'Deals are scarce, but opportunities exist — look at beauty and food companies'

"The second half will be a challenging period for the M&A industry, weighed down by concerns over interest rate hikes and valuation pressures from a strong Korean stock market. EY-Parthenon aims to be a partner for the 'K-culture' space — companies with genuine potential to go global."

Park Nam-soo, head of EY-Parthenon Korea's strategy and financial advisory division, offered that outlook for the second-half M&A market in a recent interview. The domestic M&A market was largely subdued in the first half of this year, apart from a handful of megadeals, and Park said conditions are unlikely to improve significantly. He said EY-Parthenon would focus on identifying investment opportunities among lifestyle companies — those built on Korean consumer culture, including K-beauty and K-food brands — that have the potential to expand into global markets, while also deepening its expertise in the semiconductor materials, parts and equipment sector.

EY-Parthenon was launched after EY Global acquired strategy consultancy Parthenon in 2014. From July 2025, EY Han Young expanded the brand into an integrated platform encompassing not only strategy consulting but also financial advisory services such as M&A, due diligence and valuation. Under the unified EY-Parthenon brand, the firm is building a foundation to organically connect strategy and financial advisory with innovation services — positioning itself as a more trusted advisory organization for key stakeholders including C-suite executives, boards, investment institutions and government bodies.

Park said the domestic M&A market underperformed relative to global markets in the first half. "Compared with the same period last year, global deal volume fell 6 percent but total value rose 16 percent — it was a megadeal-driven market," he said. "By contrast, in Korea both deal count and value fell — by 10 percent and 15 percent, respectively. A wait-and-see mood has persisted, leaving most sectors depressed outside a few exceptions."

He attributed the slowdown to three factors: a decline in large conglomerate carve-out deals, restructuring of key personnel at major private equity funds, and a pullback in investment sentiment due to tightening regulation. "The M&A market reacted to two keywords — a ban on duplicate listings and stronger minority shareholder rights," Park said. "Acquisition costs went up while exit options shrank, so a contraction was inevitable." He added that a concentration of investment in AI and semiconductor companies had deepened market polarization.

The first half was quiet enough to earn the label "deal drought," yet notable transactions did emerge. Park singled out the acquisition of enterprise software firm Douzone Bizon by EQT Partners — the global private equity fund affiliated with Sweden's Wallenberg family — as a standout deal.

"Until now, foreign investors have mainly acquired manufacturing-based companies," Park said. "The Douzone Bizon deal signals that global private equity investment portfolios in Korea are expanding beyond manufacturing into software."

The second-half outlook is equally demanding. Rising interest rates and a buoyant Korean stock market have made deal closing considerably harder. While interest in domestic semiconductor and AI companies remains high, surging equity valuations have added to the burden.

"For now, M&A activity will likely be concentrated in semiconductors and AI," Park said. "DIG AirGas, the big deal of the first half, ultimately sits within the semiconductor supply chain." He cautioned, however, that a sustained semiconductor bull market was widening the gap between seller and buyer price expectations. "The number of companies drawing capital market attention is small, but sector valuations are high — closing deals is far from straightforward," he said.

EY-Parthenon has been building sector expertise through a dedicated semiconductor task force. The firm is currently advising on the sale of SSP, a domestic semiconductor manufacturing equipment maker. SSP holds more than 60 percent of the domestic market for semiconductor ball-mount equipment, making it a strong niche player.

The spread of semiconductor investment beyond materials, parts and equipment companies into downstream value-chain sectors such as industrial gases and energy represents an opportunity. These industries operate on large-scale infrastructure and are capital-intensive, requiring deep sector knowledge.

"Infrastructure deals such as industrial gas transactions require consideration of long-term supply contracts and cost stability, making it difficult to assess company value through standard financial statement analysis alone," Park said. "Capital expenditure tied to facility investment, depreciation, the profitability of long-term assets, and the profit-and-loss structure at the individual customer contract level are all critical due diligence items."

EY-Parthenon handled the accounting due diligence for the buyer in Air Liquide's acquisition of DIG AirGas. The firm also has an extensive track record in domestic industrial gas transactions, including due diligence for IMM Private Equity's acquisition of Air First and work related to acquisitions involving Air Liquide, Air Products and Linde.

EY-Parthenon's strategy extends beyond simply benefiting from the semiconductor and AI boom. The firm intends to generate deal opportunities in a sluggish domestic M&A market through a more proactive approach — which is why its M&A Solutions Group is focused on the global expansion potential of industries rooted in K-culture.

"EY-Parthenon's goal is to identify and develop companies capable of going global — like those in K-beauty and K-food," Park said. The firm published a K-beauty report in 2024 and a K-food report in 2025, using each to select target companies within the respective value chains, and those efforts have translated into actual transactions.

The sale of Manjon Food is a prime example. EY-Parthenon advised the seller, Kamur PE, on the transaction, which closed in May with UCK Partners acquiring Manjon Food. "We published the report at the group level to identify sectors based in Korea that can grow globally. Our K-food strategy aligned with UCK's growth strategy," Park said. "We matched Manjon Food to UCK's vision and the deal closed in a short period of time." The transaction illustrates EY-Parthenon's core strength: rather than simply connecting buyers and sellers, the firm combines strategy consulting with M&A advisory to offer growth strategies both before and after a deal.

Park emphasized the synergy between EY-Parthenon's global network and its strong local capabilities. "EY Global has 700 offices in 150 countries — virtually any market is accessible through the EY network," he said. "We will use that global network and local insight to source deals directly and provide support all the way through to post-closing."