Market in Vietnam

Vietnam’s M&A market witnessed a significant
increase in total transaction value from US$4 billion in
2013 to US$8.6 billion in 2017, thus resulting in a 21%
CAGR. Record-breaking deals such as the transaction
of SABECO and Thai Bev, with a value of US$4.9
billion at the end of 2017, have put Vietnam on the
world map of large deals.
Amidst the continuous effort of the Government
of Vietnam towards the privatization of stateowned
enterprises (SOEs), the market has become
increasingly attractive to foreign investors and is
expected to continue this growth well into the
expected forthcoming period. In 2018, market
observers predict that Vietnam’s M&A transaction
value will reach nearly US$7 billion, a 37% YoY
growth compared to “without-SABECO-2017”.

Key risks and concerns

Nevertheless, respondents expressed concerns over
their existing operation in Vietnam. The country’s
regulatory and legal framework remains the most
prominent challenge to M&A players. Over 70%
of respondents expressed concerns over the
complicated nature of Vietnam’s law and tax regimes
when entering the country. With respect to seller
and buyer’s expectations, valuation of assets poses
another challenge, as sellers tend to be overoptimistic
about their companies. Furthermore, investors also
identified challenges related to management and
accounting standards, when entering the M&A market
in Vietnam. As a result of these concerns, the market
has experienced an increasing trend of various due
diligence and market entry services being performed
by M&A advisors, so as to help investors mitigate risk.

Most M&A deals in Vietnam are less than
US$50 million
90% of the M&A deals are within the US$3-4 million
range. In fact, a majority of our respondents reported
their average transaction value to be under US$50
million. Still, 18% of surveyed companies were
optimistic about market in the next five years, with
deals over US$100 million, especially within the next
wave of SOE equitisation going forward.