[Private Equity Network Analysis②] Cutting and Adding Companies... Consultants Specialized in 'Optimization'

Growing M&A Market... Rising Demand for Strategic Consulting Backgrounds
UCK and Praxis Capital Founded by Bain Alumni
VIG and Crescendo Led by BCG and McKinsey Alumni

Editor's NoteIt has been 20 years since private equity funds (PEF) for buying and selling companies were first registered in Korea. The market, which was only 200 billion won in 2005, has rapidly grown to over 140 trillion won. As seen in the Homeplus incident, private equity funds now affect the daily lives of ordinary people. We thoroughly investigate who the key figures are that dominate the domestic private equity industry.

In the private equity (PEF) market, where a small elite group operates, the presence of those from global consulting firms is prominent. This is because comprehensive planning capabilities to analyze the market and establish response strategies are essential to select companies with growth potential, quickly restructure them, increase corporate value, and resell.

'Corporate Value Growth' is Key... Increasing Need for Consultants

In the early days of the private equity (PE) industry, which originated in the United States, investment banking (IB) professionals dominated. This was because the main source of profit was leveraged buyout (LBO) structures centered on various financial techniques. The method involved maximizing leverage by borrowing funds necessary for acquisitions while providing the assets or future cash flows of the target company as collateral in advance. The targets were mainly companies with strong cash flow but undervalued due to lack of management capabilities.

However, as the mergers and acquisitions (M&A) market became more active, competition intensified, and acquisition prices rose, making it difficult to earn profits solely through leveraged buyouts. It became essential for PE firms to solidly grow companies after acquisition. Talent capable of boldly changing business strategies and drawing plans to increase sales and profits became urgently needed.

Consultants from global management consulting firms who gained extensive experience during the restructuring of domestic large corporations after the 1997 Asian financial crisis were optimal candidates. They were familiar with analyzing market structures where acquisition candidates exist, differentiating points from competitors, and establishing detailed growth strategies. They were optimized for decision-making by quantifying not only financial figures but also qualitative indicators and for creating various anticipated scenarios. Naturally, an environment was created for management consultants to enter the PE industry.

Established Presence of 'Big Three Consulting Firms' Alumni

In the domestic PE industry, which started about 20 years later than in the U.S., many alumni from the world's top three consulting firms?McKinsey, Boston Consulting Group (BCG), and Bain & Company?are positioned.

In Korea, especially, many from Bain & Company are active. Since the 1980s, Bain & Company has made consulting for PE a core business pillar and has pursued PE-friendly strategies. Furthermore, Bain & Company launched the global PE firm Bain Capital in 1990, internalizing actual operational experience. It is known that their consultant training process includes practical training closely related to PEF work, such as corporate acquisition and value creation strategies, corporate valuation, and investment exit structure design. With an internal culture that involves not only strategy formulation but also execution, they have produced 'execution-focused strategy consultants' rather than 'strategists who only think,' gaining prominence in the PE industry.

Kim Soo-min, CEO of UCK Partners, became a partner at Bain & Company in 2006 and served as vice president. After working in the PE group for five years, he left the company and fully entered the PE industry. Emphasizing consultant-like thinking, he hired many consultants. Kwak Seung-woong, partner at UCK Partners, is also from Bain & Company.

Kim Jeong-hwan, vice president of MBK Partners, considered a representative first-generation PE figure in Korea and a key player in generational change, started his career at Bain & Company in 2004. He joined MBK Partners in 2007 and participated in major investments such as Orange Life (formerly ING Life), Homeplus, Golfzon County, and KT Rental, successfully closing deals. Lee Jin-ha, vice president at MBK, is also from Bain & Company.

Praxis Capital is a PE firm founded by three co-CEOs from Bain & Company: Ramin Sang, Lee Kwan-hoon, and Yoon Joon-sik. Not only the CEOs but more than half of the operating personnel are consultants by background. Unlike other PEs focusing on manufacturing, consumer goods, and distribution sectors, Praxis Capital mainly invests in more innovative digital companies such as B2B (business-to-business) services, platforms, and fintech (finance + technology), thanks to the quick judgment of consultants.

In particular, Praxis Capital actively employs the 'bolt-on' approach led by consultant-origin executives. Instead of investing in a single company, they acquire related companies around a core platform company to maximize synergy creation. A representative case is the acquisition of BusinessOn, an electronic tax invoice and electronic contract platform, followed by additional acquisitions of Glosign (electronic signature and contract solutions) and Nudge Partners (tax filing and evidence automation), building a vertically integrated system to maximize efficiency.

Relatively, McKinsey and BCG alumni often pursue an MBA and then gain experience as corporate executives. Nevertheless, some individuals are actively working in the PE industry.

Notable figures who passed through McKinsey include Lim Hyung-seok, CEO of Neos Equity Partners (former head of KKR Seoul office), Kim Jae-min, vice president of Han & Company, Lee Jung-woo, head of Bain Capital Korea, and Lee Ki-doo, CEO of Crescendo Equity Partners. The CEOs of VIG Partners, Lee Cheol-min and Shin Chang-hoon, and Kim Tae-yeop, CEO of Apalma Capital, are from BCG.