The prolonged COVID-19 pandemic, together with border closures in many countries from the end of 2019 up to now, has caused a sharp decline in the global M&A market. According to statistics from a recent report by the Corporate Investment, Mergers and Acquisitions Centre (CMAC), the total value of M&A worldwide decreased by 52% in the first 6 months of 2020, compared to the same period last year. Although the Vietnamese market is also significantly affected, effective prevention and control strategies mean that Vietnam is seen as a safe and attractive investment destination for foreign investors. This could be an opportunity for Vietnam’s M&A market in the post-COVID period, say the Ecovis advisers in Vietnam.
The M&A market in Vietnam is expected to grow significantly in 2021 for several reasons.
1. Legal System
- New laws on corporate investment (e.g., investment law, enterprise law, securities law) came into effect at the beginning of 2021. These have expanded the market for foreign investors and simplified administrative procedures.
- Free trade agreements have been signed recently, such as CPTPP, EVFTA and EVIPA and RCEP (see info box Vietnamese Free Trade Agreements). The agreements bring about new regulations that will promote and facilitate M&A activities.
2. Demand for Foreign Investors and Enterprises
- There will be increased demand for mergers and acquisitions due to backlogged transactions that could not be completed in 2020.
- The changing trend in investment share in the market which focuses, for example, on the healthcare industry, consumer goods or e-commerce. These sectors are expected to become the focal point of M&A in 2021.
- State divestment deals are being accelerated.
- Most businesses and investors need to change their strategies or restructure the company to overcome the negative impacts of COVID-19.
- To cut out the procedures of business establishment, finding premises and recruiting, enterprises tend to invest by buying shares or making capital contributions to existing businesses, instead of starting new businesses.
For further information please contact:
Vu Manh Quynh, Managing Partner, ECOVIS Orient Counsel/ECOVIS Vietnam Law, Ho Chi Minh City, Vietnam
Email: quynh.vu@ecovislaw.vn
Ecovis is a leading global consulting firm with its origins in Continental Europe. It has almost 8,500 people operating in nearly 80 countries. Its consulting focus and core competencies lie in the areas of tax consultation, accounting, auditing and legal advice.
The particular strength of Ecovis is the combination of personal advice at a local level with the general expertise of an international and interdisciplinary network of professionals. Every Ecovis office can rely on qualified specialists in the back offices as well as on the specific industrial or national know-how of all the Ecovis experts worldwide. This diversified expertise provides clients with effective support, especially in the fields of international transactions and investments – from preparation in the client’s home country to support in the target country.
In its consulting work Ecovis concentrates mainly on mid-sized firms. Both nationally and internationally, its one-stop-shop concept ensures all-round support in legal, fiscal, managerial and administrative issues.
The name Ecovis, a combination of the terms economy and vision, expresses both its international character and its focus on the future and growth.
ECOVIS AG Steuerberatungsgesellschaft
Ernst-Reuter-Platz 10
10587 Berlin
Telefon: +49 89 5898-266
Telefax: +49 (30) 310008556
http://www.ecovis.com
ECOVIS AG Steuerberatungsgesellschaft*
Telefon: +49 (89) 5898-266
E-Mail: gudrun.bergdolt@ecovis.com
