The Answer Hidden in the Balance Sheet

"As you instructed, there were quite a few small and mid-sized enterprises struggling with cash flow shortages in the Banwol Industrial Complex and the Ulsan Mipo area."

The teahouse where we'd had our first meeting.

The moment Jung Tae-sung took his seat, he pulled a thick file from his briefcase and began.

I waited quietly for his briefing.

"Among them, only one company met every condition you specified, Director — holding the required permits, securing the land, and having the right mindset in its management."

My interest was piqued.

Frankly, the conditions I'd laid out were so demanding that I'd considered myself lucky if even two out of three could be met. And yet a company existed that satisfied them all.

"Which company is it?"

"A small-to-mid-sized firm called Shinhwa Weltech."

Jung Tae-sung handed over the documents.

"It's located inside the Ulsan Mipo National Industrial Complex. As you know, the petroleum and chemical infrastructure sits right next door, which makes it ideal ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠for raw material procurement."

"Mipo, hm... Location passes."

"What's more important is the regulatory permits. Not only the hazardous chemicals handling license, but the high-pressure gas registration and the wastewater and air pollution emission permits are all fully in place."

I nodded as I skimmed the documents.

That's the crux of it.

If I tried to build a factory on empty ground right now, obtaining those permits alone would take a good two years. The moment I acquired Shinhwa Weltech, I would be buying myself two years of time.

"And its line of business?"

"Ultra-high-purity wet chemicals for semiconductor wafer cleaning is their core strength."

"Cleaning solutions?"

"Yes. They blend high-purity hydrogen peroxide, sulfuric acid, ammonia, and the like to produce the solutions used in semiconductor cleaning processes. Beyond that, they also hold basic CMP slurry materials and a special gas blending technology related to NF3."

The beginning and end of every semiconductor process is cleaning.

A single wafer goes through dozens of cleaning steps on its way to completion, and if even the slightest impurity contaminates the chemicals used, the yield collapses.

Which is precisely why the technological barrier is so high.

"How's their technical capability? Surely they're not just mixing things together."

"That is this company's true gem."

Jung Tae-sung spoke with conviction.

‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠

"They possess a high-purity hydrogen peroxide refinement technology. They bring in the raw solution and, through their own purification process, manage metallic impurities down to the ppb level — one part per billion — and below. Among domestic SMEs, only a handful can achieve that standard."

My eyes lit up.

Bingo.

Not simple blending — an in-house purification technology.

As semiconductor fabrication advanced toward finer processes, the value of this technology would climb exponentially.

The major conglomerates would use overseas majors' supply, but smaller semiconductor companies and LCD lines had no choice but to seek out cost-effective local suppliers.

"A niche market, then. Too small for the conglomerates to bother entering, and too technical for skillless SMEs to break into."

"Precisely. Shinhwa Weltech was a company that competed from that narrow gap with process-customized recipes. That said, the technology gap between them and the majors remains substantial."

"Was, you say."

I let the word trail off and turned the page to the financial statements.

There, wretched numbers ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠were printed in red.

"Excellent technology, but the company itself is a wreck. The classic limitation of an engineer-turned-CEO, I take it?"

"Exactly. The founder trusted nothing but the technology and obsessed over R&D alone."

Jung Tae-sung added bitterly,

"Trying to compete with the Japanese and American majors, they never managed to open sales channels. Their sales capability couldn't keep pace with their technical skill. And when semiconductor investment contracted after the dot-com bubble burst, they took a direct hit."

Looking at the numbers, structural problems surfaced as well.

"Their debt is... 3 billion won?"

"Yes. 2 billion in bank loans, plus 1 billion in equipment leases and other obligations. Most of the high-purity refining equipment and tanks were brought in on lease, and once revenue folded, the interest payments became unsustainable."

A structure where fixed costs flowing out exceeded the money coming in.

The banks wouldn't have sat still.

"What's their current status?"

"The creditor group — mainly a regional bank and the leasing companies — is pushing for a pre-packaged sale before filing for court receivership. If it goes into court management, their recovery rate drops, so they want to find a new owner and squeeze out their money beforehand."

A pre-packaged sale meant that before the company entered court receivership, the company, the creditor group, and the prospective acquirer would agree on the sale terms in advance, then submit the arrangement to the court the moment rehabilitation proceedings opened, moving straight into the sale process.

"What price were they thinking?"

Jung Tae-sung paused briefly before answering.

"On the books, the asset value is assessed at over 8 billion won, but the actual asking price sits around 6 billion."

"Six billion..."

"The bank and other creditors take the position that they simply need to recoup what they're owed, while Shinhwa Weltech's management believes that price is fair once you factor in debt resolution along with the employees' unpaid wages, bonuses, and the land."

I rested my chin on my hand and tapped at the calculator.

Six billion won.

The cash I'd left in SJ Holdings was 5 billion. I was short 1 billion.

Of course, the stock I'd deployed 15 billion into was growing, and if I spoke to Managing Director Kim Seok-jun, I could surely pull in another billion or so.

But still.

'I can't pay full price to walk into a dying company.'

The technology was a gem, but the company's current financial state was no different from a terminally ill patient.

And this was 2003.

An era when whoever held the cash was king.

"It's expensive."

When I tossed the words out flatly, Jung Tae-sung's eyes gleamed.

"It seems the management's position is that even if the company is sold, they must settle the debts and the employees' wages before they go."

The current management's mindset wasn't bad. It was simply that, from the buyer's side, I had my doubts about whether that price was the right one.

"What about the employees?"

"Sixty-three in total. Ten of them are research staff, forty are production workers. They're all rattled because their pay is overdue, but they trust the founder, so not a single one has left yet."

Every condition was perfect.

Except for the finances on the brink of default. No — in fact, that made it all the more perfect.

Because I could become the savior and seize control of the company.

"To summarize: the technology is there, but the gap against the majors is real. Correct?"

"Add to that the fact that they're demanding more money than the cash we currently hold, and the problem compounds."

I nodded. Even if I pulled in more funds and completed the acquisition, the money required afterward would be anything but trivial.

The 6 billion the creditor group wanted was out of reach. Which meant I needed to design an acquisition strategy.

"I'll need time to think. Let's meet at Managing Director Kim Seok-jun's home in a week."

"Understood. In the meantime, we'll dig up further materials on Shinhwa Weltech."

With that, I parted ways with Jung Tae-sung and headed home.

There was much to be done.

The study of Kim Seok-jun's home in Seongbuk-dong.

Only the occasional rustle of turning pages broke the silence of the room.

Kim Seok-jun combed through the report Jung Tae-sung had submitted with meticulous care. Closing the final page, he removed his glasses and spoke.

"I see. The asking price is 6 billion."

A dry chuckle escaped him.

"Kang Seon-woo's going to have to rack his brains. The cash he has left is exactly 5 billion."

One billion won.

On an M&A table, that wasn't a fortune — but in a situation where cash was short, the difference could loom like a mountain.

Jung Tae-sung asked, his posture immaculate,

"Shall I look into ways to assist?"

At a single word from Kim Seok-jun, a regional bank president or a leasing company executive would move with one phone call. Shaving off a billion, or quietly funneling support for the shortfall, would have been nothing to him.

But Kim Seok-jun raised a hand to stop him.

"No. Leave it be."

"...Leave it be, sir?"

"Exactly what I said. Don't intervene."

At Kim Seok-jun's words, Jung Tae-sung fell silent, focusing quietly as if trying to read his intent.

"What that boy has shown us so far has been astonishing. His eye for reading the stock market, his insight that pierces through future industries. Incredible enough that I can hardly believe he's a high schooler."

That much he granted. He'd handed over 2 billion won so readily for that very potential.

But.

"That was, at the end of the day, a battle of wits. A numbers game played at a desk — rolling a pen, watching a monitor."

Kim Seok-jun's gaze sharpened.

"But a corporate acquisition is different. Creditors angling for every last scrap, engineers left with nothing but pride, and employees trembling in fear. It's a mud pit where living, breathing human beings are tangled together."

Kim Seok-jun looked at Jung Tae-sung again.

"This time, I intend to see whether the boy's strategy holds up not just on paper, but in the field."

It was a test.

Anyone can buy something when the money is plentiful.

A true businessman's skill reveals itself when his pockets are light, or when the other side refuses to sell.

"How he'll cook the creditor group while short a billion, how he'll sweet-talk the owner of a dying company. In that process, the measure of the man will show itself."

With an expression mixed half of worry and half of anticipation, Kim Seok-jun fiddled with the papers before him.

'If he stalls here and comes whining to me, then my eye was wrong after all.'

The boy might come running, begging him to cover the shortfall. Or he might rashly sell off stock to raise the funds.

Worst case, he might abandon the acquisition altogether.

Whatever choice he made, it would lay bare the limits of a man called Kang Seon-woo.

"You need only watch from the sidelines. Right up until the moment he's about to fall off the cliff."

"Understood. I'll keep it in mind."

Jung Tae-sung bowed his head.

Kim Seok-jun pushed the report to the edge of the desk.

"You may go."

Once Jung Tae-sung withdrew and Kim Seok-jun was left alone, he laced his fingers together and sank into thought.

"A billion short... What would I have done?"

His heart was pounding. Thoughts he would never have bothered dredging up in ordinary times refused to leave his head.

How should he put it. Talking with Seon-woo, or trying to guess what Seon-woo would do — it ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠kept pulling him back to the days when he'd run the field himself.

"Honestly. One careless brush with a young one, and look at all this useless thinking."

Kim Seok-jun chuckled to himself and turned back to the documents.

After meeting Jung Tae-sung and returning home, I spread Shinhwa Weltech's financial documents across the desk and rolled my pen between my fingers.

'A way to acquire them, huh...'

It wasn't that I was struggling because there was no way.

Quite the opposite. The problem was that there were too many.

Twenty years of my previous life.

I had fought every species of hyena that circled Sunjin Group.

Having only ever defended doesn't mean I don't know how to attack. To defend properly, you have to understand the principles of attack better than anyone.

The physiology of the M&A table ran in my marrow.

'The creditor group and the management want 6 billion.'

But that was nothing more than their wish list.

If I slapped my 5 billion in cash on the table and growled, "Take this and walk away, or watch it go to auction and fetch scrap value," they would stamp their seal at 5 billion.

It was they who needed cash now.

'But...'

I frowned, tapping the pen against the desk.

'If I burn all 5 billion, there's nothing left after.'

Buying an empty shell of a factory wasn't the goal.

My objective was to acquire Shinhwa Weltech, then pour in R&D capital and bring in state-of-the-art equipment to widen the technology gap.

For that, I needed at least 1 billion in operating funds left over — no, 2 billion.

If I emptied all 5 billion into the purchase price, the engine would seize up the moment it started, starved of fuel.

"Pinch the pennies, and still take the management control beyond all doubt."

A contradictory assignment.

To clear my head, I went back through the documents from the beginning.

'Second look, and it's still prime goods.'

The choicest plot in the Ulsan Mipo complex.

The sprawling 10,000-pyeong site was more than enough for future line expansion, and above all, the charm lay in the fact that the hazardous materials permit and the waste treatment licenses were still alive.

Those stamps were crystallized time — something money alone could never buy.

'An SME this fine — even if I searched again, I wouldn't find another.'

Which was to say, I had to swallow this one no matter what.

I stared hard at the liabilities section of the balance sheet.

The numbers danced before my eyes.

'3 billion in debt, then.'

2 billion owed to the banks, and another 1 billion in material costs and credit borrowings.

Wait a moment.

My gaze stopped on the words secured debt: 2 billion.

'The banks hold collateral. That's why they can play hardball.'

They believed that even if the company went under, selling the factory and the machinery would recoup their 2 billion in principal.

But the unsecured creditors — the supplier partners who'd lent out that 1 billion?

If the company slid into court receivership or was auctioned off, these people would recover not a single won. Not even the broth left in the pot.

In other words: the banks were the impatient and the dangerous, while the suppliers were the terrified.

"..."

As I stared at the documents for a long while, a spark leapt through my mind.

"Hold on. This is..."

Was there really any need to repay all 3 billion of the debt at once?

All I had to do was put out the fire currently strangling the company's throat.

Flash.

The fog lifted, and my vision snapped into focus.

Slowly, the corner of my mouth curled upward.

"That's it. No need to jumble it all together."

The 3 billion in debt shouldn't be lumped into one mass.

"Split the company from the banks first. That's the move."

If I sealed the banks' mouths, the rest...

A way to take the company without spending all 5 billion.

The answer had been sitting in the financial statements all along.