[삼정KPMG]④Director Jang-Gyun Cho “Pay attention to M&A in the financial industry that needs to expand funds in the era of high interest rates”

“When this year’s audit report comes out, it is highly likely that companies experiencing financial difficulties will be put up for sale, whether it is contingent liabilities or liquidity. In particular, it is worth paying attention to M&As in the financial industry where there is a possibility of deteriorating performance compared to the past in the era of high interest rates and the need to expand funds due to regulatory changes.”

Cho Jang-gyun, managing director of Samjung KPMG, said △Cross-border M&A △Buyout of medium and large private equity funds △Paid-in capital increase as the types of M&A worth noting this year. Having joined Samjung in 2008, he is considered a specialist in M&A in the financial industry, such as consulting on sales and acquisitions of banks, securities companies, insurance companies, and savings banks.

Managing Director Cho predicted that the current financial market crunch will affect at least the first half of the year, and that M&A opportunities will go to strategic investors (SI) relatively more than in the past.

At the same time, citing Hive’s acquisition of Ithaca Holdings and Naver’s acquisition of Poshmark as examples, he predicted that overseas M&As would become more active as there are not realistically many products that can be bought in Korea in the case of such large-scale SI.

In the case of private equity buyout, it was also seen that competition to secure a sale could be fierce, centering on large PEs with ample blind fund capacity, rather than small and medium-sized PEs, which have difficulty raising funds compared to the past.

He explained, “Recently, the timing of exits of PEs is also accelerating.”

In addition, when asked to select sectors to pay attention to in the M&A market this year, he cited energy, defense, and finance.

Managing Director Cho explained, “We will need to secure stable energy due to the recent surge in energy prices and national selfishness.

He continued, “As the financial industry, which has recorded good results for 2-3 years, has suffered a decline in performance since the second half of last year due to the influence of interest rates, etc., sales are increasing compared to the past and the valuation gap is narrowing.” Securities companies, capital companies, savings banks, etc., which may be exposed to negative circumstances, are highly likely to come up for sale,” he added.

In response, Samjong KPMG set up an M&A TFT in the financial industry to respond to it.

Managing Director Cho said, “In the past two years, the number of M&As of domestic financial institutions has been very small compared to the past, as sales have decreased significantly due to the boom in the financial industry and the valuation gap has continued.” Samjong KPMG, which has rich M&A experience in the financial industry, will lead this market this year.”

In addition, managing director Jang-gyun Cho responded with a question mark to the opinion that it was a ‘previous bargain sale’ coming out of some corners.

Managing Director Cho said, “It seems that the value will decrease compared to the past, but it is doubtful whether good sales will come out.” There may also be a rise in prices,” he said.