Author: Hoa Nguyen, MBA.,MA.
Since the past five years, evidences have been showing that M&A are vibrant, and they are foreseen to develop in Vietnamese economy in the next years. Main reasons for their future expansion are found out as follows:
First, the Government promotes equitization of State owned companies to reduce the quantity of this sector with targets of 600 companies in 2015 and 300 companies in 2020, according to Vice Prime Minister, Mr. Hoang Trung Hai. Thus, inefficient State owned companies shall be merged or acquired.
Second, in the context of domestic economy's difficulties, Vietnamese Government tends to promote foreign ownership, up to 60 percent, potentially!!!. It is a firm point to foster foreign investment in profitable sectors such as finance and banking, securities, real estate, agriculture, and consumption since Vietnam is known as an attractive destination for foreign investment. Vietnam has high GDP growth rate (more than 5% regularly), skilled labor force at low price, more than 80 million people - market with continuously increased incomes, advantages for investment environment coming from Government policies, including low cost.
Third, internal restructuring and reform by merging or acquiring with external ones is a general trend of Vietnamese enterprises in order to increase enterprise's competitive capacity, at the present.
Although, Vietnam is facing to macroeconomic issues and fierce competition from others in the South East Asia, it is still increscent market to invest, according to KPMG report named "M&A in Vietnam, from transaction performer side". In this report, KPMG also indicated that enterprises were valued at a low price but sellers still required the higher price; Asset value was still limited. EBITDA was average at 8X and valuable method was the income coefficient; It regularly took from 6 months to 12 months from the beginning to complete transaction in Vietnam.
In conclusion, because of benefits gaining from M&A and it's necessary for an inefficient company to survive, Vietnamese companies, who shall do the transaction, and foreign investors should provide sufficient information for M&A if a transaction is made towards "win - win" solution. Thus, they can get mutual benefits, which become great basis for the long term cooperation.
Second, in the context of domestic economy's difficulties, Vietnamese Government tends to promote foreign ownership, up to 60 percent, potentially!!!. It is a firm point to foster foreign investment in profitable sectors such as finance and banking, securities, real estate, agriculture, and consumption since Vietnam is known as an attractive destination for foreign investment. Vietnam has high GDP growth rate (more than 5% regularly), skilled labor force at low price, more than 80 million people - market with continuously increased incomes, advantages for investment environment coming from Government policies, including low cost.
Third, internal restructuring and reform by merging or acquiring with external ones is a general trend of Vietnamese enterprises in order to increase enterprise's competitive capacity, at the present.
Although, Vietnam is facing to macroeconomic issues and fierce competition from others in the South East Asia, it is still increscent market to invest, according to KPMG report named "M&A in Vietnam, from transaction performer side". In this report, KPMG also indicated that enterprises were valued at a low price but sellers still required the higher price; Asset value was still limited. EBITDA was average at 8X and valuable method was the income coefficient; It regularly took from 6 months to 12 months from the beginning to complete transaction in Vietnam.
In conclusion, because of benefits gaining from M&A and it's necessary for an inefficient company to survive, Vietnamese companies, who shall do the transaction, and foreign investors should provide sufficient information for M&A if a transaction is made towards "win - win" solution. Thus, they can get mutual benefits, which become great basis for the long term cooperation.
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