The difficulties encountered when conducting an M&A deal, M&A in Vietnam, Vietnam M&A, Notes to M&A in Vietnam

The difficulties encountered when conducting an M&A deal

According to experts, in M&A deals, especially in the real estate sector, intense competition happens all the time in the project acquisition, purchase, and sale process. There is no common denominator for M&A deals. However, with regard to the “real estate” projects, it will be much more difficult. Because in the real estate sector, there may be risks that the buyers cannot fully anticipate.

The key to success in M&A of An Thinh Group

Sharing with the press, Ms. Nguyen Thi Thanh Huong, Chairman of An Thinh Group, said that there are many deals in which An Thinh Group faces great competition from stronger competitors in finance, relationships, brand, and project implementation experiences. 

However, An Thinh Group still gains a lot of success because An Thinh has established its distinctive value, which is to be consistent with the former owner of the project and confirms the commitment after the acquisition. Of course, to close the deal at bargain prices, An Thinh Group also had to find the “disease” of the project, thereby getting the right “doctor” and the right “medicine”.

Nguyen Thi Thanh Huong, Chairman of An Thinh Group. Picture: kienthuc

The importance of consultation

Besides, in order to bring the M&A deal to success, there is also a requirement for a financial advisor. Without a seasoned M&A consultant, the seller may have to spend a lot of time and effort to research the rules to complete a deal, overcome the risks and arising problems. All of the above-mentioned problems come when the business still fully functions as standard. Therefore, it might be the main reason that causes a lot of stress and ultimately, leads to the failure of the deal.

ASL LAW is an M&A consultant company on deals between local companies, local companies and foreign companies, 100% foreign-invested company and foreign companies.

Risks in M&A deals

A fairly common risk in M&A deals is that sellers often prepare very optimistic strategic plans which do not reflect the basis of credibility and reasonableness. This can affect an investor’s view of the business, making the process of the deals more complex and difficult.

In addition, the quality of accounting records is also a risk factor for an M&A deal. Complexities in corporate structures and rapid diversification, including problems heavily related to non-core businesses and long-term financial investments, can hinder potential investors and create difficulties in transaction execution. Reliable and appropriate audited financial statements, accounting book systems, and management reports will help to mitigate this risk.

According to Ms. Huong, with rapid developments of the company comes greater values and risks in M&A deals. Therefore, in the long-term, the above issues are increasingly more visible. Hence, if carefully prepared, the project negotiation and implementation will be easier and more tranquil.

Trustworthy associate in M&A deals

In the real estate sector, finding a suitable project is extremely challenging. Because it is not easy to assess the level of risks and the benefits of that project. Not to mention, in many deals, the information from the seller was also incomplete, for many subjective and objective reasons.

Lawyer Pham Duy Khuong, Managing Director of ASL LAW talking about future of M&A in 2021 in Vietnam
Lawyer Pham Duy Khuong, Managing Director of ASL LAW talking about future of M&A in 2021 in Vietnam

However, Ms. Huong believed that the key to success in many deals is actually not the price or the value. The key feature in an M&A deal is that the seller needs a trustworthy transfer partner. When starting implementation, no business owners thought of the worst scenario in which the project had to stall, leading to loss of credibility with the customers. Therefore, when there is no choice but to transfer due to financial difficulties, many investors want the new partners to succeed them and bring the project to the final destination.

ASL LAW is M&A law firm in Vietnam. If you need any inquiry, please contact us.

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