Byungjin Industrial (1)
After the Lunar New Year holiday ended, I headed to the company with my father.
For now, we left the Benz behind and took my father’s regular car instead. The cabin felt cramped, and every bump in the road came straight through the seat into my back.
My lower back was already starting to ache.
Yeah, this was definitely about time for a change.
If nothing else, I needed to grow the company quickly so he could drive a Benz without worrying about what anyone thought.
“So you’re really saying you’re going to invest in our company?”
“Yes. It’s coming out of excess returns, anyway.”
If I said I was investing my own money directly, he’d obviously object. So I’d set up a paper company on paper and routed the funds through that instead.
On the books, it was an investment company making the investment.
“And I’m not saying I’ve decided to invest yet. I’ll take a look first, then decide whether the money can actually be recovered or not.”
“In that case, then…”
Following the winding road farther in, a building came into view with the factory and office attached to one another.
This was my father’s company, Byungjin Industries.
Even at that early hour, the noise of machinery roared through the place.
Inside the office was a middle-aged man with crescent-shaped eyes and a warm, easygoing face.
“Hello, sir.”
When I greeted him, he welcomed me with obvious delight.
“Well now, look who it is. Miru, right? You’ve grown a lot.”
I’d always called it my father’s company, but strictly speaking, there was a business partner involved. Kim Cheol-woo, one of my father’s hometown juniors, who currently served as vice president.
When my father first started running the factory, Cheol-woo had joined immediately and worked alongside him ever since. Unlike my blunt father, he was personable and well connected.
That was why my father handled the factory itself, while Cheol-woo managed clients and won supply contracts.
For a man who wasn’t especially gifted at business, my father had managed to keep the factory alive this long largely thanks to Cheol-woo’s help.
The ownership structure was simple: my father held 60 percent, and Cheol-woo held the other 40.
“What brings you here?”
“Nothing special. I’ve been working at an investment firm lately, and I have some spare capital sitting around, so I was thinking of putting some into Byungjin Industries.”
Cheol-woo’s eyes lit up.
“Really? How much are you planning to invest?”
“About one billion won.”
At my words, he couldn’t hide his surprise.
“One billion? I-is that really true?”
“Yes. That should be all right, shouldn’t it?”
“Of course. That’d be great for us. Things have been a little rough lately.”
Cheol-woo broke into a broad grin.
For a small company like this, one billion won was a gift from heaven in a drought.
“So you’re going to put it in right away?”
I looked between my father and Cheol-woo and said, “Even if Byungjin Industries is my father’s company, business is business, isn’t it? A billion won isn’t pocket change.”
My father nodded.
“That’s right.”
“Then shouldn’t we draw up a proper investment contract?”
At that, Cheol-woo laughed heartily.
“Oh! Miru really does think things through, doesn’t he? That’s right, that’s right. Business is business.”
The female accountant standing nearby chimed in as well.
“Really, it’s impressive. You’re lucky, sir. Having such a fine son.”
Cheol-woo looked at me and asked, “Should I print up a contract?”
“Ah, I brought one ready. Please read it over and sign here.”
I took out the contract I’d prepared and handed it over.
The two of them read through it slowly. Cheol-woo pointed at one of the clauses and asked, “What’s this part about the company disclosing all information about its condition to the investor and cooperating fully with due diligence?”
“Ah, that’s just a formality. There are shell companies out there that put up a respectable sign, gather investors, take the money, and vanish. So as a rule, we verify things before making any investment decision.”
“Ah, I see.”
There were no other points that bothered them, and after a few more looks, both men signed without further questions.
I took the signed contract and tucked it away.
“Then let’s check the condition of Byungjin Industries.”
Cheol-woo was still smiling. “Oh, sure. You just need the ledgers and financial statements and all that, right?”
“Yes.”
I started by reviewing the financial statements.
Byungjin Industries’ monthly sales were around 1.5 billion won.
On the surface, that made it look like a reasonably healthy company, but the reality was quite different.
Even for a large manufacturer, operating margins rarely exceeded 10 percent. For small and medium-sized firms, they often fell below half that, and the further down the subcontracting chain you went, the thinner the margins became.
High sales existed only because they lowered prices and delivered huge volumes.
The debt borrowed from banks and other sources totaled 1.2 billion won.
Once you paid back loans and reinvested what was left from earnings, the actual profit wasn’t much at all.
Of course, if the company were growing and assets were increasing, that would be a good thing, but both sales and profits had been flat for years.
This wasn’t some promising startup; it was just a manufacturing subcontractor.
Putting one billion won into a company like this wouldn’t produce some dramatic transformation. At best, they’d buy a few more machines and hire a few more workers.
What mattered now wasn’t simply injecting capital, but making management more efficient. And for that, there was one thing I absolutely had to do.
As I closed the file, Cheol-woo asked, “Finished already?”
“I’ve seen enough of the paperwork. Now I need to check something else.”
“Something else?”
“Whether the books match the assets, and whether there’s any hidden rot or missing money along the way.”
Cheol-woo looked flustered.
“W-well, how are you planning to check that?”
“I already called people for it.”
“Huh?”
While we were talking, a van drove into the factory grounds.
“Ah, looks like they’ve arrived.”
We went out of the office together.
Six men and women stepped out of the van. One man in his forties approached me and asked, “You’re Han Miru, right?”
“Yes, that’s right.”
“Hello. I’m Team Leader Oh Young-wook.”
“Thanks for making the trip. You know why you’re here, right?”
“Yes. The representative explained it to us.”
I told them, “Then let’s get started.”
“Understood.”
My father and Cheol-woo were stunned.
“Who are these people?”
“They’re from a famous domestic private equity fund. They specialize in corporate due diligence, and I brought them here today to examine Byungjin Industries.”
To be precise, they were employees from KSGI’s M&A division.
The reason people working in Gangnam had come all the way out here was because I’d asked Representative Kim Sung-gwun for a favor.
A due diligence team from one of Korea’s top three private equity firms had come running all the way out to examine a small manufacturer with monthly sales of just 1.5 billion won.
Even they probably hadn’t done a job like this before.
Cheol-woo asked in disbelief, “D-due diligence?”
“Yes.”
When people think of mergers, acquisitions, or investments, they usually imagine experts in suits gathered in a conference room, playing number games.
But that was only the final stage.
Before that, they visited the company, the factory, the clients, and the whole chain, examining everything in detail to determine an appropriate valuation range.
Three members of KSGI’s due diligence team went into the office, while the other three began taking photographs of the factory. They moved quickly, like prosecutors conducting a search and seizure.
“Bring out every ledger you have.”
“Could you open that cabinet?”
“Hey, who do you think you are—”
It would be a mistake to think that people who worked in finance were just pencil-pushing desk jockeys.
Whether it was a person or a company, there were always things they wanted to hide.
During due diligence, it wasn’t uncommon for arguments or even physical scuffles to break out over something as simple as looking at a single sheet of paper.
These people had clearly done this before, because their momentum was completely different.
As unfamiliar faces began turning the office inside out, Cheol-woo’s eyes went wide.
“What the hell do you think you’re doing?!”
I told him, “If you cooperate, it’ll be over quickly.”
“What?”
“Unless you have something to hide?”
“W-what are you saying? You don’t trust me?”
“Of course I trust you. That’s why I’m going to verify that trust with my own eyes.”
Unable to hold back any longer, Cheol-woo shouted, “Stop this right now!”
“Ignore him and keep going.”
Even after he tried to stop them, I didn’t budge, so Cheol-woo turned to my father.
“Brother! Are you really just going to let this happen?”
“Miru.”
Before my father could say anything, I cut in firmly.
“Didn’t you agree to the contents of the contract and sign it? If you break the contract we just made, what investor would ever put money into Byungjin Industries?”
“……”
Apparently having nothing to say to that, my father shut his mouth.
I looked at Cheol-woo and said, “This is nothing more than a formal procedure. If the assets listed in the books really exist, and if you haven’t deliberately siphoned off company funds, there shouldn’t be any problem.”
For some reason, his face went deathly pale at my words.
Corporate due diligence meant closely examining accounting, legal matters, business operations, taxes, and facilities to determine a company’s value accurately.
It required dozens of people—lawyers, accountants, bankers, and more—and could take as little as a month or as long as half a year.
But that was for companies worth trillions.
In Byungjin Industries’ case, it took less than half a day.
I received the report directly from Team Leader Oh Young-wook on the spot.
“Personal living expenses and shopping have been booked as company expenses.”
It looked like he’d been using the corporate card as if it were his own.
That alone could probably be handled with some corrective measures. The real problem came next.
“Two machines listed in the books as purchased are missing. And the bill discounting rate was set far too high. Business was conducted with only a single vendor. Compared with the normal discount rate, the difference is substantial.”
“What does that mean?”
“We believe he inflated the bill discount rate and sold them off to skim the profit.”
“So how much was embezzled?”
“The amount we can verify over the last three years is 500 million won.”
My father couldn’t hide his shock.
“500 million?”
For a small company like this, it was an amount so large it was hard to believe someone had stolen it.
The man who had taken that money was none other than Vice President Kim Cheol-woo.
My father still looked as if he couldn’t process it.
“I-is that really true? You stole that much money, Cheol-woo? Tell me it’s a lie. Say something.”
“……”
He had no answer, even under that desperate, accusing stare.
If the embezzlement had been just a few million or even 100 million won, maybe I could have understood it as a moment of weakness. But the amount verified so far alone was 500 million.
If my father had decided to shut the company down, I wouldn’t have cared how much Cheol-woo had stolen over the years.
But since he still wanted to keep going, this was the time to sort everything out cleanly and move on.
I asked Kim Cheol-woo, “What did you spend all that money on?”
“Th-that is…”
“Horse racing, right?”
My words startled him.
“How did you know!”
Because by the end, everyone would know anyway.
Apparently, he’d been addicted to horse racing from around this time.
“Hah…”
My father looked deeply shaken.
He’d never imagined that the hometown junior he trusted, the business partner he relied on, had been bleeding the company dry to feed a gambling habit.
Kim Cheol-woo was the main culprit who ruined Byungjin Industries.
Right now, the money he’d siphoned off was only, if you could call it that, 500 million won. But later, that figure would climb to 2 billion.
When it looked like he might get caught, he had stripped the company of the rest of its cash and disappeared.
And that was how Byungjin Industries went bankrupt, while my father, far too late, could only lament that he’d trusted the wrong man.