Woori Bank is stepping up a “productive business succession” initiative to support smooth succession for small and mid-sized companies.

Woori Bank held a press briefing on “productive business succession” on Sunday and announced its succession support strategy for sustainable growth of small and mid-sized companies.

Productive business succession refers to succession support aimed at preventing business closures, suspensions or downsizing. It is a one-stop support system that combines financial support and consulting, with goals of job stability for employees, supply chain stability within the industry and preservation of small companies’ technological capabilities.

The briefing introduced the operating status and direction of Woori Bank’s business succession support centre, succession cases involving employees at Japanese financial companies, dispute cases involving succession among relatives and third-party M&A cases involving small companies.

Woori Bank in February became the first in the banking sector to create a dedicated organisation for business succession, the “Business Succession Support Center”. The centre is made up of experts in accounting, tax and M&A, and supports succession strategy planning, fundraising and post-succession management stabilisation for small and mid-sized companies.

It is also expanding its collaboration system. Woori Bank signed an M&A finance support agreement with the Korea Technology Finance Corporation in April to promote business succession and technology innovation. It agreed to make a special contribution of 1.3 billion won to provide guarantees worth 43.8 billion won. It also signed mutual cooperation agreements on business succession with Kim & Chang and PwC Samil to build an integrated support system covering finance, legal and tax services.

The Business Succession Support Center reviews various methods, including succession by relatives, succession by employees and sales to third parties. It said it provides consulting tailored to each company by comprehensively diagnosing tax, legal and financial issues that may arise during the succession process.

ECONOMIC EFFECT OF 193.4 BILLION WON IF FAMILY BUSINESS SUCCESSION SUCCEEDS OVER 5 YEARS

Since the centre was set up, Woori Bank has signed business succession agreements with a total of 554 companies. Among the heads of those companies, 70.2 percent were aged 50 to 69 and 20.5 percent were aged 70 or older. The share hoping for succession to children was 52.7 percent, but 43.7 percent were surveyed as not having decided on a succession method yet.

It has so far provided consulting to 102 companies, including mid- to long-term succession strategy planning, financing solutions linked to funding and post-succession management stabilisation. Of these, 77.5 percent set strategies centred on succession to children. For companies with no successors or where succession to children is difficult, it is also presenting alternatives such as MBO, in which existing management acquires shares and control rights, and EBO, in which employees collectively acquire control rights.

Woori Financial Management Institute analysed that if Woori Bank succeeds in family business succession for 100 companies each year over the next 5 years, economic effects would occur on a cumulative base of 500 companies. It projected jobs for 10,000 people would be maintained, a revenue base of 10.7 trillion won preserved, a production-inducement effect of 469.9 billion won and a value-added inducement effect of 193.4 billion won.

Woori Bank aims to provide succession consulting to 500 companies a year, and at least 2,500 companies over the next 5 years, focusing on companies among its clients with strong employment and technological capabilities.

It plans to provide integrated support for each company’s succession structure, fundraising and post-succession management stabilisation strategies through cooperation with Kim & Chang, PwC Samil and the Korea Technology Finance Corporation, centred on the Business Succession Support Center.

Seong-hoo Yoon (윤성후), head of the Business Succession Support Center at Woori Bank, said the briefing looked at business succession as a productive finance task that goes beyond a transfer of management control and leads to job stability, preservation of technological capabilities and maintenance of supply chains.

Jin-wan Jung (정진완), CEO of Woori Bank, said business succession is an economic task directly linked to maintaining jobs for employees, preserving technological capabilities and stabilising supply chains within the industry. He said the bank will provide a one-stop solution covering legal, tax and financial services and strengthen its role as a productive finance partner supporting companies’ sustainable growth.