The process and opportunities of Mergers and Acquisitions (M&A) in Vietnam

Tra Mac

March 16, 2021


The process and opportunities of Mergers and Acquisitions (M&A) in Vietnam

Tra Mac

March 16, 2021

In a pre-Covid world, the activity of M&A in Vietnam had steadily grown with the total value of transactions reaching US$10 billion in 2018 and US$15.6 billion in 2019, Robust YoY growth rate of 60 percent and 54 percent respectively. With a fast and effective pandemic control strategy, the business opportunities in Vietnam become more attractive for M&As post-Covid. Thus, is forecast to be second to the US only in 2021 and 2022 by Euromonitor.

Overview of Mergers and Acquisitions in Vietnam

1. The total value of Mergers and Acquisitions in Vietnam in 2019 reached 7.2 billion USD, equaling 94.7% compared to 2018. Due to the impact of Covid 19 as well as some other factors, the expected Mergers and Acquisitions value in 2020 continued to decline, estimated at 3.5 billion USD (equaling 48.6% compared to 2019).

2. In the last 6 months of 2019 and 2020, the market still witnessed notable deals, especially acquisitions or restructuring of private corporations. Foreign investors, especially investors from Singapore, Thailand, Korea and Japan, are still actively participating in Mergers and Acquisitions activities in Vietnam.

3. The process of equitization and divestment in the period of 2019 and the first 9 months of 2020 continues to be quiet and has not been implemented as planned. The market is expected to have more large-scale divestments, in order to help significantly increase the Mergers and Acquisitions value of Vietnam.

4. Covid 19 and the new normal status have an impact on Mergers and Acquisitions activities globally as well as in Vietnam: investors and businesses adjust their strategies, increase restructuring activities, and increase demand for sale. due diligence and decision making are also more difficult.

5. In general, investors and businesses in Vietnam still believe in the resilience of the Vietnamese Mergers and Acquisitions market in the post-Covid period. The market may recover to 4.5 – 5 billion USD in 2021 before rebound stronger thanks to new deals as well as many large divestments made by the state after 2021.

READ MORE: What are The Most Popular Vietnam FDI Sectors which Singaporean Investors Want to Venture Into?

The activities and trends of  M&A in Vietnam

Mergers and Acquisitions activities in Vietnam have increased dramatically during the 10 years from 2007 to 2017, and peaked in 2017 with a scale of 10 billion USD with a contribution of 50% of the value of the Sabeco deal. Mergers and Acquisitions value tends to decrease in the two years 2018 – 2019. In 2020, the value of M&A deals in Vietnam may decrease by 51.3% due to the impacts of Covid-19. According to the experts forecasting of mergers and acquisitions activities in Vietnam, the market may recover from mid-2021, and the market size may return to the normal level of 5 billion USD.

The total value of M&A in Vietnam in 2019 reached 7.2 billion USD, equaling 94.7% compared to 2018. In 2019, although the total value of Mergers and Acquisitions activities decreased, there are still positive factors. In the last 6 months of 2019, many big deals with the participation of foreign investors and private corporations appeared. Typically, the merger and swap of shares between VinCommerce and VinEco with Masan Consumer (Masan Group), KEB Hana Bank (Korea) acquiring 15% of BIDV’s charter capital …

At the beginning of 2020, the Covid-19 epidemic suddenly occurred and spread globally, having been and is having a huge impact on the world economy in general as well as on M&A activities in particular. M&A activities in Vietnam as well as other countries have declined sharply due to the quarantine conditions around the world. It is expected that the value of M&A in 2020 will continue to decline, estimated at 3.5 billion USD (equaling 48.6% compared to 2019).

The scheme of M&A in Vietnam

The Vietnam Enterprise Law provides for 04 main sorts of enterprises in Vietnam including:

  • Limited Liability Companies (LLC): An enterprise with fifty (50) or less members. An LLC may consist of a single member LLC (SM-LLC) or multiple members LLC (MM-LLC) all contributing capital.
  • Joint Stock Companies (JSC): Also known as a shareholding company. It is an enterprise during which the charter capital is split into shares, with a minimum number of three (3) shareholders and no maximum. Only JSCs may issue shares, offer securities and obtain listed on the stock market .
  • Incorporated Partnerships: An enterprise with at least 02 members being co-owners of the company jointly conducting business under one common name (also known as unlimited liability partners).
  • Private Enterprises (i.e. sole proprietorships): An enterprise owned by 01 individual who shall be liable for all activities of the enterprise to the extent of all his or her own assets (unlimited liability).

First, you should also choose whether the methods are going to be a merger or an acquisition. A merger is when two companies join to make one company by transferring assets, rights, obligations and interests to the merged company and thus terminating the merging companies.

Meanwhile, an acquisition requires a change in ownership and is typically within the sort of existing share purchases or new shares but also involves acquiring assets. 

Types of transaction

Acquisition of Shares or Equity 

  • The new investor may acquire shares or capital contribution from an existing investor(s) in the target company, a LLC or a JSC; or
  • The new investor may purchase further shares to be newly issued by the target company (for a JSC), or contribute or inject further capital in the target company (for a LLC).

Asset Acquisition or Business


You may choose to make an asset acquisition in which you purchase key assets of the target enterprise, thereby incorporating new assets into an already licensed entity. In many cases, the investor acquires not only the assets of the target business but also others associated with the target business such as goodwill, client base, employees, etc. This is called business sale or business acquisition.

Merger or Consolidation

Merger and consolidation are defined under the Enterprise Law and the Competition Law including:

  • Enterprise merger is a process whereby one or a number of enterprises transfers all of its assets, legal rights, liabilities and benefits for the purposes of merging with another enterprise.6
  • Enterprise consolidation is a process whereby two or more enterprises combine all their assets, legal rights, liabilities and benefits for the purposes of consolidating themselves into a new enterprise.
Other Types of Enterprise Restructure

The Enterprise Law also provides for other types of business restructuring, which may be taken by the investors as a result of M&A, namely division or separation of an enterprise.

Documentation and due diligence 

In fact, many Vietnamese companies are not familiar with due diligence and may be hesitant to provide full disclosure. Therefore, you should be particularly cautious of any unwillingness to make full disclosure. 

Professional advisers should have skills to figure with the target companies to urge the maximized disclosure. In some cases, a cross-check must be conducted to verify the one disclosed.

Also, many older enterprises, established under a developing legal regime without the help of international- standard professional services, suffer from poor documentation and record keeping. Therefore, the importance of comprehensive legal and financial due diligence before acquiring an enterprise cannot be understated.

READ MORE AT: Global Incorporation if you’re in need of a comprehensive M&A consulting firm!

M&A Regulation in Vietnam

Vietnames Law affirms a general principle that business entities and individuals, irrespective of nationality, are entitled to make capital contributions and purchase shares without any limitation of level in all enterprises in Vietnam, except for:

  • Listed companies;
  • Businesses operating under the relevant industry specialized laws;
  • Equitized former State-owned enterprises (“SOEs”); or
  • Service companies as set out in Vietnam’s commitments to WTO for commercial services.

Under Decision 23813, foreign investors are able to buy up to 49% of listed shares of a company listed on the Vietnam stock exchange, except for some sectors in which foreign ownership may be limited, such as banking (now 30% cap).

Generally, for unlisted companies, the percentage of ownership by foreign investors will be in accordance with the regulations of the government, specialized laws and commitments of Vietnam in international treaties of which Vietnam is a member.

READ MORE AT: Legal for more high quality legal support. 

In addition, the main control imposed by government officials is on the size of the merged company. In this context, it’s important to work out what percentage of market share the newly merged company will hold. If it possesses quite 50 percent, the merger is going to be prohibited. If it’s between 30 and 50 percent, a personal representative of the corporate must first obtain permission from the executive agency for competition before implementing the merger.

For acquisitions – getting information about the targeted company can still be challenging in Vietnam because the targeted company isn’t required to disclose information to a buyer. This can lead to larger wait times while the acquiring company does its legal and financial due diligence.

And, certain sectors like banking, financial and insurance services are governed by specific regulations. If an acquiring company wants to accumulate a corporation in these sectors, it’ll be subject to additional regulations as per local law.
In short, the Mergers and Acquisitions activity is no longer complicated if you have a basic understanding of Vietnamese Enterprise and Investment law. The entire M&A process can take up to 3 months, however, this time can be shortened if you have a powerful assistant. Please contact us if you’re in need of comprehensive support by leading experts in the field!

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