Vietnam's M&A landscape mirrors global trends

According to the report 'Global M&A Industry Trends: 2025 Outlook' released by PwC on February 18, recent dealmaking momentum at the top end of the market suggests the upswing has already began. Globally, the volume of deals greater than $1 billion in value increased by 17 per cent in 2024, and their average value rose. But there are some mixed signals as the number of small- to mid-sized deals declined. There are also some potential wild cards which could disrupt the momentum.

PwC’s report looks at three key wild cards which may influence M&A activity in 2025 and key factors underlying a growing deals imperative. These global trends are also mirrored in Vietnam's M&A landscape.

In 2024, deal values increased by 5 per cent, largely driven by a rise in average deal size, despite a 17 per cent drop in deal volumes due to ongoing macroeconomic uncertainty surrounding inflation and interest rates. The landscape saw a significant uptick at the higher end, with over 500 deals valued at more than $1 billion, up from 430 in 2023. Additionally, megadeals surged by 18 per cent, with 72 deals worth over $5 billion announced in 2024, compared to 61 in the previous year.

81 per cent of previously acquisitive CEOs' plan to make another acquisition in the next three years. CEOs are optimistic about their M&A plans in 2025. According to PwC’s report, 81 per cent of CEOs who made a significant acquisition in the past three years plan to make one or more acquisitions in the next three years.

Health industry gears up for more favourable M&A environment

In 2025, portfolio gaps, supply chain issues, and policy direction are anticipated to drive M&A activity among health industry companies. Within the pharma and life sciences sectors, there is a focus on pursuing biotech deals to counteract impending patent cliffs and on divesting non-core assets as part of portfolio optimisation. These companies are also exploring creative financing structures to support innovation. Meanwhile, private equity interest in medtech and digital health is on the rise, with expectations that exits of PE-backed companies will increase. Additionally, recently spun-off or divested pure-play over-the-counter (OTC) and consumer health businesses are likely to pursue M&As to accelerate their transformation plans.

The healthcare M&A landscape in Vietnam in 2025 is expected to be vibrant, driven by increasing demand for high-quality healthcare services and a rapidly expanding middle class. Private hospitals and speciality clinics, such as ophthalmology and oncology centres, will be the primary drivers of M&A activity.

Continued growth and transformation in education sector

The global M&A landscape in the education sector is evolving, with private equity investors driving 50-70 per cent of investments. EdTech remains a major focus, especially in digitising K-12 and higher education. Overall, the sector is poised for continued growth and transformation, driven by technological advancements and increasing demand for quality education.

In Vietnam, the government’s encouragement of foreign investment, with no limits on foreign-invested capital for educational institutions, is likely to attract more international investors. The M&A landscape in Vietnam's education sector in 2025 will be dynamic, driven by government encouragement of foreign investment and growing demand for private education. Strategic partnerships and investments in higher education and vocational training will enhance quality and infrastructure. Supportive government policies will create a favourable environment for both local and foreign investors, presenting numerous opportunities for M&A activities.

The M&A wild cards

Geopolitics and the ‘Trump effect’

Dealmakers and markets are still digesting the outcomes of the elections that took place in many countries during 2024 and the resulting changes to policy direction, in particular, the impact of the new Trump administration in the US.

The global M&A outlook explores the likely impact by sector of certain US policy changes and executive orders on topics such as immigration, taxes, tariffs, deregulation, and more. The broader geopolitical environment is also explores industry perspectives which form part of the global M&A outlook series.

Long-term interest rates

Interest rate cuts in the second half of 2024 in many countries have supported the new M&A momentum. However, long-term rates are rising again, and the timing and extent of future rate cuts will depend on the strength of the local economy and whether inflation continues to cool, leading to continuing uncertainty for dealmakers.

High valuations

In mid-January 2025, the forward price-to-earnings ratio for US stocks (based on the S&P 500) was 22.87, compared with 13.67 for non-US international stocks (based on the S&P International 700). Lower valuations in some countries and a strong US dollar may lead to more cross-border deals.

To be successful, dealmakers will need to be prepared to answer some tough questions, including around the impact of AI, achieving returns in a market with high valuations and slowing growth, where opportunities exist for investors, and the geopolitical implications of any deal being considered.

Ong Tiong Hooi, partner and transaction services leader at PwC Vietnam, shared, “As we enter 2025, the global M&A landscape is set for a significant recovery, driven by easing economic headwinds and strategic acquisitions. This trend is mirrored in Vietnam, where we see increased activity across various sectors. In Vietnam, domestic companies are leading high-value transactions, and foreign investors are showing renewed interest, particularly in the healthcare and education sectors. Navigating this dynamic market requires a deep understanding of industry trends and a strategic focus on value creation. Dealmakers must stay vigilant, monitoring valuations, interest rates, and geopolitical factors to seize emerging opportunities.”

Vietnam’s M&A market set for 2025 surge amid regulatory reforms and foreign investment Speaking on the sidelines of the 16th M&A Vietnam Forum 2024 at the JW Marriott Saigon on November 27, Oh Hsiu-Hau, managing partner at Allen & Gledhill (Vietnam), shared his insights with VIR's Ngoc Huong on the outlook for the M&A market.

M&A market set to boom again in 2025 The M&A market is expected to become more dynamic in 2025 with the return of investors from Japan and South Korea across various sectors, driven by positive institutional changes and recent efforts toward dual transformation.

Investors old and new take on M&As Competition in Vietnam’s merger and acquisition market will become fierce as foreign investors, including strategic and emerging ones, compete eagerly for potential targets.