By Jane Han
Staff Reporter
Byun Ji-sung began working for online recruiter Job Korea in 2000, but things drastically changed halfway into her fifth year. The company gave her a raise plus a year-end bonus, midday massage breaks and even freed up a whole floor for other leisure activities. What brought about the change? A new boss.
Job Korea in October 2005 was bought by Monster Worldwide, the parent company of Monster, the world's biggest online recruitment site, as part of its expansion into Asia. Though Job Korea's name and staff were retained, the basic employee care system was overhauled in line with Monster's policy.
``I think it's safe to say everyone is happy with the acquisition,'' said Byun, adding employees feel more secure under the global firm's roof.
The Job Korea-Monster merger is considered one of the most successful M&As among Korea's small and medium-size firms, and industry sources say similar cross-border deals modest in size are cooking.
``We get about one or two inquiries a month from American, European and Japanese companies interested in teaming up with a small or medium firm,'' says Park Sung-il of Invest Korea, the investment promotion arm of the Korea Trade-Investment Promotion Agency.
Park, who connects domestic and foreign firms, said one or two success cases occur per year.
The purchase of Daelim Plastic Industrial by U.S.-based Illinois Tool Works is one of them, he said.
After the M&A, Daelim, which supplies carmakers Hyundai and Kia, saw its annual revenue double to 100 billion won.
``The company now has a healthier financial structure,'' said Park, ``plus, it undergoes stricter product quality control via Illinois Tool Works, which ultimately satisfies the customer.''
Shin Hyun-jang, head of 21Venture, a Seoul-based M&A consulting firm for smaller firms, says domestic firms are seeing such cross-border deals as more attractive since it beefs up their corporate image and quality.
According to the Fair Trade Commission, 742 M&A cases were reported last year, 80 percent of which involved small firms.
``More and more companies are turning to M&A opportunities as they suffer from high interest rates and raw material prices,'' he said, adding the closed mindset is becoming harder to find.
Many newer ventures created by young entrepreneurs are aiming to sell off their businesses for a profit and start new ones, said Shin. ``That's the right thing to do,'' Shin said.
Korean companies often try to restore their financial health by getting listed on the stock market, but their solution should be a smart consolidation instead.
``Timing is everything,'' said Shin. ``If the company is financially struggling and losing staff, it's too late to snatch an attractive buyer.''
Whether domestic or cross-border deals, M&As help solidify the market's competitiveness, he said.
Park of Invest Korea said that though the economy is slow, this presents a good opportunity for international integration, as M&As are part of a long-term strategic strategy.