This article was displayed on the ChosunBiz MoneyMove (MM) site at 10:58 a.m. on Dec. 9, 2025.
In Korea's mergers and acquisitions (M&A) market this year, so-called carve-out deals were in vogue. A carve-out means a corporations partitions a specific business unit to create an independent corporation or spins it off for sale. The sale of SK Enpulse's CMP pad business unit, the sale of LG CHEM's water solutions business, and the sale of HS Hyosung's tire cord business are classified as carve-out deals.
Corporations considering a carve-out need to design more meticulously how to safely separate the business unit. If the strategy is sloppy, there is a risk that everything will return to square one right before the transaction is finalized. Samjong KPMG recently launched a dedicated carve-out task force (TF) to proactively manage such risks. The carve-out TF is a special team Samjong organized to support the entire process, from establishing a business unit's partitioning strategy to stabilizing operations on day one of separation.
ChosunBiz met with Executive Director Lee Jun-sang of Samjong KPMG, who leads the carve-out TF, on the 3rd to ask about the characteristics of domestic carve-out deals, the real-world challenges that emerge on the ground, and the elements corporations should check in advance.
─ What is the background behind Samjong KPMG creating the carve-out TF?
"In the past few years, deals involving business unit partitioning and transfers have increased in Korea, but on the ground, the perception remains strong that 'as long as we prepare the partitioned financial statements well, we're fine.' In reality, there are too many issues that financial statements alone cannot solve. Workforce, IT, contracts, intellectual property (IP), and regulatory permits cannot be separated just by splitting numbers.
Overseas, "carve-out memos and plans" have long been established as de facto standard reports. They are documents in which the seller organizes in great detail how to carve out the business unit. It is customary to distribute a carve-out memo that sets separation criteria and organizes TSA and standalone costs (independent operation of the business being partitioned), along with the information memorandum (IM), to potential buyers (TSA refers to a contract in which, after a partitioning or sale, the seller agrees to continue providing assets and services—such as IT, finance, HR, and operations—that are difficult to transfer or cannot be separated immediately, so that the buyer can operate the business stably for a certain period).
So Samjong KPMG decided to create a TF dedicated to supporting the entire carve-out process from predesign to execution and stabilization, and that became the current carve-out TF."
― How far does the TF's scope of "carve-out" extend?
"Primarily, it starts with setting separation criteria for what assets, personnel, processes, contracts, and IT will be transferred and what will remain. We then organize TSA items and amounts and analyze standalone expenses. Beyond that, we detail in the carve-out memo and plan how to build the IT, HR, procurement, and sales organizations after separation; what services will be provided for how long and at what price after separation (TSA scope and unit costs); and the scale of CAPEX and additional labor costs needed to stand as an independent corporation.
If this is the strategy and design stage, the Samjong carve-out TF also plays the role of a PMO (Project Management Office) until the day the business unit is actually separated. We embed like members of the client's PMO to make sure finance, sales, logistics, HR, and IT actually "run" on day one of separation. Just as we manage a PMI (post-merger integration) project, we aim to manage and execute carve-out projects through to the end."
― What is the most difficult point in actual carve-out deals?
"If we cite the four major challenges we feel in practice, they are almost always: ▲ common assets used by multiple business units, especially technology IP (intellectual property) ▲ personnel transfer issues ▲ regulation and permits ▲ IT system separation.
In the past, we handled a deal to acquire a business unit of a global technology corporations. We had nearly finished due diligence and the seller said "we will partition and transfer the IP," but upon closer inspection, that IP was also being used simultaneously by several other business units. The seller then changed position, saying "we cannot transfer this IP in its entirety," and the deal fell apart. In fact, this should have been sorted out early in the deal when preparing the carve-out plan, but because it was discovered later, it was an unfortunate case where adjustments were not possible.
Regulation and permits are particularly important in the pharmaceutical and automotive sectors. In these areas, the moment the manufacturer changes, all kinds of permitting issues follow. In the auto parts industry, the so-called 4M (Man, Machine, Material, Method) approval is essential. When a business unit is carved out and a new corporation operates it, the finished car maker goes through a procedure to recheck and approve whether "the processes, personnel, and facilities remain the same and quality is maintained," and that alone can take 1 to 2 years. If these are not met by the set deadline, the contract is automatically terminated or renegotiations on terms are necessary."
― Are IT system separation issues also difficult?
"IT separation requires far more money and time than expected. Most domestic conglomerates have ERP, HR, accounting, procurement, and security systems integrated as one. To carve out a business unit and equip an independent system, there is too much to do, including data cloning, account and authority redesign, and interface reconstruction. In actual projects, IT setup expenses alone have sometimes exceeded several billions of won to more than 10 billion won at once."
― How are you addressing employment succession and retention of key personnel? Have there been cases where the deal structure changed or nearly fell through because of personnel?
"This is the most practical issue in domestic conglomerate deals. We carved out and sold a business unit with 70 employees, but only 2 people actually transferred. In the end, the acquirer recruited a large number of people from competitors to rebuild the organization. Because of this risk, we now often see deal structures that include a precedent condition stipulating that "if fewer than a minimum number of key personnel transfer, the deal will not close." This is because conglomerates offer strong benefits, brand power, and organizational stability. In structures where a mid-sized company or startup acquires a conglomerate's business unit, employees often feel there is "no particular reason to move."
When an overseas corporations acquired a business unit of a domestic conglomerate, it raised the compensation system by 20% to 30% compared with the existing level. Overseas, it is already common to offer packages that combine not only monetary compensation (such as salary and stock options) but also non-monetary elements like work autonomy, work environment, a clear career path, and expanded decision-making authority. There have also been cases of reworking the deal structure itself by changing team structures or redesigning roles and increasing key personnel's decision-making authority."
― How is the "price" of a business unit subject to a carve-out determined? Where do differences in perspective between the seller and buyer usually arise?
"Basically, similar to a typical stock purchase M&A, we conduct a separate valuation of the business unit. But there is one decisive difference: standalone cost and TSA terms.
The seller explains that "this business unit is generating this level of earnings before interest, taxes, depreciation and amortization (EBITDA)," but the buyer thinks differently. To become an independent corporation, HR and procurement organizations must be newly established, and CAPEX and labor costs are added. Sometimes many new hires are needed to handle procurement and sales functions previously handled by headquarters.
At this point, the seller argues to "make only small adjustments to the current companywide profits," while the buyer argues that "additional expenses for independent operations should be deducted from EBITDA." The gap in perspectives widens significantly over how much to reflect the level of standalone cost.
The same goes for TSA. Buyers want to use the existing systems inexpensively for a long time, while sellers try to keep TSA periods short and unit prices high. In the end, additional expenses for independent operations and TSA are the most important adjustment variables in carve-out valuation and the points where the two sides most often clash."
― What do you see as the characteristics of today's carve-out market?
"It is increasingly common to see high-growth sectors such as AI, robots, data centers, and power solutions mixed within traditional manufacturing and telecom businesses. If the valuation multiple of the existing business is around 5 to 6 times, AI, robot, and data center businesses are recognized at 10 to 15 times or more. When these two coexist in one company, the high-growth business gets diluted by the traditional business multiple. So overseas, there have been many cases of separating high-growth businesses through a spin-off followed by a sale or listing, and in Korea, companies contemplating similar directions are rapidly increasing."
― How do you think the carve-out market will change within five years?
"As explained above, with new businesses such as AI, robots, data centers, and power solutions rising quickly and the profitability of existing core businesses shaken by cost competition from China, companies will more often have to decide where to invest more capital and which businesses to scale down or carve out. In the petrochemical and duty-free sectors, there is even regret that "the burden would have been smaller if we had partitioned and sold a little earlier.""
― What are the unique strengths of the Samjong KPMG carve-out TF?
"I first encountered carve-out work in a 2010 deal where an overseas corporations acquired a business unit of a domestic conglomerate. Working with the KPMG U.S. team then, I first came across carve-out memos and plans. Later, at global meetings—especially in Japan—the market had grown to the point where dedicated carve-out and integration staff expanded from 5 to 200 people.
Our TF includes specialists familiar with global standards, such as Deputy Manager Min Soon-gi, who handled carve-out work in Japan for eight years. Thanks to that, we were able to bring over the know-how of carve-out memos and plans used in Japan and global markets as is.
Our TF is structured to provide everything within one team, from preparing carve-out memos and plans to executing the actual partitioning (PMO). We do not stop at preparing partitioned financial statements; we also design and manage IP, personnel, permitting, and IT issues together. When necessary, we work with experts from IT audit backgrounds and the value creation team to build synergies and a growth story.
Right now, the TF has about 10 core members, but we have an "expanded TF" structure in which integration and value creation staff join for each project. If the market grows, there is ample room to develop into a large-scale organization like in Japan."