Vietnam M&A Report Part 2 ―Deal Execution, Due Diligence and Exit Planning for International Buyers―
2026/09/08
- I-GLOCAL.CO.,LTD Hanoi Office
- Shuya Kondo
Executive Summary
① Executing an M&A transaction in Vietnam usually takes about 7 to 11 months and largely follows international practice, but a few steps in the signing-and-closing phase are specific to Vietnam — M&A approval, the capital transfer tax filing, and the registration amendment — and cannot be rushed, so buyers should plan for them and allow enough time.
② Several structural points are best settled before the process begins: what the shareholding will actually let the buyer control, any foreign-ownership limits in the sector, how the transaction price is remitted, and how the eventual exit will work. Deciding these at the outset avoids problems later.
③ Due diligence on Vietnamese private companies repeatedly surfaces a common set of issues — such as two sets of books, informal payments, under-reporting of social insurance, and key assets held outside the company — each of which can affect the price or even end a deal, and should be addressed in the share purchase agreement (SPA) and the post-closing plan.
Introduction
Our previous report covered Vietnam’s economy and the most active M&A sectors. This report turns to execution: the steps a transaction goes through, the issues we often find in due diligence, and the main points a foreign buyer should note before signing.
The overall process is close to international practice, and much of it will be familiar. However, some procedures are specific to Vietnam, the steps must be taken in a particular order, and there are points a buyer should consider before starting. We hope this report is useful to companies considering M&A in Vietnam.
1. The M&A Timeline in Vietnam
An M&A transaction for a Vietnamese private company usually takes about 7 to 11 months from the first target search to closing, running through four phases: preparation (1–3 months), negotiation and due diligence (3–4 months), signing and closing (3–4 months), and post-merger integration (6–12 months).
Three steps in the signing-and-closing phase are specific to Vietnam, and a foreign buyer should plan for them early.
1-1 M&A approval
Most share acquisitions by a foreign buyer need approval from the licensing authority. After the application is filed, approval normally takes about one to one and a half months, and longer if the authority raises questions.[1]
[1] Approval is generally required where foreign ownership rises above 50%, where it increases while already above 50%, where the target is in a conditional (restricted) business sector, or where the target uses land in a border, coastal or island area. Large deals may also require a filing under the Competition Law, and some regulated sectors need approval from the relevant ministry.
1-2 Capital transfer tax filing
When a foreign investor acquires a Vietnamese company, the seller is usually the target’s owner — a Vietnamese individual — who pays personal income tax on the transfer. If the target is a limited liability company, the tax is 20% of the profit (or 2% of the transaction price if the profit cannot be determined). If the target is a joint stock company, the tax is 0.1% of the transaction price. The tax is filed within 10 days from SPA effective date, and although it is the seller’s tax, the buyer should confirm the position and reflect it in the SPA.
1-3 Amendment of the company registration
After the approval, the company’s registration is updated to show the new owner. This step is mainly procedural and usually proceeds smoothly once the earlier approvals are in place. Vietnam also now requires a company to register its beneficial owners.[2]
[2] The beneficial owners are the individuals who ultimately hold 25% or more of the company, or who otherwise control it, and they must be registered with the business registration authority. For details, see I-GLOCAL CO., LTD., “Provisions on the ‘Beneficial Owner of a Company’ in the Draft Amendment to Corporate Law.”
２.Points to note before starting the M&A process
2-1 Control and voting rights
A common question from foreign buyers is what a given percentage actually allows. This depends on the company type and the charter. Most private targets are LLCs or JSCs, and the voting rules differ:
So 51% of an LLC cannot pass an ordinary resolution alone, 51% of a JSC cannot change the main business, and a seller keeping 36% of a JSC can block major decisions. The charter can raise these thresholds, so read it before agreeing the percentage.
2-2 Foreign ownership limits
Some sectors also limit foreign ownership: a few are closed to foreign investors, many are open only on conditions, and the rest allow up to 100%. The limit can be a cap (for example, 30% in banks), a required joint venture (for example, advertising), or heavy licensing (for example, retail, which needs a licence for each store). Where a target is registered for several business lines, the strictest limit applies; in practice, restricted or unused lines are excluded in the M&A application rather than removed beforehand.
2-3 Remitting the transaction price
How the price is paid depends on the parties. Above 50% foreign ownership, it goes through the target’s Direct Investment Capital Account (DICA); at 50% or below, through an Indirect Investment Capital Account (IICA). The main cases are below.
In addition, once the target is an FDI enterprise over 50% foreign-owned, transfers of its shares go through its DICA whatever the size of the stake. (If the target is under 50% foreign-owned , IICA will be utilized)— so a foreign investor buying a further small stake in a company it already controls still uses the DICA. Payment to a Vietnamese seller is in VND, so a US-dollar price is exposed to the exchange rate on the payment day, which should be handled in the SPA.[3]
[3] Circular 03/2025/TT-NHNN, effective 16 June 2025.
2-4 Planning the exit
It is best to think about the exit before signing, not after. Most foreign investors leave Vietnam by selling to another company rather than by listing on the stock market (and only a JSC can list), so it helps to convert an LLC into a JSC early and to keep clean books and clear title to the assets from the start.
Using an overseas holding company does not remove the Vietnamese rules at exit. Vietnamese capital transfer tax still applies in any case, because Vietnam also taxes offshore (indirect) transfers. M&A approval is also generally required where the transfer changes the target’s ultimate foreign ownership, and even where it does not, approval may still be required depending on the authority’s assessment. So plan the exit early, with tax and legal advice.
3.Points to Watch When Negotiating
Several points recur in negotiations with Vietnamese sellers and can affect both the price and the speed of the deal.
3-1 Optimistic valuation
Valuations in Vietnam are often supported by ambitious growth projections. Test these against comparable companies and the target’s own track record, and agree early how differences in view on the outlook will be reflected in the price.
3-2 Real estate and land use rights
A foreign company cannot hold land directly in Vietnam, so buyers gain access to land by buying the company that holds the land use rights. Two problems are common: factory buildings extended without a permit, which are then unregistered and cannot be valued or used as security; and land held by the founder personally and only lent to the company. Check these on site and at the land office, not only from the seller’s documents, and fix them before closing.
3-3 Funding and working capital
Unlisted Vietnamese companies rely heavily on bank loans. It is common to find negative equity, or net debt larger than cash, with no clear repayment plan, so look closely at the funding and short-term cash position and how far a weak position can improve under new ownership. Founders sometimes guarantee company loans with personal funds, so check whether the founder’s exit could trigger a default.
3-4 Key person
Many Vietnamese private companies depend on a few people — often the founder or a lead salesperson — whose relationships bring in customers, so sales can fall quickly if they leave after closing. Identify them and tie part of the price to their staying, through an earn-out or deferred amount paid only if they remain for two or three years. Vietnamese labor law does not let an employer force someone to stay, so linking money to continued employment, and moving customer relationships to the company during a handover, works better than a no-resignation clause.
4.Common Issues We Find in Due Diligence
Some issues come up again and again and, depending on the amounts, can end a deal, so each should be measured carefully and addressed in the SPA and the post-closing plan.
4-1 Two sets of books
Some companies keep a second set of internal accounts to reduce tax. This is not allowed, and an audit can lead to large back taxes and penalties; it is also harder to hide now that invoice data reaches the tax authority almost in real time. Compare the target’s e-invoice records with reported sales to size the gap, and value the business on the invoiced figures, since reported sales tend to move toward them after closing.
4-2 Informal payments
We sometimes find payments described as “consulting fees” or “facilitation payments,” made to officials or partners to keep things running. Bribery of officials is a crime in Vietnam, and such payments can fall under it depending on the recipient, amount and frequency. When they seem necessary to run the business the risk can stop a deal, so any such finding should go to senior management and legal counsel at once.
4-3 Under-reporting of social insurance
Employers pay social, health and unemployment insurance (about 21.5% employer, 10.5% employee) on base salary plus fixed allowances. Certain non-salary allowances, such as commuting allowance and housing allowance, are excluded from the SHUI base if they are properly structured.
Some companies manipulate the payment scheme so that the part subject to SHUI looks smaller than it really is. For example, a fixed allowance may be labelled as a KPI bonus or other variable payment, or the basic salary may be kept low while a large portion of the employee’s pay is allocated to non-salary allowances that are treated as outside the SHUI base.
If this issue is found, the company need to revise the salary structure in the employees’ labor contract. However, fixing it raises staff costs and may lead to arguments with employees, so measure the effect on the business plan during due diligence, not after closing.
4-4 Assets held outside the company
In family companies, some things the business depends on sit outside the company — land or buildings in the founder’s name, or the brand registered personally or not at all — so a buyer may find it did not actually get them. Vietnam registers trademarks first-to-file, so check the register independently and, where a mark is in the founder’s name, make a proper transfer a condition of closing.
Separately, employees in Vietnam are also often sensitive to a change of owner, especially to foreign ownership, so it is sometimes better to keep the due diligence and the transaction confidential within the target for as long as possible.
Also, some serious issue that cannot be undone after closing can sometimes be managed through the deal structure rather than ending the transaction: require the seller to fix it before closing under suitable warranties and indemnities, or invest into a clean new company holding the transferred staff, contracts and assets. Design either with advisors early.
Conclusion
Carrying out an M&A transaction in Vietnam follows a mostly familiar process, but with several Vietnam-specific steps and some common practical issues. A foreign buyer manages the risk best by understanding the order of the approvals, keeping expectations realistic on timing and price, and settling a few key points before signing — the structure, what the shareholding gives, how the price is remitted, and the exit.
Related Reports
・Vietnam M&A Report – Part 1 Overview of economic situation and notable sector
