In the context of international businesses increasing quality standards, rejecting products, and goods originating from Vietnam due to their failure to meet international standards, the Vietnamese M&A market also faces similar challenges in terms of scale and quality of M&A deals. Although the number of M&A deals in Vietnam has increased in recent times, the progress in terms of quality has not yet been substantial. To shed light on this issue, speakers in the second discussion, “Power Synergy,” collectively provide insights into the challenges, as well as solutions and the development direction of the Vietnamese M&A market. These insights are based on years of specialized experience in M&A activities in Vietnam and internationally.
After the conclusion of the first discussion, the Vietnam M&A Forum 2023 took a break for networking before moving on to the second discussion with the theme “Power Synergy”.
The main topics of the discussion include:
- Why is M&A still a favored investment channel in the context of difficulties, unusual fluctuations, and unprecedented global economic trends?
- What new synergies will be generated from M&A deals in the current situation, and what factors will determine these synergies?
- What are the considerations for Vietnamese businesses to ensure that each M&A deal with international partners is a successful match?
- Experiences of businesses with excellent M&A strategies.
The speakers participating in the discussion include:
- Mr. Nguyen Tien Hoa, Senior Lawyer, ASL LAW (Discussion Coordinator)
- Mr. Dang Van Thanh, Chairman of TTC Group
- Mr. Angus Liew, Chairman of the Board of Gamuda Land Vietnam
- Mr. Melvin Heng, CEO of Thomson Medical Group
- Mr. Nguyen Van Thien, Chairman of Binh Duong Water – Environment Joint Stock Company (BIWASE)
- Ms. Luu Thi Thanh Mau, CEO of Phuc Khang Investment and Construction Joint Stock Company
- Mr. Truong An Duong, CEO of the Northern Region and Residential Real Estate Block, Frasers Property Vietnam
- Mr. Vu Minh Tien, Vice Chairman of the Board of VIAD Group.
Vietnam M&A Forum 2023: Power Synergy
Mr. Nguyen Tien Hoa, Senior Lawyer of ASL LAW, posed a leading question to the speakers: Why is M&A a favored investment method in times of market volatility?
Mr. Melvin Heng, CEO of Thomson Medical Group, expressed his perspective, stating that without M&A, the “green field” would start from zero. M&A is part of the business cycle; founders initiate businesses, financial entities form, and strategic players like himself step into a company to build a foundation for additional growth and synergy development.
The essence of M&A requires a great deal of trust and emotional investment from investors. They need to believe in the investment environment, have confidence in the country, trust in specialized knowledge, and understand the mechanisms for their investment decisions to be secure and comfortable.
Mr. Dang Van Thanh, Chairman of TTC Group, reflected on the last two decades, stating that M&A has been evolving in our economy, transitioning from a centrally planned to a market-oriented economy.
In 2001, they successfully completed M&A transactions with two banks, namely Nong thon Thanh Thang Rural Commercial Joint Stock Bank and Dong Phuong Bank. This activity is a rule of the market-oriented economy, where M&A creates opportunities for both buyers and sellers. The key lies in having a market share to implement these transactions effectively.
Mr. Angus Liew, Chairman of the Board of Gamuda Land Vietnam, emphasized that Vietnam remains an attractive destination, echoing sentiments shared by other speakers in the first discussion.
In addition, the legal framework in Vietnam is favorable as we can sell unfinished real estate projects, which may not be possible in other countries. Gamuda Land chooses M&A, opting for projects with quick results because, after investing, seven years later, houses are delivered, and transactions are completed. Vietnam aligns well with this strategy, which is why we initiated it in 2020. Despite the challenges for foreign investors in 2020-2021, 2023 has been a successful year for us with the completion of three deals.
Looking ahead, Vietnam will continue to be attractive, especially with the introduction of new laws. We hope these new laws will encourage new investments, drawing more attention to this market. Regarding M&A deals, we not only want to participate but also provide M&A services to other entities.
Ms. Luu Thi Thanh Mau, CEO of Phuc Khang Investment and Construction Joint Stock Company, stated that the achievements in M&A this year are a result of progress in laws such as the Enterprise Law. This legal foundation allows investors not only to invest entirely but also to form joint ventures and collaborate with international management practices.
Vietnam has seen more advanced urban developments in terms of quality, providing consumers with more enjoyment. This is the outcome of M&A activities benefiting investors and businesses. M&A also serves as a means for investors to gain quick profits, recover capital swiftly, operate flexibly, adapt to various conditions, and make the investment basket more appealing and diverse in terms of types and products.
Mr. Truong An Duong, CEO of the Northern Region and Residential Real Estate Block at Frasers Property Vietnam, expressed his belief that Vietnam has the necessary foundation to drive economic growth. The increasing demand for industrial real estate is fueled by the growing inflow of FDI into the Vietnamese market.
In the coming time, he believes that industrial real estate will continue to develop, and M&A transactions in the real estate sector will also increase. Besides industrial real estate, they are also exploring opportunities and potential in the office real estate segment, participating in the market’s office real estate renovation. According to him, the M&A demand in various real estate segments remains promising in the coming years.
Mr. Vu Minh Tien, Vice Chairman of the Board of VIAD Group, remarked that despite discussions about supply chain disruptions and economic difficulties in 2023, many remain optimistic about economic growth.
M&A stories are inevitable because the decline of one industry is an opportunity for another, serving as a driving force for the overall development of the economy.
Mr. Nguyen Tien Hoa continued to guide the second discussion round with the question: What new synergies will be created in upcoming deals? How to understand the concept of acquisitions, the “big fish swallowing the small fish”?
Mr. Dang Van Thanh: When there is a good opportunity but not transferring everything, joint ventures and partnerships should be considered. One must understand the percentages – 36, 49, 51, 65% – in terms of ownership. When someone enters, they must take responsibility. If unclear, professional advisory firms can be sought.
Mr. Nguyen Van Thien: I agree with Mr. Thanh. The metaphor “big fish swallowing the small fish” may have a negative connotation, but from another perspective, it can be positive. It symbolizes unity to lift a struggling colleague who is on the verge of collapse. After that, the business recovers, develops, and we participate in capital and management, also helping the parties involved retain assets in the business.
Mr. Nguyen Tien Hoa then directed a question to Mr. Dang Van Thanh, the founder of TTC, who has marked numerous successful M&A deals, contributing to the competitiveness of the Vietnamese sugar industry. He asked about the strengths of TTC.
Mr. Dang Van Thanh: With our strategy, we always have aspirations and a keen interest in M&A. In 2010, with a high entrepreneurial spirit and 16 years of building factories, we felt a responsibility to farmers and the market. So, we were ready to acquire two factories. With such a sense of responsibility, agriculture must continue to develop, involving various issues.
Mr. Nguyen Tien Hoa further inquired about the impact of M&A synergy, and how the strong growth of the business would unfold.
Ms. Luu Thi Thanh Mau: The most progressive goal of M&A is for both the seller and the buyer to win. The buyer has responsibilities, and the seller also has responsibilities. The most challenging decision for a leader in the deal-making process is to refuse at the right time and under the right circumstances. It is crucial to choose the most appropriate timing.
Regarding our social relationships, with a large population and rapid real estate development, laws have not kept pace with this growth. However, adjustments have been made to align with this development, creating synergy.
In the final round of the second discussion, Mr. Nguyen Tien Hoa raised the question: “Joining hands for prosperity” – this year’s impressive slogan. What are your thoughts (Mr. Angus Liew) on this theme, and what should Vietnamese businesses pay attention to in ensuring cooperation and the successful completion of M&A deals?
Mr. Angus Liew: We are the beneficiaries of M&A. We entered the market by collaborating with local partners such as Nam Long and TTC. To work with foreign investors, patience and time are needed for them to understand Vietnam’s tax system, laws, and culture. Of course, some deals can be completed in two months due to experience, but it’s easier to close deals if unrealistic expectations are eliminated from the start. During the process, additional requirements often arise, causing delays, so it’s advisable to share everything from the beginning to save time for all parties.
Mr. Nguyen Tien Hoa then asked about practical experiences and what businesses need to consider in M&A.
Mr. Dang Van Thanh: After taking over another business, achieving harmony can be challenging, especially in terms of corporate culture. Regarding labor issues, after taking over, we train the core team of TTC to adapt, assess, classify, assign additional tasks or reduce workload to create the best conditions for employees in the new unit to integrate into TTC effectively.
Mr. Nguyen Van Thien: I agree with Mr. Thanh. Human resources play a crucial role. After completing M&A, improving management and enhancing employees’ welfare is essential. Before the transition, signs of decline may be apparent, causing dissatisfaction among employees. Therefore, when taking over, changing the service approach and improving their work and life will bring immense joy to them, and they will dedicate themselves fully. In my case, I reviewed the salary structure. If it’s too low, I will raise it. Improving their lives is the key to improving labor productivity.
The second discussion concluded successfully under the coordination of Mr. Nguyen Tien Hoa, Senior Lawyer at ASL LAW.
Mr. Nguyen Tien Hoa expressed gratitude to the speakers for their enthusiastic participation, sharing diverse perspectives on M&A in Vietnam and internationally, from macroscopic views to intricate micro factors, all crucial in determining the success or failure of an M&A deal.
At the end of the discussion, Mr. Le Trong Minh, Editor-in-Chief of Bao Dau Tu, Head of the Organizing Committee of the Vietnam M&A Forum 2023, presented a token of appreciation to the coordinator and the participating speakers.
Typically, during the M&A Forum, ASL LAW is awarded one of the Outstanding Vietnam M&A Advisors from 2009-2023.