The number and value of merger and acquisition (M&A) deals declined in the first quarter of 2019, the first time in 10 years. Restructuring-type deals accounted for the lion's share, with private fund and venture capital more active than conglomerates. In the advisory market, which has been dominated by foreign investment banks (IBs), a domestic accounting firm ranked first for the first time in a long time.
The number of M&A deals in the first quarter stood at 294, down 19.5 percent, while their aggregate value totaled 15.8 trillion won (US$13.90 billion), a 33.8 percent drop from a year ago, according to the Bloomberg M&A League Tables released on April 4.
The amount of outbound deals, which refer to overseas investments by South Korean companies, came to 3.70 trillion won (US$3.25 billion), up 35.6 percent from the same period last year, while that of inbound deals slid 21.3 percent to 2.70 trillion won (US$2.37 billion).
The biggest deal in the first quarter was Hyundai Heavy Industries Group's takeover of Daewoo Shipbuilding & Marine Engineering Co. for 2.09 trillion won (US$1.83 billion). The acquisition of Linde Korea by South Korean private equity fund manager IMM Private Equity came second with 1.30 trillion won (US$1.15 billion), followed by the Seoul Square office complex by Singapore-based real estate fund manager ARA Asset Management with 998.10 billion won (US$877.84 million), CJ Hello by LG Uplus with 806.30 billion won (US$709.15 million).
By type of transaction, the amount of stake purchases from controlling shareholders under heavy tax burden after inheriting family businesses increased five times from last year. Venture capital investments also grew by more than three times, injecting vitality into the overall market. On the other hand, the number of corporate takeovers shrunk 79.3 percent.
In the advisory market, Samil PricewaterhouseCoopers (PWC), which consulted Hyundai Heavy about the acquisition of Daewoo Shipbuilding, ranked first in the M&A sector, surpassing Goldman Sachs. Until now, foreign IBs, such as Goldman Sachs and Morgan Stanley, have been monopolizing large M&A deals or overseas ones, while domestic accounting firms have been figured in small and mid-size M&A deals. However, other domestic accounting companies, except for Samil PWC, are hovering just outside the top 10.
Goldman Sachs came in second, Morgan Stanley third, Samsung Securities forth and Deutsche Bank fifth. For legal advice, Kim & Chang took first place, followed by Shin & Kim, Bae, Kim & Lee and Lee &Ko. The market share of Lee & Ko fell from 27.4 percent to 10 percent, while that of by Shin & Kim decreased from 27.1 percent to 19.9 percent. In short, competition among the nation’s top four law firms intensified.