Cultural Differences
– Major cultural and business practice gaps between two parties trying to negotiate a highly collaborative joint venture
Numerous Details
– Joint venture was a de novo operation prior to PGP’s involvement
Language Barriers
– While all SKT team members spoke English, slight miscommunications were somewhat frequent and, at times, created additional friction / problems
Established PGP as the principal facilitator for all business discussions
– PGP actively assisted the parties in developing the business plan and financial model, whereas SKT’s banker (Lehman Bros.) was much more passive
Assertive and aggressive advocacy on behalf of the client
– Recognized SKT’s motivations for the deal and understood the decision-making process at a Korean chaebols
Creative leveraging of relationship network
– At a potential breakdown point in the negotiation phase, PGP was able to coordinate a direct meeting with a significant SKT shareholder who is part of the controlling family of the SKT Group
The Results
Capturing Excess Economics Through Understanding Cultural Factors
▪ Superior economic structure for ELNK – Obtained 50% of the ownership while committing only $180 million of the $400 million total cash commitment of the JV
▪ Earned Investment Banking mandate with SKT – Subsequently, SKT approached PGP to help it pursue an $80 million acquisition in the U.S.
Client Testimonial
“While Earthlink had banking relationships with Credit Suisse First Boston, Goldman Sachs and Blackstone Group, the company selected PGP because if had fairly sizable investment-banking experience and a good understanding of Korean business”, said Earthlink Chief Financial Officer Kevin Dotts. “It was a fairly unique circumstance,” he said.
”PGP helped us by providing background on how Korean corporate firms are set up, specifically with regard to our partner, SK Telecom,” said Earthlink CFO Dotts. “They also helped us understand how to interpret certain actions and reactions [in negotiations], in addition to [providing} straight investment banking technical expertise.”
Kevin Dotts
CFO of Earthlink
M&A Advisory
PGP acted as advisor to EarthLink, Inc. in negotiating its joint venture with SK Telecom to form SK-EarthLink
