Mergers and Acquisitions (M&A) are increasingly becoming an important strategy to help businesses restructure, expand scale, improve competitiveness and effectively mobilize capital in Vietnam. The Vietnamese M&A market, although affected by the global economic context, is still highly appreciated for its growth potential and is expected to be more vibrant in 2025 when the legal corridor is increasingly improved.

However, M&A is a complex activity, requiring careful preparation and strict compliance with legal regulations. Mastering the process and key legal factors is a prerequisite to optimize benefits and minimize risks. GMC Consulting Centre, with experience in M&A consulting, will outline the basic legal process and important notes when implementing M&A in Vietnam.

What is M&A from a Vietnamese Legal Perspective?

Vietnamese law does not have an official definition for “M&A”. This activity is often understood through legal forms stipulated in the Enterprise Law, Investment Law, Competition Law… including:

• Merger: One or several companies (the merged company) can merge into another company (the acquiring company) by transferring all assets, rights, obligations and legal interests to the acquiring company, and at the same time terminating the existence of the merged company.
• Consolidation: Two or more companies can merge into a new company, and at the same time terminating the existence of the merged companies.
• Acquisition: Is when a business buys part or all of the assets, shares or capital contributions of another business sufficient to control and dominate that business. This is the most common form.

Basic Legal Process of an M&A Deal

The M&A process can vary depending on the transaction structure, size and parties involved, but typically includes the following main stages:

Stage 1: Preparing the Transaction

1. Defining Strategic Objectives: The buyer needs to clearly define the objectives of the deal (market expansion, scale increase, access to technology/IP, supply chain optimization, etc.).
2. Searching and Approaching Target Companies: Identifying potential companies that fit the criteria.
3. Preliminary Valuation and Approach: Conducting an initial assessment of the value of the target company and approaching to express intentions.
4. Signing of the LOI/MOU and NDA: Record the initial agreements and commitment to confidentiality during the due diligence process.

Stage 2: Due Diligence (DD)

This is an extremely important stage for the buyer to comprehensively evaluate the target company. The DD process usually includes:

• Legal DD: Review the legal status and compliance of the target company regarding licenses, organizational structure, important contracts, labor, land, assets, potential disputes….
• Financial DD: Check accounting books, financial statements, cash flow, debts, tax obligations…
• Commercial/Operational DD: Evaluate the market, customers, suppliers, operating procedures…

The DD results are the basis for the buyer to make the final decision, negotiate price and contract terms.

Stage 3: Negotiation and Contract Signing

1. Negotiation: Based on the DD results, the parties negotiate in detail the price, transaction structure, terms and conditions in the M&A contract (usually the Share Purchase/Stake Sale Contract – SPA).
2. Contract Drafting and Signing: The contract needs to be drafted tightly and clearly by legal experts, including terms on the transfer object, price, payment, guarantees and warranties, conditions precedent, liability, applicable law, dispute resolution….

Stage 4: Obtain Approval and Complete Legal Procedures

1. Investment Procedures (For foreign investors): Carry out procedures for registering capital contribution, purchasing shares, and capital contributions at the Department of Planning and Investment according to the Investment Law.
2. Notification/Registration of Economic Concentration: If the M&A transaction meets the notification thresholds under the Competition Law, the parties may have to carry out notification procedures or apply for permission to concentrate economic concentration with the National Competition Commission.
3. Other approvals (if any): Approval from the State Bank (for credit institutions), the State Securities Commission (for public companies)…
4. Closing: The parties carry out the following procedures: Small and medium-sized enterprises (SMEs) are an important driving force of the Vietnamese economy. However, due to limited resources and sometimes management experience, SMEs are often more exposed to legal risks than large corporations. Failure to identify and prevent these risks in a timely manner can lead to heavy financial losses, prolonged disputes and even affect the existence of the business.

   GMC Consulting Centre, with experience consulting for many SMEs, has compiled the 5 most common legal risks that these businesses often encounter and suggests effective ways to prevent them.

   1. Risks from Loose or Incomplete Contracts

   This is one of the most common and dangerous risks. Many SMEs use contract templates downloaded from the internet or drafted roughly, leading to:

   • Ambiguous and controversial terms: Rights and obligations are unclear, definitions are incomplete, and can easily lead to disputes during implementation.
   • Lack of a mechanism for handling violations: No clear regulations on penalties for violations, compensation for damages, and late payment interest, making it difficult to handle violations when one party commits a violation.
   • Unfavorable terms: Unintentionally accepting unfavorable terms regarding payment, liability, warranty, etc.
   • Non-compliance with the law: Contracts may contain illegal terms, leading to the risk of being invalid.
   • How to avoid: Always use written contracts for important transactions. Invest in drafting a tight contract or use the service of contract review and inspection from professional legal units such as GMC Consulting Centre before signing.

   2. Risks Related to Labor Law

   Labor relations are complicated and have many potential disputes if businesses do not comply with regulations:

   • Non-standard labor contracts: Lack of mandatory content, using the wrong type of contract.
   • Illegal dismissal or labor discipline: Failure to comply with procedures, legal basis.
   • Violation of wages and insurance: Paying wages on time, not paying or underpaying social insurance, health insurance, unemployment insurance for employees labor.
   • Lack of regulations and labor rules: Not developing or registering labor rules according to regulations.
   • How to avoid: Develop a system of labor contracts, labor rules, clear salary and bonus regulations, comply with the Labor Code and guiding documents. Regularly update changes in the law. Consult a lawyer when handling complex labor situations.

   3. Risks of Non-Compliance with Other Legal Regulations

   In addition to labor and contracts, businesses must also comply with countless other regulations:

   • Tax and Accounting: Incorrect declaration, lack, late payment of taxes; Incomplete and substandard accounting books.
   • Business license: Operating without a business license (for conditional industries) or the license has expired.
   • Labor safety and hygiene, Fire prevention and fighting: Not ensuring safety conditions according to regulations.
   • Environmental protection: Not complying with regulations on waste treatment and environmental impact assessment.
   • Advertising, Promotion: Implementing programs that are not in accordance with the law.
   • How to avoid: Proactively learn about legal regulations directly related to your industry and activities. Use compliance consulting services, especially tax – financial consulting, to ensure legal operations.

   4. Intellectual Property (IP) Risks

   In the era of knowledge economy, intellectual property is increasingly important, but SMEs often ignore or are not fully aware of protecting:

   • Infringement of other people’s trademarks: Using similar names and logos that cause confusion with protected trademarks.
   • Brands/Trademarks used illegally by others: Not registering trademark protection in time, being registered by competitors or other parties or used to affect reputation.
   • Copyright infringement: Using images, content, unlicensed software.
   • Business secret leakage: No effective internal information security mechanism.
   • How to prevent: Carry out procedures to register for trademark protection, copyright, industrial design (if any). Develop information security regulations. Consult an IP lawyer when detecting infringement