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: Implement the prerequisites, transfer shares/capital contributions/assets, make payments and complete the procedures for registering changes to the business registration content at the competent state agency.

Stage 5: Post-Merger Integration (PMI)

This is an important stage to realize the expected benefits from the deal, including the integration of organizational structure, personnel, operating system, corporate culture….

Important Notes When Conducting M&A in Vietnam

• Complex legal framework: M&A activities are subject to the regulation of many different laws (Enterprise, Investment, Competition, Securities, Land, Labor…).
• Market access conditions Market: Foreign investors need to pay attention to the restrictions on ownership ratio and investment forms for some conditional business lines.
• Due Diligence: This is an indispensable step to identify potential risks (legal, financial, tax, labor, etc.).
• Transaction structure: Choosing the appropriate structure (buying shares/contributing capital or buying assets) will affect legal procedures and tax obligations.
• Labor issues: It is necessary to have a plan to handle issues related to employees at the target company after the transaction.
• Corporate culture: Cultural differences can be a major barrier in the integration process after M&A.
• Information confidentiality: An agreement is required strict confidentiality from the very beginning.
• The role of professional consultants: Hiring experienced legal and financial consultants is very important to ensure successful transactions and legal compliance.

GMC Consulting Centre – Trusted Partner in M&A Deals

With a team of lawyers and experts with in-depth knowledge of the law and the Vietnamese M&A market, GMC Consulting Centre provides comprehensive consulting services to parties in M&A transactions:

• Consulting on transaction structure.
• Performing legal due diligence (Legal Due Diligence).
• Drafting and negotiating M&A agreements and contracts.
• Supporting the implementation of legal procedures for approval required design.
• Advice on post-M&A issues.

Contact GMC Consulting Centre for detailed advice and professional support for your M&A plans. Your merger in Vietnam.

• Hotline: 0375751616
• Email: [email protected]
• Website: gmcconsultingvn.com

(Disclaimer: This article provides reference information based on expected legal regulations and practices at the time of writing. Laws may change. To receive the most accurate and updated advice for specific cases, please contact GMC Consulting Centre’s lawyers and experts directly.)

(Disclaimer: The information in this article is for general reference only, not official legal advice for a specific transaction. Legal procedures and regulations may change. Please contact GMC Consulting Centre for detailed advice.)