According to a questionnaire held by the Korea Chamber of Commerce and Industry on 302 entrepreneurial firms and 50 venture capital firms, 62.9 percent of respondents said they would be willing to go public to expand in size and secure working capital.(image: Kobizmedia/Korea Bizwire)
SEOUL, Dec.4 (Korea Bizwire) – A survey revealed that Korea’s tech ventures tend to consider initial public offering positively while exhibiting negative attitudes toward mergers and acquisitions. According to a questionnaire held by the Korea Chamber of Commerce and Industry on 302 entrepreneurial firms and 50 venture capital firms, 62.9 percent of respondents said they would be willing to go public to expand in size and secure working capital.
In contrast, they preferred organic growth instead of a merger by larger firms (51.7%) to a question whether they are willing to consider a merger offer positively when a larger company makes it. The investment recovery path preferred by venture capitalists was IPO (66%) while only 20 percent said they would opt for M&A (20%) to recoup their investment. According to the Korea Chamber of Commerce and Industry, most other venture capitalists in countries like the United States and Europe recover their investment by way of M&A.
This is borne out by a report published by Ernst & Young, which said that the ratio of mergers and acquisitions by venture capital firms as a way to recoup investment was 91.3 percent for Europe, 85.5 percent for the United States and 83.3 percent for Israel. Choi Sung-ho, professor at Kyonggi University Graduate School of Public Administration, also said, “The fact that both entrepreneurs and venture capitalists are not so open about M&A shows vividly how hard it is for small firms to procure capital within start-up ecosystem.”
By Sean Chung (schung10@koreabizwire.com)
