M&A Trends

Post-Pandemic
Ngo Thanh Tung, Esko Cate,
Partner Associate
 Presentation Structure
1. Past Trends
2. Process & Regulatory Framework
3. Challenges & Opportunities
4. Post Pandemic M&A Forecast
Past Trends
M&A 2019 - 2021: Volume and Value
• 2019 – moderate growth year over year
o Followed 2018 trend lacking substantial blockbuster deals (such
as the US$4.9bn Sabeco - ThaiBev deal from 2017)
o Externally driven market
• 2020 - pandemic dip
o Clear pandemic impacts despite initial success controlling
pandemic domestically
‒ Difficulties in deal assessment/valuation
‒ Complications with due diligence
‒ Financial instability for buyers
• 2021 – adaptation and market recovery
o M&A sprang back from the pandemic dip as both domestic and
international parties learned and adopted new measures of
facilitating business
 M&A 2019 – 2021: Volume and Value
All Deals Regardless of Size or Acquired Stake
$9.00 620
COVID-19 Restrictions

600
$8.50

580
$8.00

560

$7.50
540

$7.00
520

$6.50 500
2019 2020 2021

Volume Value in US$ Billions Data aggregated by KPMG

 M&A 2019 – 2021: Volume and Value
Deals with Value over US$5 Million & Stake Acquired 10% or
more
$6.00 64
COVID-19 Restrictions
62
$5.00
60

$4.00 58

56
$3.00
54

$2.00 52

50
$1.00
48

$- 46
2019 2020 2021

Volume Value in US$ Billions Data aggregated by White & Case

 M&A 2019 – 2021: Volume and Value
Takeaways All Deals
Regardless of Size
Deals with Value
over US$5 Million
• Deals of all sizes declined
in 2020 and bounced back or Acquired Stake & Stake Acquired
in 2021 $9.00 620 10% or more
• Rising average deal value 600
$6.00 64
when only considering $8.50 62
$5.00
data on all deals 580 60

• Comparing the two data

$8.00
560
$4.00 58

sets, difference in 2021 $3.00

56
values suggests $7.50 54
substantial increase in 540
$2.00 52
percentage of very small $7.00 50
deals as compared with 520 $1.00
48
previous years
$6.50 500 $- 46
2019 2020 2021 2019 2020 2021

Volume Volume
Value in US$ Billions Value in US$ Billions
Data aggregated by KPMG Data aggregated by White & Case
 M&A 2019 – 2021: Characteristics
2019 2020 2021
Financial Other
Financial Other Financial 33%
24% 25% Other 42%
47%
44%

$571 $612
$1,395
$742

$1,676
$2,055
Real $1,608
Estate $894 Real $2,241
15% Estate
15% Real
Consumer Consumer Consumer
Estate
Staples Staples Staples
15%
14% 16% 10%
• Singapore brought big action in 2019 with US$2bn on only 33 deals
• Market turned inward to domestic deals in the pandemic dip
• Japan the first to come back as markets adapted
• S. Korea remained steady throughout the dip *Deal values in US$mn

Data aggregated by KPMG

Process &
Regulatory
Framework
 Typical M&A Process
Updating
Regulatory
Closing Authorities
Conditions
Precedent
SPA
Due
Diligence
Term sheet
NDA
Preliminary
stages
Basic M&A Documentation
• NDA
• Term Sheet
• Due Diligence
o Tax
o Financial
o Legal
• SPA
• Shareholder Agreement (if any)
• Other (if any)
Potential Submissions
Approvals
M&A Approval / Investment
Merger control filing
Registration Certificate (IRC)

Amendments
Enterprise Registration Certificate
IRC
(ERC)
Closing

Post-closing notifications
Any changes of company information
Typical M&A Licensing & Approvals
Acquisitions Acquisitions
Public Company Private Company
Merger control clearance if Merger control clearance if
required required

Securities Trading Code M&A Approval if required

SSC Approval if required Foreign shareholder change

notification
 Merger Control Filing
Key Trigger Tests Filing triggering thresholds
1. Is it an Economic • Assets of VND 3,000 billion (approximately USD 126 million) or
Concentration? more during the preceding financial year
2. If it is, does the Economic
Transaction subject to
any filing triggering
• Revenue generated in Vietnam of VND 3,000 billion or more in
thresholds? the preceding financial year

• Transaction value of the economic concentration is VND 1,000

billion (approximately USD 42 million) or more (not applicable
to a transaction conducted outside Vietnam)

• Combined market share of the participating enterprises is 20%

or more in the relevant market during the preceding financial
year

Data source: the International Monetary

Fund & the World Bank
M&A Approval
• When do you need approval?
o The acquisition leads to an increase in the foreign ownership of
a company engaging in business lines with market access
conditions for foreign investors
o The acquisition leads to an increase in the foreign ownership of
a company from 50% or less to more than 50% of the charter
capital; or a further increase in the foreign investor ownership if
it has been over 50%
o The acquisition of a company having land use right certificates
for frontier land / island, coastal land areas or other areas which
may affect national defense and security
Foreign Ownership
Private Companies
• Business lines in which foreign investment is prohibited
• Business lines in which foreign investment is subject to market access conditions or
foreign ownership restriction
Public Companies
• Specific applicable ratios provided by international treaties or specified in Vietnamese law
• If the sector is subject to market access conditions, but the list is silent on specific foreign
ownership ratio, maximum foreign ownership ratio is 50%
Foreign Exchange Controls
• Except where explicitly permitted otherwise, payments for capital transfer or capital
subscription must be made via:
o Direct Investment Capital Account (DICA); or
o Indirect Investment Capital Account (IICA)
Challenges &
Opportunities
Global and domestic challenges
Global Domestic
• Possible economic hurricane due to • Procedures
inflation: • Bureaucracy
o Lingering COVID consequences • Annoyances
o China zero COVID policy
o Ukraine war
o Oil prices
o Commodities prices
Opportunities
• Vietnam’s geographic location
• Increasing sophistication
o Regulatory reforms
o Capital markets reforms
o Targets and supporting parties improving business practices and ability
• China’s zero COVID policy moving businesses from China to Vietnam
• Increased comfortability (and ability) of parties to interact digitally
Post Pandemic
M&A Forecast
 Post Pandemic M&A Forecast
Post-COVID rebound
GPD of Vietnam • Anticipate a substantial bounce back in the economy
$285
$275 2.6% o Vietnam fared better than many other countries through
2.9%
$265
pandemic
US$ IN BILLIONS

$255 7%
$245
$235 7.1%
• Benefit of recently signed FTAs (EVFTA - 2020, Regional
$225 Comprehensive Economic Partnership - 2022)
6.8%
$215
$205
6.2%
• Additional manufacturing companies moving to Vietnam
$195

Data source: the International Monetary

Fund & the World Bank
Post Pandemic M&A Forecast
Growth in M&A
• M&A will be unpredictable in short term due global uncertainty but expected increase over
the long term
o Turbulence in global markets
o Inflation
o Improvements by Vietnamese companies related to corporate governance and
branding, making Vietnam become more noticeable to the global market
o The technological benefits adopted during the pandemic will continue to assist in
closing deals more efficiently
Post Pandemic M&A Forecast
Areas to watch
• Domestic M&A
o The increased trend for domestic acquisitions will continue
• Outward M&A
o Larger Vietnamese companies are looking to expand out of Vietnam, and this may be
an opportune time to do it
• Incoming M&A
o Real estate, tech, financial, and manufacturing
Post Pandemic M&A Forecast
Foreign buyers
• Historically active buyers will continue to play key roles
o Japan
o Korea
o Singapore
o Thailand?
• New buyers
o China (especially in manufacturing)
Post Pandemic M&A Forecast
Why Vietnam?
• Government commitments to more business-friendly regulations, anti-corruption, and
advances in infrastructure
• Geographical location
• Population (demographics and size)
Post Pandemic M&A Forecast
Closing remarks
• Regulatory changes that could help increase Vietnamese M&A attractiveness
o The Government must continue to create an environment that is favorable for business
‒ Improving implementation of regulations at a local level (speed up the process of
approving and issuing licenses and approvals)
‒ Removing any arbitrary or unnecessary obstacles in obtaining approvals
‒ Supporting enterprises after they establish here
o Stronger protection of intellectual property rights
‒ Boost valuation for small and midsize entities in Vietnam based on their intangible assets
‒ Encourage manufacturers of higher end products to shift to Vietnam
Ngo Thanh Tung
tung@vilaf.com.vn

Esko Cate
esko.cate@vilaf.com.vn