows, so do the needs of Korean SMEs struggling in the pursuit of M&A transactions. They face a lack of information regarding targets, difficulty obtaining accurate valuations of foreign assets, low funding, a general lack of M&A experience and other challenges. Under the leadership of Invest KOREA Commissioner Kiwon Han, our Center aims to assist domestic SMEs and PE/VC firms. We will support them through the acquisition of stock, business units and assets, as well as the establishment of joint ventures. With an emphasis on the expansion of foreign channels, the Center aims to secure research and global core technology for SMEs with R&D limitations, overcome trade barriers in foreign markets and acquire first- and second-tier vendors to secure distribution channels. Our strategy is to partner with foreign advisories as well as reach out and utilize our global PE/VC network to assist Korean companies looking overseas for M&A opportunities.

The Global M&A Center’s network consists of KOTRA’s 10,000 annual clients in addition to other domestic databases. We are in a unique position to build off of KOTRA’s reputation for reliability in the private sector. We will collaborate with other KOTRA teams and Korean companies to assess their overseas M&A needs, and we will use our overseas branches, called Korea Business Centers (KBCs), and an international network of foreign financial firms to deal source. We plan to hire global experts as well.

Our operational plan involves multiple stages and two parties: domestic SMEs and advisories from the private sector. The first stage, identifying potential buyers and their needs, will be handled by our Center. In the second stage, deal sourcing, we will work with domestic SMEs to search for and screen promising targets. We will also be able to support the retainer fees of private sector advisories. In the next stage, deal execution, we will support pre-valuation and introduce due diligence institutions and M&A financing firms, as well as support due diligence fees. In the final stage, post-merger integration, we will provide local law and regulation information, introduce PMI consulting firms and support local marketing through our KBC network. We will serve as an M&A mentor, leading Korean companies through all aspects of a cross-border M&A transaction.

Korean companies are very interested in overseas M&A deals. According to a recent KOTRA survey of 1,366 SMEs, 12 percent of them were interested in overseas M&A. We currently support 165 M&A interested firms, which are divided into three tiers: companies with a clear target, plan and capital to complete M&A transactions within the year (tier 1); companies that intend to carry out M&A transactions but lack a clear target or strategy (tier 2); companies that want to pursue M&A but have done little research and are not prepared to execute a transaction (tier 3). Our goal is to increase the number of M&A-interested firms to 300 by the end of this year, with 100 of them being from tier one.

With Han at our helm, we are confident we will achieve these goals. Prior to joining KOTRA in 2012, Han led a distinguished 25-year career as an investment banking expert in Japan and Europe. He has successfully executed a number of deals as the lead manager of more than 500 equity transactions out of Japan, Asia and Europe and as the lead advisor in cross-border M&A transactions.

The Center will build a systematic deal sourcing structure through six key locations — Tokyo, Hong Kong, Singapore, London, New York and Silicon Valley — and 36 supporting KBCs. Over time, our operation will expand to include local M&A experts in London and Silicon Valley.

Throughout 2013, we will host and attend a variety of events around the world targeted at domestic SMEs, domestic PE/VC firms and foreign investors. Coming up in May is the Global M&A Forum. The PE/VC Forum, which is our largest event and attracts hundreds of domestic and foreign firms, advisories and institutions, will be held in Seoul in June.