Next year, corporate mergers and acquisitions (M&A) are expected to be more passive than this year, according to prevailing forecasts. The atmosphere is hindered by widespread uncertainty.

However, it is anticipated that assets for restructuring will continue to flow into the market steadily.

According to a survey conducted by the capital market premium news service Maeil Business Newspaper's 'Radar M' targeting financial officers of 50 major domestic companies, 51% responded that the M&A market next year would be more subdued than this year. Only 18.4% responded that it would be more active than this year.

Despite a more favorable environment for funding due to interest rate cuts, it seems that companies are hesitant to engage in active M&A due to heightened domestic and international uncertainties.

However, there are analyses suggesting that some large corporations' moves to boldly dispose of non-core businesses or non-operating assets could inject some vitality into the M&A market.

The fact that 93.9% of respondents believe the trend of credit rating downgrades due to worsening financial conditions will continue next year supports this.

In fact, when asked about the factors that could drive M&A activity next year (selecting two), the most common responses were 'increased involuntary restructuring due to economic recession leading to more struggling companies' at 70.6% and 'expansion of voluntary restructuring by companies' at 50%. Just this year, there have been 'trillion won' transactions involving large corporate subsidiaries, such as Affinity Equity Partners' acquisition of Lotte Rental and Han & Company’s acquisition of SK Specialty.

A senior official in the investment banking (IB) industry noted, "One of the issues in the M&A market after COVID-19 is that valuations have not fallen sufficiently, leading to a significant gap in perspectives between sellers and buyers," adding, "The valuation adjustments that began in the fourth quarter of this year are expected to create a buyer's market starting in the first quarter of next year." He also explained, "Foreign large private equity fund managers with abundant liquidity are expected to lead transactions due to the strength of the dollar against the won."

The most prominent business leader expected to stand out in the M&A market next year (multiple responses allowed, up to three) was Hyundai Motor Group Chairman Chung Eui-sun (59.2%), followed by Hanwha Group Chairman Kim Seung-yeon (30.6%) and SK Group Chairman Chey Tae-won (28.6%).



※Companies participating in the survey include Kumho Petrochemical, Nexon, Korean Air, Doosan, Dongwon Industries, Lotte Tourism Development, Lotte Shopping, BGF, Viva Republica (Toss), Samsung SDS, Samsung Biologics, Samsung Electronics, Samchully, Shinsegae International, Shin Young, Socar, NCSoft, E-Mart, Jeju Air, Chungheung Construction, Kakao, Kolon, POSCO E&C, POSCO Future M, POSCO Holdings, Harim Holdings, Hanwha Solutions, Hanwha Aerospace, Hyundai Motor Company, Hyundai Steel, Hyundai GF Holdings, CJ Foodville, DL E&C, GS, GS Construction, HD Korea Shipbuilding & Offshore Engineering, HL Holdings, KT, KT&G, LG CNS, LG Display, LG Energy Solution, LG Innotek, LG Chem, LS Cable, SK Square, SK Eco Plant, SK Innovation, SK Telecom, SPC.



[Woo Su-min Reporter / Hong Soon-bin Reporter]