M&A market in 2021 sees impetus

Vietnam Investment Review

M&A market in 2021 sees impetus

The mergers and acquisitions (M&A) market is forecast to see big changes since January 1, 2021 as the pandemic-induced slowdown wanes and the policy framework is radically improved.

This was announced by experts at the press conference announcing Vietnam M&A Forum 2020 themed “Upsurging in the new normal” orgnaised by Vietnam Investment Review on November 5.

AVM’s report showed that along with the negative impact on M&A activities this year, the COVID-19 pandemic also helped investors take a step back and study their targets more carefully. Besides, the pandemic impacts reduced valuations and put more assets on the market, strongly favouring buyers.

In addition, policy changes have also improved convenience for investors to make share contributions and purchases. Phan Duc Hieu, deputy head of the Central Institute of Economic Management, forecast M&A activities in Vietnam to change from the beginning of next year, when three amended laws will come into effect at the same time.

Reformed corporate governance principles in the Law on Enterprises will also promote M&A activities. Both the Law on Enterprises and the Law on Securities have important changes, including the institutionalisation of international principles and best practices in corporate governance, which contributes to enhancing the legal framework.

“In the long term, investors' changing mindsets will also promote M&A activities. Notably, more and more investors are interested in acquiring other companies, even companies that are operating at a loss. M&A helps investors save time to establish a new legal entity and access an established workforce. Not only large-scale investors but also small- and medium-sized enterprises are developing a preference for this method,” Hieu said.

“In addition, along with M&A deals in their home market, numerous Vietnamese enterprises are now going aboard in increasing numbers to buy enterprises and make inroads for exports instead of simply co-operating with partners,” Hieu said.

Vietnam has numerous charms for foreign investors, being the only country in the region to produce positive growth this year. In addition, the country’s free trade agreements namely the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), EU - Vietnam Free Trade Agreement (EVFTA) and EU - Vietnam Investment Protection (EVIPA) also make Vietnam more attractive for foreign investors.

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