Seven years since joining the World Trade Organization (WTO), Vietnam remains committed to integrating further into the world economy. Vietnam continues to attract record foreign direct investment (FDI) and is welcome to foreign investors and visitors alike. The government is steadfast in its pursuit of business reforms and has improved in ranking on the World Bank's Doing Business report.
Yet Vietnam is still catching up to China’s infrastructure, transport networks, suppliers, raw materials, and supply chain network. It is in this context that mergers and acquisitions (M&A) have become an increasingly popular investment route. With an M&A, investors can enjoy preexisting access to customers, suppliers, and distribution channels. An M&A can help reduce investment cost, help weak businesses and allow new entities to grow and gain a competitive advantage in the marketplace.
In the first six months of 2019, Vietnam recorded US$1.9 billion in M&A deal value. In 2018, Vietnam recorded US$7.64 billion of M&A transactions, up 41.4 percent from 2017. Despite a slowdown in global trade and even ASEAN countries experiencing a decline in M&A activity, Vietnam recorded the second highest value of M&A deals. Thailand, Singapore, South Korea, and Japan dominated Vietnam’s M&A market in 2018. With Vietnam’s strong FDI growth, this trend is likely to continue into 2020.
In this issue of Vietnam Briefing magazine, we look at the legal foundation for M&As including the basic laws that govern M&A activity. We then look at the legal and financial aspects of the M&A process including the due diligence process that goes into an M&A. We conclude with step by step procedures for M&As and post-merger considerations.
We hope this magazine will empower you to make an informed decision if choosing the M&A route in Vietnam.