Established in 2002 and engaged in battery recycling for 23 years, Company A recently sold its business to a small- to medium-sized enterprise in the same industry as part of its expansion efforts. This decision was made because the CEO did not wish to pass the company down to their children. Company A conducted interviews with the management teams of potential acquirers and site surveys through merger and acquisition (M&A) consulting from the Korea Technology Finance Corporation (KOTEC), and subsequently succeeded the company to a third party while transferring technology and management know-how.
Company B, established in 2000 and operating in the waste treatment industry for 25 years, also sold its business to a small- to medium-sized enterprise in the same sector due to challenges in passing it down to their children. Company B also completed the succession to a third party through M&A consulting and guarantee support from the Korea Technology Finance Corporation (KOTEC).
The Ministry of SMEs and Startups recently announced on the 8th that a senior CEO without an heir has successfully completed a third-party corporate succession through M&A. This increase in demand for third-party corporate succession is due to the CEO's refusal to pass it down to their children.
Due to demographic changes, the proportion of CEOs aged 60 and older in manufacturing small and medium-sized enterprises has risen 2.4 times over the past 10 years, reaching one-third of the total, leading to an increase in representatives of small and medium-sized enterprises wanting to pass the business down to their children. However, many representatives are giving up on family succession due to reasons such as refusal from their children, lack of the children's capabilities, or not wanting to burden them with the heavy responsibility of running the business.
As a result, the demand for third-party corporate succession alternatives such as hiring professional managers and selling businesses is increasing. The Ministry of SMEs and Startups has established an M&A Support Center within the Korea Technology Finance Corporation (KOTEC) to assist aging representatives, who find it difficult to pass their businesses down to their children, with third-party corporate succession through M&A since January of this year. The M&A Support Center provides corporate succession services including managing an M&A transaction information network, intermediary support, building an M&A partners network, M&A guarantees, and technology protection.
In light of the aging trend, the Ministry of SMEs and Startups plans to further strengthen the infrastructure for supporting corporate succession through M&A to prepare for the anticipated increase in demand for M&A-based corporate succession among small and medium-sized enterprises where passing the business down to children is challenging.