Rebuilding reputation and union conflicts remain challenges
By Jun Ji-hye
Private equity funds (PEFs) are expected to play a key role in corporate restructuring in 2025 as their influence in the mergers and acquisitions (M&A) market continues to grow.
This trend began to emerge in 2024, as PEFs gained significant attention by driving corporate restructuring efforts amid an economic downturn that led to a decline in conglomerate-led M&A activities.
By closing major M&A deals involving companies like SK Specialty and Lotte Rental, PEFs have significantly expanded their presence beyond the capital markets into the broader business world.
SK Group has been the most active conglomerate in leveraging PEFs.
In June, it sold SK Rent-a-Car to Hong Kong-based private equity firm, Affinity Equity Partners. In November, it divested the thin-film business of its battery materials subsidiary, SK Nexilis, to Affirma Capital, a domestic firm.
In December, the group also agreed to sell an 85 percent stake in SK Specialty, a specialty gas producer, to Hahn & Company in its latest efforts to realign its business portfolio.
Meanwhile, Taeyoung Group, struggling with financial difficulties, sold Ecorbit, the nation’s largest waste management company, to a consortium between IMM Private Equity and IMM Investment in August.
“Corporate restructuring through PEFs offers a win-win strategy for both sides,” an official from one of the domestic private equity firms said.
“For large corporations, it provides an easy way to enhance operational efficiency, while for PEFs, it secures lucrative opportunities. Additionally, it allows PEFs to leverage the talent nurtured within the corporate system and tap into existing client networks.”
Industry officials and experts noted that the ongoing ownership fight between Korea Zinc and an alliance between MBK Partners and Young Poong is also expected to provide a platform that will elevate discussions on corporate governance in the country, though it is still uncertain which side will prevail.
As both sides engage in a battle for shareholder support, they are competitively suggesting measures on how to enhance corporate value and protect shareholder interests. This has led to debates on issues such as how to maintain the independence of the board of directors and what the practical benefits of good governance are.
However, PEFs are not immune to criticism, as their primary goal is to gain investment returns by selling the acquired companies, which often leads to them being labeled as “corporate raiders.”
This raises concerns that M&As might be misused purely for exit strategies.
As an increasing number of PEFs have adopted a more “activist” approach, involving themselves in corporate management for the sake of shareholder rights, they also face growing risks of opposition from political circles, civic groups and minority shareholders.
Even when PEFs emphasize sustainable management, they struggle to gain internal support. Resistance often arises during efforts to restructure businesses, leading to conflicts with unions.
As a result, PEFs are expected to face a heavier burden in managing complex external conflicts and reputation issues.
Experts advise that PEFs need to redefine their position by working to build an image as rational market participants, considering public resentment over the large sums of money earned through M&As, combined with their closed operational culture and reluctance to speak publicly.
“PEFs strictly follow economic logic, but also play a significant positive role,” Shin Jin-young, a professor at Yonsei University’s business school, said. “They need to shift away from their previous attitude of avoiding exposure and develop stronger communication skills to actively persuade stakeholders.”
