[Exclusive] Government Launches Specialized Consulting Project for SME Third-Party Succession

Pilot Consulting Program to Launch Next Year
Offline Sessions to Provide Key Information
Specialized Online Platform to Be Established
"Raising Awareness Is the Top Priority"

The government is launching a pilot program for specialized consulting to encourage “third-party succession (M&A)” among small and medium-sized enterprises (SMEs) struggling to maintain operations due to the absence of family successors. The plan is to match companies seeking third-party succession with legal experts who will guide them through legal and administrative procedures, and provide professional assessments of merger and acquisition possibilities, thereby offering a lifeline to businesses with no clear path forward.

According to government and industry sources on November 12, the Ministry of SMEs and Startups has allocated 850 million won in next year’s budget for the “Corporate Succession M&A Support” project and will operate pilot programs for specialized consulting and offline information sessions. A support team composed of legal and administrative experts will hold offline sessions nationwide to introduce the concept and procedures of third-party succession. Subsequently, company representatives who formally wish to sell their businesses will be individually matched with experts for detailed analysis and support regarding business valuation and the feasibility of M&A at the time of sale.

A dedicated online platform will also be created to promote and raise awareness of third-party succession. In April, the Ministry of SMEs and Startups established an M&A transaction information network on the “Smart Tech Bridge” technology trading platform, operated by the Korea Technology Finance Corporation, to provide intermediary services between supply and demand companies. However, due to low awareness, platform usage remains limited. According to the Korea Technology Finance Corporation, from March to October, there were 47 cases referred to “M&A Partners” under agreement with the corporation, but only 4 actual transactions were completed. In light of this reality, the new platform launching next year will add features such as policy support information, M&A guides, and consulting applications to strengthen related promotion and activate its functions.

A Korea Technology Finance Corporation official stated, “Until now, we have waited for companies to approach us, but going forward, we plan to proactively seek out elderly business owners and identify potential candidates. We aim to provide information on third-party succession to SME owners who are not even aware of the concept, and to encourage succession.”

The government’s decision to actively promote third-party succession is driven by the rapid aging of SME owners. According to the Ministry of SMEs and Startups, as of 2022, 33.5% of manufacturing SME owners were aged 60 or older, more than double the 14.1% recorded in 2012. Nevertheless, the concept of business succession in Korea remains largely family-centered, leaving many companies with no children to succeed them, or whose children are unwilling to take over, facing either sale or closure. A survey conducted by the Korea Federation of SMEs earlier this year found that 27.5% of domestic SMEs had no plans or had not decided on succession by children, and among these, 30.2% were considering selling or closing their businesses.

The government also plans to enact relevant legislation within the year to provide stable support for SME succession. A Ministry of SMEs and Startups official said, “There is a strong consensus not only in the industry but also among policymakers that government support for third-party succession is necessary to ensure that competitive SMEs without suitable successors can continue to operate. We expect to complete the necessary procedures soon. Next year, we will focus on raising awareness of third-party corporate succession through a variety of pilot programs.”