Need to Change Rules
It is pointed out that rules of M&A arrangement and intermediation should be prepared in compliance with global standards so that South Korean companies’ presence can be enhanced in the domestic M&A market currently dominated by foreign ones.
At present, foreign securities companies such as Morgan Stanley, Citibank and Credit Suisse have the largest portion of M&A arrangement and intermediation in the local M&A market.
According to industry sources, the market began to grow rapidly in 2012 and hit a new high of 76.8 trillion won in November last year. However, the size of the market reached US$32.2 billion in the first half of this year, when a total of 744 M&A deals were signed, to show a 51% decline from a year ago and reach the lowest level in three years.
“The current lack of rules regarding M&A works, which allows individuals and boutiques to be engaged in the works, has acted as a barrier for global enterprises looking to entrust M&A works to South Korean securities firms,” said an industry insider, adding, “They cannot but think that the domestic M&A market does not have any safeguard at all and, as such, they cannot seek advice or entrust the works and the works have ended up in the hands of foreign securities firms.” He went on to say that advanced countries such as the United States and Japan have put some limits on M&A intermediation by means of certain types of licenses and selected organizations.