Hopes raised for M&A improvement in 2024

Tran Duy Dong - Deputy Minister of Planning and Investment

Over the past 15 years, with more than 5,000 deals totalling $66 billion, the merger and acquisition (M&A) market in Vietnam has become an effective capital mobilisation channel, contributing to diversifying capital attraction for the Vietnamese economy. However, in the context of low global growth, global M&A activities in 2023 have not gone entirely smoothly.

According to research by GlobalData, the total number of M&A deals as of the end of October decreased by 16.8 per cent compared to the same period last year, of which the number of deals in Asia-Pacific decreased by 11.6 per cent.

As part of this general trend, Vietnam’s M&A market is also declining, especially compared to its peak in 2021, with a total deal value of more than $10.8 billion. By the end of October, according to KPMG’s estimates, the total deal value of the Vietnamese market had reached just over than $4.4 billion, and it is not expected to reach the figure of $6.8 billion that was seen last year.

However, despite these issues, Vietnam’s M&A market still provides many opportunities thanks to its strong fundamentals. The government has proactively and effectively responded to the challenges.

Investment growth drivers continue to be strongly promoted, and many key national projects have been put into operation. Economic diplomacy activities also seen historic achievements, opening up new opportunities to attract foreign investment, especially in relation to technology.

According to S&P Global’s 2024 Big Picture Outlook report released in November, although global activities have slowed down for most of 2023, there are many potential factors motivating investors.

The Vietnamese investment market in general and the nation’s M&A market in particular continue to be considered attractive by international investors, thanks to the political stability and impressive economic growth. The domestic consumer market also continues to grow rapidly.

As of November 20, the total foreign investment capital registered in Vietnam reached nearly $28.85 billion, an increase of 14.8 per cent over the same period last year.

Of this, capital contributions and share purchases reached nearly $5.97 billion, an on-year increase of 46.4 per cent.

Further encouragement is required for domestic businesses to reconsider their strategies, seek new growth models, and focus on restructuring production and business activities in a more long-term and sustainable direction.

Luu Thi Thanh Mau - CEO, Phuc Khang Corporation

International investors identify Vietnam as an ideal destination and most deals are concentrated in Vietnam compared to the Southeast Asian and Asian markets, thanks to the government and agencies focusing on changing policies and institutions accordingly to integrate with the world’s economy and create a more equal business environment.

Investors currently do not only focus on quick and efficient profits returns, or economic-related index issues, but pay more attention to factors related to the environment, society as well as management capabilities.

In the process of implementing international deals and joint ventures with foreign investors, I realise that businesses need to prepare many things. Firstly, they must clearly determine their M&A goals and the partner’s strengths and expertise that the business can learn from.

Secondly, they must understand the culture and identity of the businesses and countries they wish to cooperate with, the welfare and trade agreements of the countries with businesses doing M&A with them.

And the third and most significant thing is to prepare a thorough M&A plan and strategy, including a team of advisors, legal staff and human resources to implement the deal and to make it successful. More important is to control the whole process and to make it successful. The ultimate goal is a win-win result for both sides.

Truong An Duong - General manager of North Vietnam & Residential Frasers Property Vietnam

In any M&A deal, we prioritise choosing projects in strategic locations, at the hub of greater Ho Chi Minh City and Hanoi with the ability to connect directly to major provinces, airports, seaports, or easily accessible transportation infrastructure. In the centre of value chains, areas where many queen bees gather to engage many supporting manufacturing businesses concentrate and create the essential excitement for the industrial picture of the region.

We are eager to collaborate with like-minded and long-term trusted partners who have valuable resources and experience to develop significant projects together. Partners have completely ready-made infrastructure, vast experience, and a high market reputation.

The company has also diversified so that we can lead and act responsibly as an investor, developer, and operator, whether in terms of delivering quality products, providing excellent customer experiences, becoming a net-zero carbon corporation, or building connected and healthy communities.

Dang Van Thanh - Chairman, TTC Group

In a thriving and open economy like Vietnam’s, well-managed M&A processes can unlock tremendous opportunities. The dual benefits, for both buyers and sellers, stressing timing as a critical factor. The seller must recognise the peak moment to showcase their strength, while the buyer should view M&As as a strategic move to expand at the right time.

This approach requires courage and a willingness to embrace the inherent risks and rewards. As entrepreneurs, our aspirations always lead our strategy. At TTC, this has meant harnessing the power of M&As to fulfil our ambitions over our 44-year history. This strategy has driven TTC’s growth and positioned it as a leader in Vietnam’s business landscape.

Responsible entrepreneurs should actively seek collaborations when they sense limited scope for individual growth, viewing M&As as a growth catalyst from a buyer’s perspective.

In an ever-changing market like 2024’s is likely to be, the ability to quickly identify and capitalise on these opportunities is crucial. However, the true challenge lies in merging the cultures of two distinct entities. At TTC, we focus on preparing our employees for this transition, ensuring a harmonious and productive integration.

Le Minh Phieu - Managing partner, LMP Lawyers

An M&A deal passes a very long road and there are many possible problems that the parties need to overcome. Those are the differences in culture, legality, way of thinking, and educational background. Consultants need to help the parties know the relevant laws and all aspects of partners in the journey so that the parties can understand and negotiate with each other.

Legal obstacles and legal regulations are the biggest barriers that consulting lawyers need to support businesses well in order to have a perfect deal. Both sides can overcome those obstacles and come together.

In addition, the wishes of the parties are different and conflicting, leading to failure to negotiate. Lawyers will find a solution to reconcile both parties to be able to cooperate successfully.

Currently, the world and Vietnamese economies are struggling in challenges but industries that serve basic needs will continue to grow. Food production, medical treatment, healthcare, new technology, semiconductor chips, and future control industries will attract M&As.

In the next 3-5 years, I am sure that Vietnam’s landscape in these areas will be very exciting.

Binh Le Vandekerckove - Head of M&A Advisory, ASART

Ten years ago when the M&A market hit bottom, everyone was pessimistic. But from 2016 was more positive and in 2017 alone, it is estimated that up to $16 billion was poured into the Vietnamese market, including deals that were not publicly announced.

This means that opportunities are always there and available, and in a few years we will see Vietnam’s M&A market reach $20 billion. In this development, the government plays an extremely important role. When laws are updated and amended, the M&A market will accelerate. We hope the Vietnamese government continues to pay more attention to this market.

In addition, opportunities also come from Vietnam’s position as one of the most dynamic economies, having participated in well over a dozen free trade agreements.

Doors of opportunities for attracting investments are open. We need to work together to help the market be more transparent, go deeper into the nature of the deals, and add value to the deals.

Pham Duy Khuong - Managing director, ASL Law

This year the M&A market had a downward trend, but there are still certain groups that show growth and potential. For example, foreign businesses currently tend to focus on key projects related to ports and logistics.

In addition, foreign investors are interested in the energy sector, especially wind power. And in the opposite direction, there are also Vietnamese businesses paying attention to foreign wind power markets.

Although the overall picture is going down, there are still certain industries that are going up. In fact, nowadays there is a general trend of having a crisis once every 10 years. When in a crisis period, there are many businesses that need to be transferred because they are thirsty for capital. So the market now is for buyers.

In short, it is a game that the market decides. Who can take advantage of the opportunity at this time and who dares to put down money at this time is an important factor.

Angus Liew - Chairman, Gamuda Land Vietnam

Vietnamese real estate is an attractive destination for investors, including Gamuda Land. The demand for homeownership in Vietnam is huge, while the supply is limited. Furthermore, the population is not only large but also young and the middle class is growing.

We chose the M&A method because it brings the fastest results in the real estate sector. The Vietnamese market is also suitable for Gamuda Land’s development strategy. In 2020 and 2021, M&As were not easy for foreign investors but 2023 has been a successful year for us, when we have completed three deals.

In the Vietnamese market, many new laws related to real estate have been being revised. The legal environment is also becoming more favourable, which will further encourage investors.

During the M&A process, the parties need to share everything frankly with each other. To be transparent is one of the most factors that bring two sides together.

Nguyen Van Thien - Chairman of the board, Binh Duong Water-Environment Corporation

I view M&A transactions not as a predatory strategy, but as a means to extend support to struggling businesses, helping them to not only survive but to retain their businesses and assets.

Our approach when investing our money is collaborative. We join the board of the company we invest in, focusing on improving their services and growing together, rather than aiming for a takeover.

In fact, we have often come across companies deeply passionate about the water sector, companies that have invested in building plants in what is known to be a relatively stable industry.

However, they’ve encountered difficulties and incurred losses due to their singular focus on investment without developing a full-fledged water supply network and services.

This is where we come in, co-investing and aiding in the development of these networks and systems, providing professional services for mutual growth.

Vu Minh Tien - Vice chairman, VIAD Group

M&A activities are a driving force in promoting economic development. After the pandemic, the total value of deals went down, but the average value tended to go up. This shows the current trend of businesses aiming for high-value deals to promote each other and cope with the broken economy. I think this will continue to be the trend in 2024 as the world economy fluctuates.

Big deals in Vietnam recently came mainly from Japan, the US, and Southeast Asia, and this comes from the agreements that Vietnam has signed. As for the European Union, Vietnam has access to capital from this market, but is currently also being severely affected by supply chain disruption, leading to European also carrying out mutual M&A within their own borders.

This is not only an opportunity to welcome capital flows from Europe, but also indicates potential for Vietnamese businesses to reach out to Europe to carry out more M&A activities.