PEF의 M&A 관련 계약 주요 유형에 대한 검토 - 경영권 인수형 M&A를 중심으로 -

Private equity funds (“PEF”) have been a key player in the Korean M&A market by driving equity investments in a wide range of industries with capital raised from private placement. The use of the PEF has grown rapidly, in both scale and scope, to become one of the key players of the M&A sector in the Republic of Korea. There are two major types of M&A in the field of PEF investment transaction: (1) buyout investment involving acquisition of management right of a target company, and (2) acquisition of minority shares in a target company for the purpose of becoming its minority shareholder. This article sets the topics in the major agreements in the buyout transactions mentioned above. There are usually four major types of agreements in buyout investment transactions by PEF: (i) memorandum of understanding, (ii) confidentiality agreement, (iii) share sale and purchase agreement, and (iv) shareholders agreement. This article focuses on the practical issues that often arise during the negotiation and execution of those agreements. In particular, this article covers the issues regarding representations and warranties, adjustment of share purchase price, seller’s indemnity obligations, limits on indemnification amount, and seller’s anti-competition obligation, followed by a discussion on W&I insurance that is becoming increasingly popular in the Korean M&A market. Because PEFs have become the key players in the Korean M&A sector, this article aims to facilitate readers’ understanding of the major issues and the current trends in the buyout M&A transactions by PEF in Korea.