Buying a Korean company: the steps for a foreign buyer

Buying a small or mid-sized company in Korea follows much the same path as anywhere else. A few steps are specific to Korea, and most of them are about timing: when to file, what to check before you sign, and who needs to agree. This is the usual order.

Set your criteria

Industry, size, region, structure (all shares, a majority, or one business line) and timing. Decide early who in your organisation signs off, and whether you will buy directly or through a Korean company. Short criteria let an adviser tell you quickly whether a company fits.

Find companies that are actually for sale

Most well-run Korean SMEs are never publicly listed for sale. They come to market through sell-side advisers, who share an anonymous teaser first and the company’s name only after an NDA and the owner’s approval. Expect to explain who you are and how you would fund the deal before you see detailed materials.

Check the numbers and what sits outside them

Many smaller Korean companies are not required to have an external audit. Compare the figures with tax filings, and look at what the accounts may not show: loans between the owner and the company, personal guarantees on bank debt, unfunded retirement pay, related-party transactions and customer concentration.

Choose the structure

In a share deal you buy the company with everything in it, liabilities included. In a business transfer you take over the assets, contracts and staff you agree on, which takes more separate steps. If you and related parties will hold more than 50% of the shares, allow for the deemed acquisition tax on the company’s taxable assets.

File the foreign investment report before paying

Acquiring 10% or more of a Korean company for KRW 100 million or more is usually treated as foreign direct investment under the Foreign Investment Promotion Act. The report goes to a foreign exchange bank or KOTRA before the money is sent. A few sectors, such as defence, broadcasting and telecoms, finance and companies holding designated national core technologies, need additional approval or review. Smaller stakes are usually reported under the Foreign Exchange Transactions Act instead.

Sign, close and register

The share purchase agreement sets the price and how it is paid, the conditions to meet before closing, and the seller’s representations. At closing the price is paid and the shares are transferred and entered in the shareholder register. The company is then usually registered as a foreign-invested company; your advisers will confirm the deadlines.

Plan the handover

In many Korean SMEs, customers, banks and staff deal with the founder personally. Agree how long the owner will stay, who meets the key customers first, and which reports you want each month.

This guide describes the usual process in general terms. It is not legal or tax advice, and rules change. Confirm the details of any deal with qualified advisers.