Korean CEOs eye sales over acquisitions... Carve-out consideration surges eightfold [fn Market Watch]

[Financial News] Domestic companies’ M&A strategies are expanding beyond growth in scale to portfolio reshaping through the disposal of non-core businesses. In particular, the share considering carve-outs—the sale of part of a business—has surged eightfold in six months. The strategy of focusing capital on core businesses is gaining traction.
According to the “EY-Parthenon CEO Outlook Survey,” released on the 3rd by EY Han Young, 58% of Korean CEOs said they plan to pursue business-sale-related transactions within the next 12 months. The share planning to pursue M&A was 56%. These figures were up 16 percentage points and 12 percentage points, respectively, from the May survey. The survey covered 1,200 CEOs in 21 countries worldwide.
In particular, the share considering carve-outs or partial sales rose eightfold to 16%, from 2% in May. That was at least twice the global average (7%). This is seen as a move to separate and sell non-core businesses, rather than the company as a whole, and reallocate funds to growth businesses. The use of artificial intelligence (AI) in recent transactions is also expanding. Some 96% of Korean CEOs said they had introduced AI or were piloting it for transaction assessments. The share that had embedded AI in most transaction evaluation tasks was also 32%, above the global figure of 12%. Key applications included company valuation (58%) and risk reviews (48%). Gil Tae-min, an EY-Parthenon partner, said, “As uncertainty grows, companies should keep sales as well as acquisitions on the table and concentrate capital and capabilities on core businesses and future growth.”
Meanwhile, the investment banking industry is watching for the possibility that the expansion of carve-outs could lead to corporate restructuring and the discovery of new M&A targets.
An investment banking industry source said, “Selling non-core businesses is a way to reallocate investment resources to growth businesses, going beyond simply disposing of assets,” and assessed, “Whether a deal actually closes depends on the cost of separating the business, securing a buyer, and price expectations.”

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