“My son said he can't do this job. He said it doesn't suit his personality.”
Since its establishment in 1999, Yidun Food Service (hereafter Yidun Food), which has been focused solely on contracted meal service, its founder Yoon Joo-hyun (62) met with a reporter on the 11th at a canteen of a public institution located in Seodaemun-gu, Seoul, and said this.
Under the motto of "home-cooked meals eaten outside the home," Yidun Food, which has been quietly continuing its business, currently provides meals to 22 locations, including government agencies and professional sports teams in the metropolitan area, and generated 3.15 billion won in sales last year.
Mr. Yoon said that he felt a physical burden as he entered his 60s and decided to retire. He considered family succession, but when his son Yoon (35) left the company after expressing difficulties in personnel management after just a year, the situation hit a snag.
“I brought my son on board 2 to 3 years ago, but after trying it for about a year, he said he couldn't do it. This industry relies 80 to 90% on personnel management, and you have to cater to the individual personalities of each employee. My son found this challenging.”
◇ Prioritizing the protection of ‘employees’ and ‘transactions’
Ultimately, Mr. Yoon decided to sell the company in the second half of last year. However, conventional mergers and acquisitions (M&A) were not the solution that Mr. Yoon wanted.
Most companies hoping to acquire are forming funds to increase corporate value or reduce expenses with the goal of realizing profits 5 to 7 years later. There is a strong tendency to prioritize growth potential even if there are risks involved. There are often cases where restructuring is pursued after acquisition.
Mr. Yoon did not want the company he had nurtured for 25 years to simply become a means to make money.
In the meantime, he came to know a company called Liberty Labs. This company, established in 2023 in South Korea, benchmarks Teamshares and Empowered Ventures in the U.S., which support succession through employee ownership, as well as a comprehensive M&A research institute in Japan.
Liberty Labs proposed a unique model of converting Yidun Food into an ‘employee-owned corporation’ by acquiring 100% of its equity and gradually gifting shares to employees based on the cash flow generated each year. The company will transition to employees over a period of 10 to 20 years. This is the only attempt of its kind in the country. For this reason, Liberty Labs’ priority in selecting acquisition companies is also focusing on ‘stability’ that can continuously generate cash.
Mr. Yoon said, ‘The most important criterion for judgment was whether it was a place where we could protect employees and transactions.’ He is currently helping with the company’s soft landing as an advisor.
“After raising the company for 20 years, it feels like my child. I had no choice but to think of the employees first. I thought it would be a good system for employees in terms of welfare, and it could also justify my step back from management.”
◇ New CEO, 33, aims for growth with employees
The new CEO Park Hyung-jun (33), who has been leading Yidun Food since November last year, is a professional manager selected by Liberty Labs. He is about the same age as Mr. Yoon's son.
CEO Park, who has experience in human resources (HR) and accounting in companies like Com2uS and Devsisters, is evaluated as the right person to lead the stable growth and changes of Yidun Food.
Liberty Labs, as the parent company, is supporting Yidun Food behind the scenes, ensuring Mr. Park's independent operation while helping with the construction of internal software needed for productivity enhancement, such as finance and human resources.
Not a single employee has been let go. CEO Park said he is focusing on strengthening communication with employees and building organizational cohesion.
He noted, “Since this is a business that relies heavily on personnel, I thought it would be tough without employees. The first thing I thought about was the employees.” He emphasized, “This year, I am working to strengthen cohesion by creating opportunities for workshops and meetings and to instill a sense of ownership in the company.”
He also plans to actively seek new businesses for Yidun Food's new leap. In addition to the contracted meal service, he is promoting a food material distribution business and is conceptualizing a customized meal delivery service using future technologies.
“I think we will invest a lot in new businesses in three years. I am looking at a model that incorporates food material distribution as well as contracted meals. I am also planning to use the Apple Watch or Galaxy Watch for customized meal delivery for senior care.”
◇ A solution for small and medium-sized enterprises without successors to avoid closure or reverse immigration
The aging of the first generation of small and medium enterprises that have driven economic growth in our country is progressing rapidly.
According to a study by the Korea SMEs & Startups Institute (KOSI) in 2021, one in four CEOs of small and medium enterprises is over 60, and the number of those over 70 is close to 30,000.
If smooth succession does not occur over the next decade, the estimated number of enterprises at risk of extinction is about 325,000, with potential job losses exceeding 3 million.
The heavy burden of inheritance tax is acting as a factor that makes the succession of family businesses, which are the source of stable jobs, even more difficult. Instances of ‘reverse immigration’ where individuals emigrate overseas to avoid high inheritance tax rates, or simply opting to shut down, are increasing.
In this situation, the case of Yidun Food is drawing attention in the industry as a potential new alternative for small and medium enterprises facing succession challenges.
Until the second half of last year, over 400 small and medium enterprises reportedly discussed collaboration with Liberty Labs to resolve succession issues. Liberty Labs aims to acquire more than 10 small and medium enterprises and transition them into employee-owned corporations starting with this acquisition of Yidun Food.
Yoo Hyun-ho, vice president of Liberty Labs, said, “Even healthy small and medium enterprises often close because they struggle to sell to surrounding businesses. Converting to employee-owned corporations is the way for small and medium enterprises to persist. The market needs to become more active.”