Tech firms in mass sell-off

Technology start-ups are scrambling to sell themselves for mergers and acquisitions, according to the Small Business Corp. and the Association of M&A Specialists. Since the second half of last year, the number of firms put up for sale had risen sharply, the Small Business Corp., an agency to promote small and medium enterprises, said yesterday. The 30 members of the private Association of M&A Specialists currently have 500 companies on their "buyer wanted" lists. The figure is up 20 percent over the first half of last year. "It is hard to tell the exact number, but about 30 percent of 9,000 companies that the government certified as 'venture businesses' are waiting for new owners," Yun Jong-hun, a director at the restructuring bureau at the small business agency, said. "An average of two to three companies inquire about how to sell their companies or how to buy one every day." Among 847 companies listed on the secondary Kosdaq market, more than 100 want to sell themselves, according to industry sources. "Companies that lack profit models and are close to the brink of collapse are desperately seeking buyers," Hwang Sang-un, an executive at Core Financial Advisory Group, said. "In the first half of the year, the supply of technology start-ups put up for mergers or acquisitions will overflow the market." Standards for listing on the Kosdaq were tightened starting this year, with the market's reviewing committee pledging to keep a close eye on it to weed out those that failed to meet continual listing requirements. Analysts said the stricter rules had prompted many venturers to try to sell their companies to recoup losses. But few transactions were actually made, industry observers said, because of the increasing gap between those who wanted to sell and those who wanted to buy. On top of this, they said, it was not easy to find professional evaluators due to a shortage of supply. Most prices of companies on the market -- which usually ranged between 2 billion won ($1.7 million) and 3 billion won -- were too small to attract the attention of large consultancies, industry analysts said. "Legal systems must be overhauled as well," Mr. Yun said. "Transactions are discouraged when there are legal requirements that companies must pay capital gains taxes for stake swaps as part of their merger or acquisition deals." by Kim Jong-yoon