Hello, this is Attorney Sangyun Eom of Cheongchul Law Firm.

Over the past several years, Silicon Valley has seen a wave of large-scale deals in which major platform operators systematically recruit only the founders and core development staff of emerging artificial intelligence startups, while leaving the company itself in place as a separate entity or maintaining the relationship through licensing agreements. These so-called 'acqui-hire transactions' are nominally hiring, technical cooperation, or licensing arrangements, but it has been pointed out internationally that their substance is no different from a takeover of an existing business. In Korea, similar deal structures are being actively attempted in new industries such as AI, fintech, and biotech. Yet because the existing merger notification requirements were tailored to the typical contractual form of a 'business transfer', a gray area has persisted as to whether acqui-hire deals fall within the scope of merger notification.

On September 9, 2026, the Korea Fair Trade Commission (KFTC) prepared a draft amendment to its Guidelines on Business Combination Notification (기업결합의 신고요령) to resolve this gray area and opened an administrative notice period running through September 30. The gist of the draft amendment is to (i) include organized personnel among the components of a 'business', (ii) expand the criteria for determining a 'principal part', and (iii) revise the standards for calculating the transfer price and for identifying acts of performance to fit personnel-transfer deals, thereby making clear that acqui-hire transactions are also subject to merger notification and review. Below, we summarize the main contents of the draft amendment and then consider what it implies for the landscape of M&A practice in Korea.

The Rise of Acqui-hires and the Notification Blind Spot

Unlike a typical business transfer, an acqui-hire is carried out not through a single comprehensive agreement but through a dispersed set of contracts: (i) the founders and key personnel moving to the acquirer together with the release of non-compete covenants, (ii) technology and patent licenses, and (iii) equity acquisitions or call options over the remaining shares. Through this combination of contracts, the acquirer effectively absorbs the startup's organization, technology, and know-how while the startup entity itself is left in place or reorganized into a separate business.

The problem was that this deal structure did not fit neatly within the existing Guidelines on Business Combination Notification. The former Guidelines defined a 'business' as 'a collection of property rights organized for the business purposes of a company and functioning as an organic whole', listing as examples of its components items of property value such as sales rights, intangible property rights, and licenses and permits, but did not expressly include personnel. The criteria for a 'principal part' were also limited to cases where (i) the part is in a form capable of being operated as an independent business unit or (ii) the transfer or lease substantially reduces the transferor's sales, and the standard for calculating the transfer price was designed on the premise of payment under a single comprehensive business transfer agreement. As a result, for acqui-hire deals spread across contracts under various labels, it remained difficult to determine whether a notification obligation existed even when their substance amounted to a business succession.

The fact that the KFTC pursued this amendment not on its own but on the basis of close information exchange with overseas competition authorities such as the European Union, Germany, and the United Kingdom illustrates the nature of the amendment well. Acqui-hires are a problem that first emerged in cross-border global big tech M&A practice, and competition authorities around the world are currently responding to a similar regulatory gap.

Main Contents of the Draft Amendment

The draft amendment contains three sets of revisions centered on Paragraph 4 of the Guidelines. Each is examined in turn below.

Inclusion of Organized Personnel as a Component of 'Business'

Paragraph 4(b) of the Guidelines had already defined a 'business' as 'a collection of property rights organized for the business purposes of a company and functioning as an organic whole', listing sales rights, intangible property rights, and licenses and permits as examples of its components. The draft amendment adds a new subparagraph expressly providing that "where organized personnel, combined with the technology or knowledge held by such personnel, are capable of performing the core functions of business activities, such personnel shall be included." This codifies that organized personnel themselves can be a component of a business alongside property rights, and can be seen as a provision in which the rules have belatedly caught up with the market reality that human assets form the substantive value of a business in new industries.

In a deal that transfers an entire AI model development team or a particular research lab, the very question of 'whether this deal constitutes a business transfer' could previously be contested; after the amendment, the gateway question becomes whether those personnel perform the core functions of the business activities.

Expansion of the Criteria for a 'Principal Part'

The merger notification obligation arises when 'all' or a 'principal part' of a business is acquired or leased. Paragraph 4(c) of the former Guidelines limited a principal part to cases where (i) the part is in a form capable of being operated as an independent business unit or (ii) the transfer or lease substantially reduces the transferor's sales. The draft amendment adds a third criterion: "where, following the transfer or lease, the transferee is able to carry on the same business activities as the transferor had been conducting."

This third criterion is a yardstick precisely tailored to acqui-hire deals. The perspective is that if, through the transfer of personnel, the transferee becomes able to take over and carry on the transferor's existing business, the substance should be assessed as a business succession regardless of the quantitative scale of the property rights remaining with the transferor. However, the existing size thresholds of at least 10 percent of total assets or at least KRW 10 billion remain in place, so a small-scale transfer of personnel does not immediately become subject to notification.

Revision of the Transfer Price Calculation Standard and the Act-of-Performance Standard

Regarding the transfer price, Paragraph 4(d) of the Guidelines previously provided only for the transfer consideration and assumed liabilities and, in the case of a lease or delegation of management, the total annual rent or delegation fee. The draft amendment adds a new subparagraph providing that "in the case of organized personnel, the economic consideration paid to the transferor as consideration for the transaction, including money or other property benefits, shall be included regardless of its label," and expressly lists as specific examples consideration for the waiver of rights relating to the transferred personnel and license fees for intellectual property needed for the business activities. The intent is that even where contracts are spread across various labels, all amounts are aggregated into the transfer price if their economic substance is consideration for the transfer of personnel.

The act-of-performance standard has also been revised. Previously, completion of payment, delivery of movables, registration of real estate, and registration of trademarks were specified as the points in time of performance; the draft amendment adds "in the case of organized personnel, where the transferor has ceased the business it had been conducting" as a type of act of performance. In personnel-transfer deals, payment is often spread across multiple points in time or replaced by an intellectual property license, and this provision reflects the reality that the point of completion is ultimately the moment the transferor ceases its existing business.

Meanwhile, the addenda to this amendment of the Guidelines provide that it will take effect immediately upon publication of the notice, with a transitional measure that it will apply to business combinations for which the cause for notification arises on or after the effective date.

Reshaping the Practice Landscape

Once this amendment is finalized and takes effect, the landscape of M&A practice in Korea is expected to change on several levels.

From the Acquirer's Perspective

Businesses seeking to acquire Korean startups (large corporations, mid-sized companies, and foreign businesses) must re-examine personnel-transfer deal structures that they may previously have regarded as leaving room to avoid notification. A deal in which only the founders and the core development team are hired, the startup entity is left with only a small residual business, and the technology is secured through a separate license agreement becomes subject to merger notification under the amended Guidelines where (i) the transfer of organized personnel amounts to the performance of the core functions of business activities, (ii) the acquirer becomes able to carry on the business the transferor had been conducting, and (iii) the consideration relating to the transferred personnel and the intellectual property license fees, taken together, meet the size thresholds.

From the Perspective of the Transferring Startup

From the perspective of the transferring startup, negotiations over the departure of founders and key personnel and negotiations over intellectual property licenses may effectively be assessed as components of a single M&A transaction, so care must be taken in pricing each contract and drafting its terms. What could previously be assessed contract by contract for notification purposes now becomes a structure in which the economic substance of the entire transaction is assessed as a whole.

From the Perspective of M&A Advisory Practice

From the perspective of M&A advisers, a new set of due diligence items is expected to take root from the deal structuring stage onward, under which the existence of a notification obligation is determined through a comprehensive review of (i) an analysis of the transferred personnel's contribution to the business, (ii) whether the residual startup will continue its business, and (iii) the economic substance of ancillary agreements such as intellectual property and non-compete arrangements.

Global Big Tech M&A and International Cooperation

The impact of this amendment on global big tech acquisitions of Korean AI startups also deserves attention. Cross-border acqui-hires can take a variety of forms, such as transferring personnel from an overseas parent to a Korean subsidiary or transferring Korean personnel to an overseas parent, and such deals will also bear a notification obligation if they meet the domestic notification requirements. Given that international cooperation with the European Union, Germany, and the United Kingdom has been expressly stated, in future multinational matters a phase in which competition authorities share information with one another as they conduct their reviews will become clearly pronounced.

Judged by the scale of the textual changes alone, this draft amendment to the Guidelines is modest, but its implications are of a kind that gradually change M&A practice. In an era in which the substance of a business is transferred not through physical assets or equity but through the movement of people and organizations, this amendment can be understood as the starting point from which the realignment of regulatory rules to that substance begins in earnest. Continuously monitoring the final effective date and the detailed wording of the finalized provisions after the administrative notice period closes, and diagnosing in advance how deal structures currently in progress or planned would be caught by the notification requirements, will be the starting point for controlling regulatory risk going forward.