Samil Accounting Corporation Pursues Acquisition of IR Agency... Corporate 'Resuscitation' Emerging as New Growth Opportunity

Seeking New Opportunities through Advisory for Listing Maintenance and Acquisition of IR Agency
"Saving Zombie Companies" vs "Strengthening Corporate Competitiveness": Divergent Views
M&A Market Remains Sluggish... Exploration of New Growth Engines Likely to Continue

Companies on the brink of delisting are emerging as a new growth opportunity for the accounting industry. Some accounting firms are establishing organizations to advise on maintaining listings or even providing investor relations (IR) agency services in-house through mergers and acquisitions (M&A).

According to the accounting industry on the 6th, Samil Accounting Corporation is pursuing the acquisition of IPR Square, an IR and public relations specialized agency. Founded in 2009, IPR Square counts dozens of companies such as Interpark, HLB, and Yujin Robot among its clients. It is considered a top-tier agency in the IR industry and has experience in M&A consulting as well. Samil Accounting Corporation is in final negotiations with IPR Square and is expected to close the deal within this year.

Big 4 "We help you avoid delisting"

Samil Accounting Corporation is not the first to absorb IR agency services into its own organization. In 2022, Deloitte Anjin Accounting Corporation acquired the PR agency 'PR Gate' and has since been providing IR consulting through this company. This represents an evolution from the previous stage of advising on listing maintenance through internal teams. The reason accounting firms offer such services to companies is due to the increasing difficulty for companies to maintain listings following the introduction of the new external audit law (Shin Oegam Law) for corporations and others. The number of companies delisted annually on the KOSDAQ was 37 in 2022, 39 in 2023, and as of the 5th of this year, has reached 51.

The Big 4 each have organizations named Listing Maintenance Advisory Center (Samjong and Anjin), Listing Maintenance Support Center (Samil), and Value-Up Support Center (Hanyoung). All these organizations were established after last year. Samjong KPMG, which established the Listing Maintenance Advisory Center in August last year, explained at the time, "We organized a dedicated team to provide listing maintenance advice to companies facing a difficult business environment due to global uncertainties from inflation and interest rate hikes, as well as rising raw material and labor costs." This organization is led by Deputy CEO Park Seong-bae of the audit division and consists of about 30 experts in accounting, taxation, fraud investigation, and financing. They resolve risks according to the issues and characteristics of delisting reasons and advise on all stages before delisting.

"Discovering new growth engines" vs "Forcibly keeping zombie companies alive"

The behavior of accounting firms emerging as 'problem solvers' for listing maintenance draws mixed views: a positive perspective as discovering new growth engines and a negative one that they are making money by forcibly keeping 'zombie companies' alive in the public market. Since the introduction of the new external audit law, the accounting industry has enjoyed a boom but is now analyzed to have passed its peak and begun to decline. According to the 2023 business reports, two of the Big 4 accounting firms saw net profits decrease compared to the previous year, and some even experienced a decline in revenue. The total number of new partners among the Big 4 this year is 99, the lowest level since the 2020s began.

As a sense of crisis over the slowdown in the industry is detected, accounting firms are seeking new growth drivers. Advising on listing maintenance and M&A of IR agencies are among them. For example, Samil newly established organizations this year include the Real Estate Healthcare Center, Value-Up Support Center, Digital Plant Center, U.S. Listed Company Audit Support Center, and Regional Hub M&A Center. Other Big 4 firms also established an unusually high number of new organizations this year compared to previous years. Unless there is a clear rebound in the M&A market, which remains stuck in a slump, this trend is expected to continue for the time being.