In the domestic market, private equity funds have become firmly associated with corporate restructuring and job insecurity. Although public sentiment has turned cold following a series of negative incidents, there are actually many cases where these funds have saved and grown companies.

Edaily has spotlighted cases where private equity funds invested in growth rather than workforce reductions, thereby boosting corporate value. Through examples of companies that faced concerns and misunderstandings simply because they were acquired by private equity funds but successfully turned themselves around, we examined how the appointment of professional managers, global expansion, and job creation led to improved performance and growth.

Through this, we aim to highlight that investment approaches and management strategies determine a company’s success or failure, and to underscore the need to reconsider the prejudices surrounding private equity funds. [Editor’s Note]

[E-Daily Marketin JI YEONG-EUI YunJi Kim Reporter] Employees who opened their wallets to save a failing company ended up in debt. In the 2000s, when Daehan Cable was teetering on the brink, employees participated in a rights offering to purchase employee stock, hoping to help the company stay afloat. It was a choice made to protect “their company,” which had posted profits for 54 consecutive years. However, the company could not withstand the shock of the 2008 global financial crisis and fell further into decline, leaving employees with loans of tens of millions of won per person taken out to purchase employee stock. Their desire to save the company had turned into a shackle.

Following a period under creditor-led management, Daehan Cable was sold to the domestic private equity firm IMM Private Equity (IMM PE). Restructuring, workforce reductions, and asset sales—it was an inevitable source of anxiety as to which management approach the new private equity fund would choose from among the various options. However, the private equity fund that acquired Daehan Cable made an unexpected announcement. At its first town hall meeting with Daehan Cable’s management and employees, IMM PE declared a “debt forgiveness” plan.

“The company will repay approximately 4.5 billion won in employee stock purchase loans on behalf of Daehan Cable employees.”

This private equity firm, which made a fresh and striking impression from the very beginning, went on to write a “comeback story” for Daehan Cable throughout its tenure. Under IMM PE’s management, Daehan Cable shed its label as a company under a voluntary agreement with creditors and returned to a growth trajectory based on global orders. By the time it was resold to Hoban Group—which could support its mid- to long-term growth—the company had recovered 3 trillion won in revenue for the first time in 15 years.

Daehan

Cable, Mired in Losses… The Aftermath of Overreach and the Financial Crisis

Founded in 1941, Daehan Cable was Korea’s first wire and cable company and had long served as a pillar of the nation’s core industries. It was regarded as a sound company, having posted profits for 54 consecutive years. However, management began to falter in the mid-2000s following the passing of Chairman Seol Gyeong-dong, the company’s founder. Its financial structure became unstable as investments unrelated to its core business—such as the Muju Resort, the Namu Bus Terminal, and overseas real estate—accumulated, and the 2008 global financial crisis dealt a direct blow to that fragile structure. Ultimately, Daehan Cable entered into a voluntary agreement with its creditors in 2012. A management team led by major creditors was dispatched, and passive management continued under this provisional system.

To IMM PE, which had been monitoring Daehan Cable as it emerged on the M&A market, the company’s “areas in need of surgery” were relatively clear. What had brought the company down were investments far removed from its core business, the resulting accumulated financial burden, and an unstructured management framework. IMM PE judged that the company could be saved if managed properly.

Instead of acquiring shares from existing shareholders, IMM PE proposed injecting capital directly into the company through a rights offering. The goal was to first stabilize the company’s financial structure by injecting immediate cash into the company. In September 2015, IMM PE carried out a rights offering worth approximately 300 billion won, securing a 70.1% stake in Daehan Cable and becoming the largest shareholder.

The First Step Toward Recovery: “Investing in People” Instead of Restructuring

Upon joining Daehan Cable, IMM PE began its turnaround efforts with “investing in people.” As part of this investment strategy, the firm settled approximately 4.5 billion won in employee stock ownership loans—which employees had been burdened with during the company’s difficult period immediately following the acquisition—by having the company cover the costs. The rationale was that management strategies would only succeed and results would naturally follow if the people who had sustained the company were retained.

The restructuring of management also focused on reorganization rather than workforce reductions or a complete overhaul. While a change in major shareholder typically leads to the replacement of the CEO, IMM PE interviewed the internal executive who was leading sales at the time and decided to retain him as CEO. They retained the person who knew the company best and focused on reshuffling roles to restructure the company—including finance, management, and the resolution of contingent liabilities. To this end, immediately after the acquisition, IMM PE’s deal team was stationed on-site and conducted repeated interviews with executives and employees. It was a “100-Day Plan” designed to identify who could lead the company forward.

They also redefined the criteria for compensation and evaluation. By introducing stock options and performance-based bonuses, they ensured that rewards were directly tied to results such as securing overseas orders and improving profitability. Even without resorting to drastic restructuring measures, the organization began to quickly reorganize itself once the compensation and evaluation criteria were rationally revised.

“Business Redesign” Instead of “Financial Squeeze”… Daehan Cable’s Five and a Half Years with a Private Equity Firm

The first thing IMM PE put on the operating table after entering

Daehan Cable

was its unnecessarily bloated business structure. Although the company possessed excellent technological capabilities, it was difficult to properly implement growth strategies within a structure entangled with various contingent liabilities and non-core assets. A significant portion of Daehan Cable’s contingent liabilities was tied to businesses unrelated to its core operations. Payment guarantees and lawsuits arising from resort, real estate, and terminal development projects, as well as liabilities related to its investee companies, were strangling the entire company.

IMM PE sold the Namu Terminal, the Muju Resort, and overseas real estate assets, and reduced the number of investee companies—which had stood at 36—to roughly half. During the asset sale process, the firm also eliminated guarantees and potential bad debts. The rationale was that operations could only move forward once uncertainty was removed, and growth was only possible once operations were moving forward.

The business strategy was also realigned to focus on the core business. The company reduced low-margin products and concentrated on areas with high technological barriers—such as extra-high-voltage (EHV) and high-voltage (HV) cables and subsea cables—where increased investment would enhance the company’s competitiveness. As these high-value-added areas expanded, large-scale order requests began pouring in from major global markets, including the United States, Europe, Oceania, Asia, and the Middle East.

The next area addressed was the overseas order structure, which relied heavily on brokers. The structure, which involved intermediaries, resulted in high commission costs and a serious problem of low-price bidding. IMM PE recognized that this structure was eroding profitability and shifted its strategy toward strengthening direct sales through overseas subsidiaries. As a system for direct transactions with clients took root, the company was able to manage its cost structure—taking into account fluctuations in exchange rates and raw material prices—right from the order acquisition stage, and the proportion of low-margin contracts naturally decreased. In managing foreign currency assets related to global orders, the company also established hedging principles to ensure that exchange rate and raw material price fluctuations were not left to chance. Rather than expecting speculative gains from exchange rate fluctuations, the company adopted an approach—befitting a manufacturing firm—of locking in profits.

As a result of these gradual improvements in management practices, Daehan Cable successfully returned to profitability in 2020. Contingent liabilities, which had stood at around 450 billion won at the time of acquisition, were reduced to around 100 billion won, and the net debt-to-equity ratio fell from 250% to around 100%. Total debt also fell by nearly half, from 1.1373 trillion won in 2014 to 586.3 billion won in 2020.

Over the course of about five and a half years, IMM PE turned Daehan Cable around, grew the company, and then resold it to Hoban Group, a strategic investor (SI). While this was a natural progression given the nature of private equity funds—which typically invest for a period ranging from three years to five or six years before exiting—it was also necessary because Daehan Cable required an owner capable of making long-term facility investments and capital injections to take the company to the next level. The financial soundness and resilience that IMM PE had built up during its management period continued even after Daehan Cable was resold to Hoban Group. Even after joining the Hoban Group, Daehan Cable reduced its financial burden through additional paid-in capital increases and debt restructuring, and in 2024, its revenue exceeded 3 trillion won.

The Other Side of Private Equity That We Don’t Know About

The case of IMM PE

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which propelled Daehan Cable to a new level of growth, challenges preconceptions about “private equity management.” Private equity funds are often associated with restructuring and cost-cutting, but in the actual business world, they play a far more diverse range of roles. They can fix the broken finances of companies in crisis, redefine core business strategies, and lay the groundwork for rebuilding crumbling organizations. The success of a private equity fund—defined by “buying well, selling well, and making a profit”—is ultimately tied to the success of the companies it acquires and invests in.

Private equity funds are not permanent owners. Instead, they can serve as capital that performs emergency surgery on ailing companies and oversees the process of restoring them to a state where they can get back on their feet. The management approach demonstrated by IMM PE at Daehan Cable was akin to that of an “emergency room doctor” at a moment of crisis. We need to broaden our perspective on private equity funds.