Due Diligence in Vietnam: Legal and Financial Aspects in the M&A Process
Mergers and Acquisitions (M&A’s) are an increasingly popular route for foreign investors looking to begin operations in Vietnam – and due diligence is a key component of the M&A process.
While there are several aspects to consider in due diligence – such as the company’s reputational profile, strategic position in the market, and assets – we focus on legal and financial due diligence because they represent the starting point for most investors.
Before commencing due diligence on a target company, the acquiring company typically signs an agreement such as a Memorandum of Understanding (MoU) with the target company. The acquiring company may also make a deposit to confirm that the deal is serious enough for the target company to spend time to prepare and release documents needed for the due diligence.
Legal and financial due diligence may take several months, depending on the size of the company being acquired, as well as the location where it is based. This work is typically conducted by a third-party professional services firm.
Foreign investors should seek to select a firm that has an office in-country with staff fluent in both Vietnamese and the language spoken at the investors’ headquarters. This profile will help ensure your service provider can work more efficiently during both on-site visits and communication with overseas managers.
This is an excerpt from an article appearing in Vietnam Briefing, a subsidiary of Dezan Shira & Associates. For the latest economic, regulatory and business news from Vietnam, visit vietnam-briefing.com.