M&A knowledge

Key trends in the Vietnamese M&A market:

• Increase activity in essential sectors: Mergers and acquisitions (M&A) are booming in the retail, fast-moving consumer goods (FMCG), and industrial real estate sectors to capitalize on the recovery of domestic purchasing power.

• The dominance of foreign investors: Corporations from South Korea, Japan, Singapore, and Thailand continue to play a leading role, prioritizing businesses with strong governance foundations and commitments to ESG (Environmental, Social, and Governance).

• M&A is closely linked to digital transformation: Enhancing transactions in the technology, Fintech, and e-commerce sectors aims to help traditional businesses quickly acquire a digital ecosystem.

• Startup acquisition: Large corporations are actively acquiring startups to gain access to core technologies and innovative business models, especially in the field of artificial intelligence (AI).

• The impetus from restructuring state-owned enterprises: The divestment process at large-scale state-owned enterprises has been accelerated, creating high-quality strategic investment opportunities for both domestic and foreign investors.

Common M&A models in Vietnam:

• Business mergers (Mergers): One or more companies (the merged companies) transfer all their assets, rights, and obligations to another company (the acquiring company). Upon completion, the merged company ceases to exist, while the acquiring company retains its original legal entity and inherits all rights and responsibilities.

• Business consolidation: Two or more companies merge to form a completely new company. All old companies cease to exist, and the newly formed entity inherits all assets, personnel, and legal obligations from the participating parties.

• Business Acquisition: A business acquires all or part of the assets, shares, or capital contributions of another business to gain control. Unlike a merger, the acquired business retains its legal entity status and continues to operate under the management of the new owner.

• Joint Venture: Two or more businesses pool their capital to establish a new legal entity to carry out a specific project or business objective. This model allows the parties to leverage their strengths in technology, market, or capital while maintaining the independence of the parent company.

• Acquisition through the stock market: Investors (usually foreign funds) purchase shares of listed companies through order matching or negotiated transactions on the exchange to become strategic shareholders. This trend is expected to accelerate sharply by the end of 2025 thanks to the upgrading of the Vietnamese stock market.

Areas requiring detailed assessment:

• Due to Financial Diligence: Examine the authenticity of assets, potential liabilities, revenue quality, actual profits, and the sustainability of cash flow.

• Due to legal limitations: Review the legality of licenses, compliance with major contracts, dispute/litigation status, and intellectual property rights (especially important for tech startups).

• Due Diligence works as follows: Evaluate the efficiency of the production process, the reliability of the supply chain, R&D (research and development) capabilities, and the level of customer loyalty.

• Due to Human Resources Needs: Analyze the organizational structure, assess the capabilities of senior management, evaluate compensation policies, and assess the level of cultural compatibility between the two parties.

• Due Diligence ESG and Digital Transformation (Updated 2025): Assess the level of compliance with environmental, social, and governance standards, and evaluate the technological infrastructure and cybersecurity of the target enterprise.

Legal issues to note:

• Regulations on controlling economic concentration: Businesses must notify the National Competition Commission if an M&A transaction falls under the economic concentration threshold as stipulated in the Competition Law to avoid penalties or cancellation of the transaction.

• Restrictions on foreign ownership ratio (Foreign Room): Carefully review international agreements (such as CPTPP, EVFTA) and specialized laws to determine the limits on foreign investor ownership in conditional business sectors.

• Approval procedures from the regulatory authority: Complete all procedures for registering capital contributions and share purchases at the Department of Planning and Investment, or apply for investment policy approval for large projects or projects involving land use.

• Comply with regulations regarding information disclosure: For listed companies, the buying and selling of shares must strictly adhere to the information disclosure schedule and deadlines stipulated in the Securities Law to ensure transparency.