Half of Korea's Manufacturing SME CEOs Are Over 60
The share of Korean SME owners aged 60 or older jumped from 14.1% in 2012 to 44.8% in 2024 — more than a threefold increase. An estimated 675,000 SMEs have no identified successor, including roughly 56,000 manufacturing firms.
When a manufacturer shuts down, it is not just a business closing. Decades of process know-how, equipment, skilled workers, and supplier relationships disappear at once. As more owners' children decline the business — or as there is simply no heir at all — policy has shifted from family succession toward third-party succession through M&A.
What the SME Succession Promotion Special Act Does
The Business Succession Support Center and a Dedicated M&A Platform
The Business Succession Support Center is designed as a one-stop channel: identifying succession needs, delivering succession strategy consulting, then linking firms to funding, guarantees, and training. A dedicated M&A platform screens and manages both sellers and buyers, addressing the two structural obstacles in SME succession — information asymmetry and the absence of a functioning "small deal" market.
Deals in the range of a few million dollars have historically been too small for major accounting firms and investment banks, so the businesses never reached the market at all. Consultations are available through regional KIBO (Korea Technology Finance Corporation) and KOSME offices. If succession is a three-to-five-year issue for you, now is the time to open that conversation.
Tax Relief for Third-Party Succession — Eligibility Is Everything
The new third-party succession tax relief applies to owners who are 60 or older with 20-plus years of management. In practice this is a demanding threshold. Companies founded after the mid-2000s, firms that incorporated late, or businesses where the CEO changed mid-course often fail the tenure test.
A simple decision framework:
For firms that fall short today, preparation time converts directly into tax savings. Detailed criteria are set out in enforcement decrees and notices, so confirm the final wording before structuring anything.
Five Things Sellers Should Prepare Now
The Opportunity for Buyers
Succession-driven M&A delivers proven revenue, installed capacity, and an existing customer base in a single transaction, eliminating years of capital investment and business development.
That said, buyers must confirm whether outstanding policy loan covenants, in-flight government R&D projects, and certification status transfer with the business. A change of control without the sponsoring agency's approval can trigger project suspension or clawback of grant funds.
How KITIM Helps
KITIM supports the full succession cycle — readiness diagnostics, financial and certification cleanup, IP ownership restructuring, tax relief eligibility review, and policy funding linkage. Succession does not begin when you list the business; it begins the day you start cleaning up the balance sheet. To find out where your company stands, request a free consultation with a KITIM specialist.