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Speaking at the 12th Annual Vietnam Merger – Acquisition (M&A) Forum – 2020, Mr. Pham Duy Khuong – Director of ASL Law shared many issues related to post-M&A.
The challenges
At the first session, Mr. Pham Duy Khuong, Director of ASL Law, assessed that after M&A often some complicated disputes will happen, such as labor disputes.
“Usually in Vietnam, when new owners appear, old employees often feel flustered,” he said.
On the other hand, on the financial and debt issue, many legal issues have been carefully assessed, but it is not possible to predict 100% of the problems in a deal. There are certain gaps left to the parties.
Assuming the company has violated the law, or has a certain commitment obligation, without telling the buyer to deal with the implicit settlement. After the new owner appears, the legal problem may come back to the buyer.
Another legal issue can be mentioned when the cooperation between the buyer and the seller is not as passionate as originally. For example, in the process of selling, the seller will take the money of the company, transfer the information of other customers and potential fields to another company,… This will make the buyer face many difficulties in operating the company. For serious problems at the court, one of the two parties has to buy back the capital, so what happens when the right side buys back not enough financial capacity.
In addition, in the energy sector, there are many foreign investors, especially investors from Japan, Hong Kong (China), China …, the legal issue for these projects is also the point to address.
The opportunities
Although there are many terms of initial capital contribution, in fact, the buyer has also encountered obstacles from the seller in accepting the project, not sure when it will be able to accept the project after the M&A.
Also at the first session, some speakers also shared about the potential of the M&A market in Vietnam in the coming time.
Accordingly, Mr. Nicolas Audier, Chairman of EuroCham assessed that the approved EVFTA Free Trade Agreement will indirectly push M&A transactions through. Projects from Europe to Vietnam on this occasion will explode.
In addition, in the Vietnamese market, there is another factor with great potential to explode, which is the infrastructure sector. (This sector was stalled because of epidemics). EVFTA will protect investors between parties, helping businesses to have mutual investment. We expect strong progress from such deals.
Sharing the potential of the M&A market in the coming time, Mr. Seck Yee Chung, Executive Lawyer, Baker McKenzie Law Firm added that, after a period of downtime, the export market is also slowly growing. Come back but most importantly are the growth signals of the domestic market such as the furniture market.
“I have been working from home since March 2020 and consuming more, probably too. They are also at home and need to change the interior of their house, ”said Mr. Seck Yee Chung.
Mr. Warrick Cleine, President and CEO of KPMG Vietnam and Cambodia said that he was impressed and optimistic about M&A transactions under new forms of direct and indirect ownership or equity. According to him, the family business group has positive signals in the capital market in Vietnam. Manufacturing and processing education… good sectors for the consumer sector are expected to grow rapidly.
ASL LAW is M&A law firm in Vietnam. If you need any inquiry, please contact us.
