Samil PwC Supports Startup Global Expansion with 'Flip' Service

Samil PwC announced on the 2nd that it will launch a one-stop advisory service that handles the entire process of Flip, which involves relocating the core of a business overseas to help domestic startups expand internationally.

Flip refers to the concept where a corporation operating in Korea moves its business center to a foreign country for overseas expansion, turning the existing Korean corporation into a subsidiary or branch. It means 'flipping' the ownership structure so that the newly established corporation controls the existing one as a subsidiary.

According to a 2022 survey of 259 startups conducted by the Korea Trade-Investment Promotion Agency (KOTRA), when domestic startups expand overseas, majority of them (76.5%) do so through sole investment, followed by joint ventures with foreign companies (8.1%), Flip (5%), and acquisitions of foreign companies (0.4%).

As the number of startups expanding overseas increases annually, interest in Flip is also growing. The biggest advantage of establishing a business base locally through Flip is the broader opportunity to attract investment from foreign investors. Additionally, securing local customers and transactions, as well as forming close strategic alliances with overseas companies, can be facilitated more smoothly. Recently, some startups consider Flip to attempt business models allowed overseas but not permitted domestically, such as remote medical services between doctors and patients.

On the other hand, Flip involves a complex process of relocating the business base overseas, including transferring the shareholder composition and equity ratio of the Korean corporation to the new local corporation as is. This process requires obtaining consent from existing investors and involves various variables such as language and cultural differences and tax issues. Because of these factors, it is pointed out that startups considering overseas expansion should seek expert advice from the early stages to review the optimal timing for implementing Flip and find the best solution.

Samil PwC plans to provide related services in a one-stop manner, from the preparation stage of Flip such as corporate conversion and structuring, investment attraction, and legal support, to post-execution processing. In particular, a major strength is that if a company succeeds in Flip and desires, Samil’s overseas listing dedicated team, which has abundant experience and a global network, can provide comprehensive advisory services for listing in the respective country.

Steven Jung, a partner at Samil PwC who planned the Flip one-stop service, said, "We plan to fully support companies interested in successful global expansion to further grow their existing business models through Flip by leveraging Samil’s global network and expertise.”