Consultant urges aggressive action
Joseph H. Marshall
“Companies need to take advantage of the current low growth, utilizing cheap financing to acquire other businesses and grow faster than competitors,” Marshall said at a Tuesday press conference in Seoul. “It is time for companies to be aggressive rather than defensive.”
AlixPartners is a consulting firm that has engaged in many restructuring deals for Korean and foreign businesses, such as Kodak.
The American business advisory firm in its annual report cited the Korean construction and petrochemical industries as being in need of strategic restructuring. Although construction has picked up in the domestic market, builders are seeing stagnant growth in their overseas portfolios. And despite some recent rebounds in international oil prices, the market for petrochemical companies remains gloomy.
Traditional retailers will also need such change as sales platforms move online, Marshall added.
Korean companies have long enjoyed the benefits of growth. They were able to improve their values based on growth momentum. But now, as the economy remains in an extended period of sluggish growth, companies need to think about operational changes in management for higher efficiency, while seeking higher growth than competitors, he explained.
AlixPartners also announced the findings of a survey of about 100 professionals on the state of private equity value creation in Asia, which revealed that the role of private equity funds lags behind that of their western counterparts.
In the report, 86 percent of respondents said it is more challenging to implement private equity firms’ value creation strategies at Asian companies because private equity firms commonly hold minority ownership stakes. That limits their ability to drive true operational change in companies that need restructuring.
China was cited as the most challenging country and Korea ranked ninth of 16 Asian countries in terms of difficulty in implementing operational changes in corporate management.
“Most Korean companies view restructuring as cleaning up in a time of trouble, but that will change when private equity firms get a bigger role in corporate restructuring,” said Kang Jung-woo of AlixPartners in Seoul.
BY SONG SU-HYUN [song.suhyun@joongang.co.kr]
with the Korea JoongAng Daily
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