[Edaily Marketin, Reporter Hur Jieun ] As dominance in the domestic mergers and acquisitions (M&A) market rapidly shifts toward global private equity (PEF) firms, a seismic shift is taking place in the survival strategies of major law firms. With overseas private equity firms, backed by financial clout and exchange rate advantages, monopolizing deals worth trillions of won, law firms are also staking their survival on recruiting global talent tailored to these firms’ preferences.

Just a few years ago, the domestic M&A market was led by domestic private equity firms. According to the investment banking (IB) industry, domestic private equity firms dominated the market in 2023–2024, sweeping up more than 70% of large-scale deals worth trillions of won. While foreign firms also appeared as buyers in major deals, there was a widespread consensus that domestic private equity firms held the upper hand in terms of negotiating power and networking capabilities.

However, starting last year, the dynamics of the market have completely shifted. The most powerful weapon is the high exchange rate. The won-dollar exchange rate, which started the year at 1,446.7 won per dollar, soared to 1,561.5 won last month and currently remains around the 1,550 won mark. As the high exchange rate trend persists, global private equity funds holding dollars now find themselves in a “bargain sale” environment where they can acquire high-quality Korean assets at discounts of up to 20%.

The government’s moves to tighten regulations are also a factor that is dampening the enthusiasm of domestic private equity funds. Since last year’s Homeplus crisis, there have been persistent calls—particularly from political circles—to strengthen regulations on private equity funds to European levels. A prime example is the proposal by Rep. Park Hong-bae of the Democratic Party of Korea to “mandate reporting to financial supervisory authorities for leveraged buyouts and asset sales.”

The mandatory tender offer system for the acquisition of listed companies is also considered a system that favors foreign private equity funds. This is because the deal size itself increases by hundreds of billions of won compared to before, as funds are required to compulsorily purchase not only controlling stakes but also shares held by general shareholders. This has effectively created a playing field that is absolutely advantageous for global private equity funds, which manage tens of trillions of won in dry powder (uninvested capital) in the global market.

Given this situation, global private equity firms have set their sights squarely on the Korean market and begun reorganizing their operations. Since the start of this year, leading global private equity firms—including Affinity Equity Partners, Carlyle, Bain Capital, Morgan Stanley Private Equity (MS PE), and EQT Partners—have all completed leadership reshuffles at their Korean offices.

There are also signs of a move beyond mere investment to directly attract funds from domestic limited partners (LPs). A prime example is CBC Group, a global healthcare-focused private equity firm that recently announced the launch of the world’s largest bio-investment platform. The firm is directly targeting the Korean market and is currently conducting matched fundraising with entities such as the Korea Investment Corporation (KIC), the country’s largest sovereign wealth fund. It appears that top-tier global capital firms are preemptively securing even the major LPs in the Korean market.

An industry insider explained, “In the past, domestic private equity firms were able to compete with foreign capital by leveraging their extensive local networks,” adding, “Given the current gap in capital strength and the regulatory environment, it is not easy to overcome this disparity in scale.” The insider continued, “The fact that law firms are going to great lengths to recruit foreign lawyers is, in itself, the most accurate leading indicator of who will be the main players in the M&A market going forward.”