This article was published on March 7, 2025, at 12:45 p.m. on the ChosunBiz MoneyMove site.
Independent advisory firms are emerging as new players in the domestic mergers and acquisitions (M&A) advisory market, which had been split between global investment banks (IB) and large accounting firms. They are building their core business around advising the sale of small and medium-sized enterprises (SMEs) and venture companies valued at less than 100 billion won, and their numbers are growing rapidly.
According to IB industry sources on the 67th, there are currently more than eight independent advisory firms operating in the domestic M&A advisory market. This contrasts with the past when Korea R & Partners, founded in 2016 by representatives Kim Dae-jung and Yoo Se-hyun, who were previously with the corporate activity agency Q-DAS, was regarded as the only independent advisory firm.
Independent advisory firms classified as 'corporate governance consulting firms' have been increasing rapidly since the 2020s. MMP, founded in 2023 by representative Kim Kyu-hyun who previously provided M&A advice at Anjin Accounting Corporation, is a prime example. Last year, four more advisory firms were established, including those from securities firms.
The increase in independent advisory firms is interpreted as a response to the expanding domestic M&A market. According to the 'Current Status of the Domestic M&A Industry' report published by Samsung Securities in December last year, the number of M&A transactions in 2023 reached 1,926, more than double the 936 transactions in 2014, about a decade ago.
The shift of the M&A transaction focus toward SMEs and venture companies has also spurred the emergence of independent advisory firms. The core of M&A advisory is the connection between sellers and buyers, but global investment banks and large accounting firms have no choice but to pursue buyer-centric transactions for continued trading.
One representative of an independent advisory firm noted, "Independent advisory firms mainly contact SMEs and venture companies with potential for management rights sales in advance and take on the role of their sale advisory firms," adding, "In terms of the importance of closing the sale transaction over the interests of the buyers, we have a competitive advantage."
Independent advisory firms are starting to achieve results. Korea R & Partners successfully completed a total of eight M&A advisory transactions over the past year. While the transaction size of 910.9 billion won is not sufficient to compete with global investment banks, it is significant in terms of the number of transactions. MMP also achieved five M&A transactions last year.
The market expects that the size and number of independent advisory firms will continue to grow. Recently, the issue of management succession in SMEs has emerged alongside the deepening aging population, highlighting the need for M&A in a corporate succession manner rather than a traditional family business succession. Thus, the opportunities for independent advisory firms are increasing.
According to the Korea SMEs & Startups Institute (KOSI), the proportion of 'those aged 60 and older' among domestic manufacturing SME managers increased from 14.1% in 2012 to 33.5% in 2022. Notably, 20.4% of these SMEs do not have suitable successors, and among SMEs lacking successors, 30.7% are reportedly considering M&A.
In Japan, which experienced aging before Korea, independent advisory firms have become the core players in the local M&A market. There are also listed companies. Japan M&A Center, which primarily handles corporate succession M&A for local SMEs, was listed on the Tokyo Stock Exchange in 2006 as a specialist in M&A for Japanese SMEs.
Lee Chang-hee, a researcher at Samsung Securities, stated, "In Korea, there are about 100 family business successions annually, and similar to Japan, the demand for M&A among Korean SMEs and mid-sized companies without successors is increasing," adding, "Online platforms focusing on small-scale M&A below 30 billion won have also emerged."
In fact, independent advisory firms established last year, such as Fractal Technology, Korea Exchange for Enterprises, and Deep Search, have built platforms for advisory services on SME and venture company M&A. They utilize artificial intelligence (AI) for matching sellers and buyers and charge a 2% commission only upon successful transactions, without any upfront fees.
A representative of an independent advisory firm remarked, "I believe that independent listed advisory firms like those in Japan can emerge in Korea as well," stating, "M&A aimed at corporate succession for maintaining businesses and tax savings is already rapidly emerging as a new alternative for SMEs and venture companies in Korea."