M&A Vietnam: Gearing up for a new era

In 2023, M&A Vietnam exhibited a contrasting trajectory compared to the relatively subdued scene in 2022.

At the Vietnam M&A Forum, esteemed experts deliberated on the market’s prospects for the coming years, spanning 2023 to 2025 and even 2030.

While global economic forecasts for 2023 were not entirely optimistic due to factors like a potential slowdown and persistent inflation, Vietnam’s economy demonstrated resilience.

The Vietnamese government’s commitment to managing inflation at approximately 4.5 per cent and targeting an economic growth rate of 6.5 per cent underscored their determination for socio-economic recovery and development.

Despite a temporary slowdown in M&A activities, Vietnam remains an attractive and secure market, poised to “ignite new opportunities”.

On the global stage, M&A activity faced headwinds. According to Bain & Co., global M&A declined by 20 per cent in 2023, reaching a total value of approximately $3 trillion.

Notably, venture capital and private equity firms experienced substantial declines of 39 per cent and 35 per cent, respectively.

In contrast, the energy sector led the way with 3,559 deals worth $704.2 billion. Despite these challenges, strategic winners emerged, demonstrating that turbulent times can foster opportunities for those who navigate wisely.

In conclusion, while Vietnam’s M&A market faced short-term slowdowns, its long-term potential remains promising.

Globally, M&A activity dipped, but specific sectors continued to thrive amidst uncertainty. Both markets grappled with unique dynamics, emphasising the need for strategic agility and resilience in the ever-evolving landscape.

How to invest in Vietnam’s M&A market?

Investing in Vietnam’s M&A market presents a compelling proposition for strategic investors and private equity funds.

Despite the risk of a global economic downturn, Vietnam remains a bright spot in terms of economic development potential and a potential destination for investors in the region.

In 2024 and beyond, the Vietnamese M&A market is expected to continue its sustainable growth, attracting attention from investors across borders.

Strategic investors from Thailand, Singapore, Japan, and South Korea actively participate in M&A activities within Vietnam.

Their motivations include increasing market share and diversifying business operations. Logistics, healthcare and technology integration, food, and renewable energy are attractive sectors in Vietnam for foreign investors.

For example, in the first seven months of 2023, healthcare investments in Vietnam totalled $400 million.

Japanese investors recognise Vietnam’s rising per capita income and robust healthcare sector, leading to increased demand for service providers in hospitals and healthcare facilities. Specifically, they seek collaboration with IT companies to develop software for hospitals, laundry service providers, and hospital meal suppliers.

These trends, coupled with policy changes aimed at attracting foreign investment, position Vietnam as an ideal source of deposits and investments for international investors in the visible future.

The M&A process in Vietnam involves several stages, each crucial for successful transactions. Let’s delve into the key aspects:

Pre-M&A stage:

- Preparation: In this phase, the acquirer searches for and evaluates the target company. Approaching the target and assessing its suitability are essential steps.

- Negotiation: Price and transaction terms are negotiated. This stage sets the foundation for the deal.

M&A transaction execution stage:

- Negotiation continues: Detailed negotiations occur, covering legal aspects, financial terms, and conditions.

- Due diligence: Thorough examination of the target company’s financials, legal status, and operational aspects.

- Documentation: Drafting and reviewing agreements, including share purchase agreements or asset purchase agreements.

- Regulatory compliance: Ensuring compliance with Vietnamese laws and regulations.

Post-M&A stage:

- Integration: Post-acquisition, integrating the target company into the acquirer’s operations is critical.

- Monitoring and adjustment: Continuously monitoring performance and making necessary adjustments.

Challenges when doing M&A in Vietnam

When it comes to M&A in Vietnam, foreign investors encounter a mix of opportunities and challenges.

The regulatory environment and legal uncertainties pose significant hurdles.

Intellectual Property Rights (IPR) enforcement remains a concern due to a lack of robust protection and challenges in enforcement.

Infrastructure limitations, including inadequate transportation networks and supply chain constraints, affect operational efficiency.

Additionally, the human capital and skills gap, language barriers, and selective FDI attraction add complexity.

Despite these challenges, Vietnam’s evolving M&A landscape offers promise, with over 500 deals annually and larger transactions becoming commonplace.

Foreign investors must navigate these obstacles while capitalising on Vietnam’s growth trajectory and market liberalisation.

New horizons for Vietnam’s M&A market

Foreign investors started to move beyond exploratory investments and sought long-term strategic positions.

Deal values reached record highs, with mega deals closing across sectors. For instance, Japan-based Sumitomo Mitsui Banking Corporation's (SMBC) acquired a 15 per cent stake in VPBank for $1.5 billion in 2023, making a new banking industry record, with a deal value of VND35.9 trillion ($1.5 billion).

This deal surpassed the VND20 trillion ($833 million) acquisition of a 15 per cent stake in BIDV from South Korea's KEB Hana Bank in 2019 and indicating investor confidence and commitment to Vietnam’s current market and prospects.

Apart from that, the M&A market has undergone a substantial transformation, marked by a growing assertiveness and sophistication among local companies.

These firms are increasingly active in pursuing strategic deals and expanding their influence within the market.

The maturation of Vietnam’s M&A landscape reflects a dynamic economic environment and the emergence of domestic players as key participants in shaping business transactions.

INMERGERS - A gateway for foreign investors to enter the new era of M&A Vietnam

INMERGERS, a pioneering M&A company in Vietnam, particularly focusing on Corporate M&A and strategic M&A, will serve as a gateway for foreign investors venturing into the dynamic landscape of M&A in Vietnam.

MMatch, a product of INMERGERS, is a leading business connection platform in Vietnam applying auto-matching technology to automatically “match” suitable Buyer and Seller profiles.

MMatch seamlessly connects enterprises and investors, facilitating transactions across various domains: mergers and acquisitions, property transfers (warehouses, offices), and more. With their help, 720+ teaser submissions have been sent to potential investors, 500+ M&A orders for businesses across various sectors.

As Vietnam’s economic environment matures and diversifies, INMERGERS emerges as a pivotal player, bridging global investors to promising opportunities within the Vietnamese market.

For more information, you can reach out to INMERGERS via:

INMERGERS JSC Headquarters:

3rd floor, 192 Thai Thinh, Lang Ha ward, Dong Da district, Hanoi, Vietnam

4th Floor, HM Town Building, 412 Nguyen Thi Minh Khai, ward 5, District 3, Ho Chi Minh City, Vietnam.

Hotline: (+84) 963 550 192 ; Website: http://inmergers.com/en

Email: advisorteam@inmergers.com

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