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Main stages in an M&A process

Over the last decade, the M&A market in Vietnam has been expanding significantly with the signing of several Free Trade Agreements. Therefore, through this article, Apolo Lawyers (Tel: +8428 66.701.709) would like to give some information on how a usual M&A process happens.

An M&A process basically includes three main stages: pre-deal negotiation stage; due-diligence stage; and deal completion stage.

1. M&A Pre-deal negotiation

In the M&A pre-deal negotiation, parties ussually reach these documents:

(a) Confidential Agreement

This is a legally binding contract which contains promises of parties to treat the information about the deal as trade secret and not to disclose information to other people without proper authorization.

(b) Memorandum of Understanding/ In-principle Agreement/ Term-sheet

These are similar preliminary documents that set out the key terms of the M&A deal. These are generally non-binding and parties can come to an agreement that the seller company does not negotiate in the same M&A deal with any other party except for the buyer.

2. Due-diligence

There are 03 types of due-diligence:

(a) Commercial due-diligence

This step is carried out to uncover the commercial activities of target comany, market, customers, partners, potential,...

(b) Financial due-diligence

Generally, this step is carried out by an audit firm and cross-checked by a law firm. Financial due-diligence is conducted to have a better understanding of the financial situation of target company as well as to find out undercover issues.

(c) Legal due-diligence

Legal due-diligence is conducted to identify legal risks or relevancy with regulations, legal possibility of the transaction. Legal due-diligence consists of making a checklist; data-room check; researching additional information and documents; reviewing documents; doing draft report; managers interview of target company; and completing final report.

In fact, not every target company is likely to have a completely clean legal status in their background. As a result, it is essential for the buyer to be aware of all possible legal issues that they are likely to be responsible for by buying the company. Therfore, in order to minimize unwanted legal liabilities, this step should be carried out by a high-quality law firm.

>>> See more: How to acquire an enterprise in Vietnam for foreign investors

>>> See more: Legal advice on tranfer of investment project in Vietnam

>>> See more: Pre – M&A legal consultancy about access of project

3. M&A Deal completion

This stage may includes:

(a) Share Transfer Agreement and Shareholders Agreement

The main purpose of Share Transfer Agreement is to prove the agreement between the parties on the proportion of shares to be transferred and at what cost, as well as the terms and conditions of the transfer.

On the other hand, Shareholders Agreement is an arrangement among Shareholders which shows not only how the company should be operated and managed but also the rights and obligations of Shareholders.

(b) Perform obligations stated in the Agreement

An M&A deal does not close when signing but only when conditions precedent are met that the M&A deal can be completed.

(c) Register M&A deal with State Agencies

For an M&A deal to be recognized by law, needed documents basically are: registration for M&A approval; registration for an Indirect Investment Capital Account; updated Business Registration Certificate or Shareholders Registration.

4. What can Apolo Lawyers do for clients?

As a reputable law firm with many years of experience, Apolo Lawyers has continuously given advice and supported foreign investors on legal due-diligence and M&A process in general. We always consider the purpose of our client sas well as Vietnamese regulations to give legal advice on the most efficient M&A deal structure to optimize the rights and benefits of clients. Our M&A legal services includes but not limited to:

  • Collect information, verify the profile of the target company

  • Assess the risk of the M&A deal, come up with the optimal plan

  • Complete legal documents for the M&A process

  • Consulting and completing legal procedures in business restructuring after M&A.

For further information, please contact us: Apolo Lawyers


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