How to Acquire a Korean Company: M&A Guide for Foreign Investors (2026)
South Korea’s dynamic economy — home to global conglomerates (chaebols) alongside a thriving SME and startup ecosystem — makes it an attractive destination for foreign investors looking to acquire businesses. Whether you are targeting a Korean tech startup, a manufacturing firm, or a listed company, the M&A process in Korea involves specific legal requirements that differ significantly from Western markets.
This guide walks you through the complete acquisition process for foreign investors in 2026, including regulatory approvals, deal structures, due diligence, and key pitfalls to avoid.
Table of Contents
Open Table of Contents
- Why Acquire a Korean Company?
- M&A Deal Structures in Korea
- FIPA Registration: The Foreign Investment Notification
- Regulatory Approvals and Screening
- National Core Technology (NCT) Review
- Due Diligence in Korea
- Key Transaction Documents
- Post-Acquisition Compliance
- Timeline and Cost Overview
- How SMA Law Firm Can Help
Why Acquire a Korean Company?
Acquiring an existing Korean company offers several advantages over greenfield investment:
- Immediate market access: Inherit existing customer relationships, distribution networks, and brand recognition
- Talent acquisition: Korean engineers, technicians, and managers with specialized expertise
- Technology and IP: Korea is a global leader in semiconductors, batteries, shipbuilding, K-beauty, and biotech
- Government incentives: FDI-friendly policies, including tax benefits under the Foreign Investment Promotion Act (FIPA)
- Strategic positioning: Korea as a gateway to Japan, China, and Southeast Asia
Korea’s M&A market reached record volumes in 2024–2025, driven by private equity activity, cross-border technology transactions, and chaebol restructuring. 2026 continues this trend, with particular deal flow in AI, secondary batteries, and healthcare.
M&A Deal Structures in Korea
Foreign investors can acquire Korean businesses through two primary structures:
1. Share Deal (주식 양수도)
The buyer purchases shares of the Korean target company from its existing shareholders.
Pros:
- Company continues as a legal entity with all existing contracts, licenses, and permits intact
- Often simpler from a regulatory standpoint (no need to re-register for industry licenses)
- Tax efficiency for sellers (may trigger capital gains treatment)
Cons:
- Buyer inherits all existing liabilities, including undisclosed ones
- More extensive due diligence required
Registration requirement: Under FIPA, foreign acquisition of 10% or more of a Korean company’s shares requires filing a foreign investment notification with a designated foreign exchange bank.
2. Asset Deal (영업 양수도)
The buyer purchases specific assets (and sometimes liabilities) of the Korean business.
Pros:
- Buyer selects which assets and liabilities to assume
- Cleaner from a legacy liability perspective
- Easier to structure if only acquiring part of the business
Cons:
- Existing contracts, licenses, and permits may need to be re-registered or re-applied for
- More complex tax treatment
- Employees may need to be re-hired (triggering severance obligations to seller)
3. Merger (합병)
A statutory merger where the target company is absorbed into the acquirer (or a new entity). Used primarily in domestic contexts; less common for first-time foreign market entry due to complexity.
Acquisition Thresholds Under FIPA
| Acquisition Level | Requirement |
|---|---|
| Less than 10% of shares | Generally not subject to FIPA (no investor rights) |
| 10% or more of shares | Foreign investment notification required |
| Acquisition of management control | Foreign investment notification + possible NCT screening |
| 50% or more / effective control of company with NCT | Prior MOTIE approval required |
FIPA Registration: The Foreign Investment Notification
The Foreign Investment Promotion Act (외국인투자촉진법, FIPA) governs all foreign investment in Korea. When acquiring 10% or more of a Korean company’s shares, or acquiring management control, you must:
Step 1: Select a Designated Foreign Exchange Bank
Open or designate an account at a bank authorized to handle foreign investment registration (most major Korean banks qualify).
Step 2: File Foreign Investment Notification (외국인투자 신고)
Submit the notification before or concurrent with the actual investment. Required documents:
- Foreign investor identification (passport, corporate registration)
- Investment plan (amount, shareholding ratio, purpose)
- Share purchase agreement or letter of intent
Step 3: Remit Investment Capital
Transfer the acquisition price from overseas through the designated bank. The bank verifies the FIPA notification and processes the remittance.
Step 4: Register Share Transfer
After closing, update the target company’s shareholder registry and file with the Korean court registry (등기소) if a registered director changes.
Step 5: Obtain Foreign-Invested Company Certificate (외국인투자기업 등록증)
This certificate unlocks access to FDI incentives, including:
- Corporate tax reduction (up to 100% for 5 years + 50% for next 2 years in qualifying industries)
- Customs duty exemptions on capital equipment imports
- Support programs through Invest KOREA
Regulatory Approvals and Screening
Depending on the target’s industry, additional regulatory approvals may be required before closing:
Competition Clearance (기업결합 신고)
The Korea Fair Trade Commission (KFTC) requires prior merger filing if:
- Combined domestic revenue of the parties exceeds KRW 200 billion (~USD 145 million), and
- Each party has domestic revenue of at least KRW 20 billion (~USD 14.5 million)
If thresholds are met, the KFTC must clear the deal before completion. Review typically takes 30–90 days.
Sector-Specific Approvals
| Industry | Regulator | Approval Required? |
|---|---|---|
| Financial services (banking, insurance, securities) | FSC/FSS | ✅ Prior approval |
| Telecommunications | MSIT | ✅ Prior approval for major acquisitions |
| Broadcasting | KCC | ✅ Prior approval |
| Defense | DAPA | ✅ Prior approval |
| Healthcare/pharmaceuticals | MFDS | Notification/approval depending on activity |
| General manufacturing/services | N/A | Generally no sector approval |
National Core Technology (NCT) Review
This is the most significant new consideration for foreign M&A in Korea since 2024.
What Is NCT?
National Core Technologies (국가핵심기술) are technologies designated by the Korean government as critical to national security and economic interests. Currently designated sectors include:
- Semiconductors and displays
- Electric vehicles and secondary batteries
- Shipbuilding
- Steel and advanced materials
- Aerospace
- Certain AI and quantum computing technologies
When Is MOTIE Approval Required?
Under the Industrial Technology Protection Act (산업기술보호법), foreign investors seeking to:
- Acquire 50% or more of shares, or
- Gain effective management control of a company holding NCT
…must obtain prior approval from the Ministry of Trade, Industry and Energy (MOTIE) before completing the transaction.
Even a minority stake may require reporting (not full approval) if the investee holds government-funded NCT.
NCT Review Timeline
- MOTIE review: 45 days (extendable by 15 days)
- High-tech security review: Can extend to 90+ days in complex cases
Practical implication: Identify NCT issues in early due diligence. Factor in review timelines when setting closing conditions.
Due Diligence in Korea
Korean M&A due diligence broadly mirrors international practice but has local nuances:
Legal Due Diligence Priorities
Corporate records:
- Shareholder registry (주주명부) — verify actual ownership
- Articles of incorporation (정관) — check transfer restrictions, preemption rights
- Board minutes — prior approvals for significant transactions
Labor:
- Employment contracts, collective bargaining agreements
- Severance liability (퇴직급여충당금) — all Korean employees accrue 1 month’s salary per year as statutory severance
- Union status — unionized companies require consultation before transfer
Intellectual property:
- KIPO patent and trademark registrations
- NCT classification of any technology
- Technology license agreements
Real estate:
- Lease agreements (임대차계약)
- Registered encumbrances (근저당, 가압류)
- Zoning compliance
Regulatory:
- Business licenses and permits specific to the industry
- Outstanding regulatory violations or investigations
Financial/Tax Due Diligence
Korean accounting standards (K-GAAP or K-IFRS for listed companies) require careful review for:
- Deferred tax liabilities
- Related-party transactions common in chaebol structures
- Pension liabilities
- Import/export compliance under customs law
Key Transaction Documents
1. Non-Disclosure Agreement (NDA)
Standard starting point. Korean courts enforce NDAs, though damages can be difficult to quantify.
2. Letter of Intent (LOI) / Term Sheet
Often non-binding except for exclusivity and confidentiality. Korean practice tends to treat LOIs as more morally binding than legal practice in some Western jurisdictions.
3. Share Purchase Agreement (SPA)
The core transaction document. Korean SPAs typically include:
- Representations and warranties about the business
- Conditions precedent (regulatory approvals, NCT clearance)
- Indemnification provisions
- Post-closing adjustments (Net Working Capital, cash/debt)
- Non-compete restrictions
Note: Korea does not have a statutory warranty and indemnity (W&I) insurance market as mature as the US or UK, but international W&I products can be obtained for larger deals.
4. Shareholders’ Agreement (SHA)
If the foreign investor is taking a minority stake or entering a joint venture structure, an SHA governs ongoing rights:
- Board representation
- Veto rights over material decisions
- Tag-along and drag-along rights
- Dividend policy
- Exit mechanisms
Post-Acquisition Compliance
After completing the acquisition, foreign investors must:
| Task | Timeline | Notes |
|---|---|---|
| Update shareholder registry | Immediately post-closing | Legal obligation |
| Court registry update (for director changes) | Within 2 weeks | Mandatory |
| FIPA post-investment report | Within 1 month of completion | Submit to designated bank |
| Tax filing (corporate tax) | Annual | Within 3 months of fiscal year end |
| Audit (if applicable) | Annual | Required if above certain size thresholds |
| Employment transition | Ongoing | Handle employee communications carefully |
Timeline and Cost Overview
Typical Transaction Timeline
| Phase | Duration |
|---|---|
| Due diligence | 4–8 weeks |
| Negotiation and documentation | 4–6 weeks |
| Regulatory filings (KFTC, NCT if needed) | 30–90 days |
| Closing | 1–2 weeks after approvals |
| Total (standard deal) | 3–5 months |
Estimated Costs
| Item | Estimated Cost |
|---|---|
| Legal fees (Korean counsel) | USD 30,000 – 200,000+ (deal size dependent) |
| KFTC filing fee | KRW 500,000–10,000,000 |
| Registration taxes on share transfer | 0.35% of transaction value (stamp duty) |
| Financial/tax advisors | Varies significantly |
How SMA Law Firm Can Help
Foreign M&A in Korea requires navigating FIPA notifications, KFTC filings, NCT screening, labor law, and complex due diligence — all while managing cross-cultural negotiations and tight deal timelines.
SMA Law Firm provides end-to-end M&A support for foreign investors:
- Preliminary regulatory risk assessment (NCT, sector approvals)
- Full legal due diligence on Korean targets
- SPA and SHA drafting and negotiation
- FIPA registration and post-investment reporting
- KFTC merger control filings
- Post-acquisition integration support
📩 Contact us at sma@saemunan.com to discuss your Korea acquisition strategy. Our bilingual team has extensive experience representing international clients in Korean M&A transactions.
This article is for informational purposes only and does not constitute legal advice. Consult a qualified Korean attorney for advice specific to your transaction.