| M&A: It's all about relationships |
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We often hear about the need to build better relationships in politics.
This same principle holds true in building successful businesses.
When expanding a business locally or globally, success depends
upon strong relationships. Nowhere is this more true than in the
context of Mergers & Acquisitions (M&As) where South Korean
businesses play an increasingly important and active role.
Whether in politics or M&A, building relationships
involves working through many challenges - how
do you bridge cultural differences in bringing two
groups together? how do you work together more
effectively to achieve real results? How should you
communicate effectively with one another?
As South Korean companies expand and
magnify their global ambitions, M&A activities will
undoubtedly increase and relationship
building
will define each such transaction's success.
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Changing global market
In the Asia Pacific market, M&A activity has been on an upward
spiral for the last five years. South Korean companies are
actively involved in this growing activity on both sides of the
equation - both as the acquirer and acquired organization.
In 2007, Korean companies announced more than 500
deals, with deal values of approximately US$40 billion. Sales
of companies owned by creditor banks and financial sponsors
drove the M&A volumes. Recent acquisitions by South Korean
companies include the Eugene Group's acquisition of Hi Mart
for US$2.1 billion and SK Telecom's US$1.2 billion acquisition
of Hanaro.
Having experienced initial success, South Korean
companies continue to expand globally, as evidenced by
Doosan Infracore's US$4.9 billion acquisition of Bobcat, a
utility equipment and attachment business. |
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Daewoo Shipbuilding & Marine engineering, Hyundai
Engineering & Construction, and other blue chip companies
are poised for finding new owners. Likewise, President-elect
Lee Myung-Bak has pledged to dispose of firms that received
public funds as early as possible. he also mentioned he plans
to privatize state-invested public companies to turn them into
a more efficient and profit-oriented entity, as well as raise
funds for a range of state projects.
At Hewitt, we believe that this trend will continue as
companies look for revenue growth, expanded markets, and
geographic expansion. Further, we anticipate these deals will
become ever larger and more complex.
Looking ahead to the remainder of 2008 and into 2009,
we foresee that the country's largest organizations will likely
engage in fierce competition to acquire companies. The
organizations best poised for succeeding in the M&A race
appreciate the value of relationships and have developed a
strategy to nurture and grow these relationships from the
inception of an acquisition to the completion of integration. |
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Hewitt Quarterly Asia Pacific
is made possible through the combined skills and experience of Hewitt consultants from across the Asia-Pacific region.
For further information please contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com
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