Currently, Mergers and Acquisitions (M&A) are considered popular and effective strategies to expand the enterprises’ scope of business. Therefore, training sessions for internal members are of great importance as they would help to ensure strict management of the M&A Procedure, and these training sessions are often held by CNC.

Based on the recent experience, CNC realized that Mergers and Acquisitions (M&A) mainly revolve around the following major issues:

• Selection of appropriate types of M&A
• Structuring of the process of M&A transactions
• Preparation of essential materials in each M&A transaction
• The lawyer’s role and required abilities to help clients achieve their objective in the M&A transaction
• Common challenges encountered in M&A transactions
• Resolution of M&A disputes

Download the PDF file of the article: Newletter_Procedure of Mergers and Acquisitions (M&A)

Firstly, M&A transactions often undergo the following 03 phases:

03 main phases in M&A transactions

Phase 1: Pre-M&A

• Determine the Target Company: Parties need to evaluate the pros and cons, opportunities and challenges of their own company as well as search for potential target companies to come up with appropriate strategies and select appropriate types of M&A. Parties might perform M&A among enterprises in the same industry (horizontal M&A) or among enterprises involved at different stages in the same supply chain (vertical M&A) or among enterprises operate in different industries to create a new ecosystem (conglomerate merger).

Common types of M&A

• Perform reviews: Reviews often include (i) Financial Review; (ii) Legal Review; (iii) Commercial Review; (iv) Technical Review; (v) Personnel Review; (vi) Other reviews depending on the needs of parties to the transaction. Prior to the review, parties are required to provide any and all material relevant to the M&A transaction (hereafter referred to as “Essential materials”) as well as ensure the accuracy of provided materials. Such provisions are required so that a comprehensive and accurate assessment of the company could be conducted.

Reviews in M&A are not only an important step to protect the legitimate interests of parties but also a means to ensure the efficiency and stability of the transaction. A meticulous and comprehensive review would lower the risks, determine growth opportunities, and help implement long-term plans of enterprises in the most optimal way.

Phase 2: Contract Conclusion

• Negotiate the structure of M&A transactions: Based on the purpose, development plan, and detailed review of each party, the parties shall agree on the structure of the transaction.

Structure of M&A Transactions

• Complete any necessary legal procedures: Subsequent to the agreement on the structure of M&A transactions, parties shall proceed with the negotiation of detailed provisions and finally conclude the official contract. Depending on the structure of each transaction, the provisions in each contract shall vảy, and one of the more important provisions that would ensure the success and mitigate the possibility of risks is the provision on Representations and Warranties. In this provision, each party shall declare the actual condition at the time of conclusion of the company’s general situation, financial situation, regular operation of the company, etc to protect the other party from potential risks that might take place after the transaction, ensuring that the promised values shall be maintained in the future.

Immediately after, parties are obligated to announce and notify relevant parties (members, shareholders, staff, clients, and any other relevant parties) of the conclusion of the M&A contract.

Phase 3: Post-M&A

The post-M&A phase, also known as the enterprise restructuring phase, is an important step that makes the M&A transaction not simply a financial agreement but also a successful merger or division of two enterprises. This process requires strict management, detailed plan, and coordination of relevant parties. During this phase, to not affect the operation of the enterprise, the following actions should be taken continuously:

• Assess the current company culture;
• Establish the cultural integration plan;
• Optimize the operation process;
• Manage personnel and restructure the organization;
• Establish a detailed change management plan to ensure the success and efficiency of the integration process;
• Observe and evaluate the integration process on a regular basis;
• Make timely adjustments to the changes;
• Establish appropriate welfare policies to ensure the benefits of staff;
• Enhance the quality of the services to retain the existing customer base’s interest as well as expand the customer base;
• Performing other works in accordance with the parties’ policies.

Secondly, to ensure the success and efficiency of the process of M&A, multiple expertise and abilities would be required. Therefore, the importance of the Lawyer’s role is not to be underestimated, as there are multiple aspects that would ensure the success and legality of the process. Below are the 06 fundamental abilities that each Lawyer ought to possess to assist Clients in achieving their purposes during the M&A process:

Fundamental abilities in M&A

Thirdly, M&A transactions are complex and high-risk transactions, below are some challenges and corresponding solutions listed by CNC:

Challenges and solutions in M&A transactions

As demonstrated above, the procedure of mergers and acquisitions (M&A) is a complex and multi-faceted procedure that require meticulous preparation, subtle negotiation, and effective change management. From the determination of the strategic objective and performance of detailed reviews to the negotiation and conclusions of the contract and finally the post-M&A phase with the integration of company culture, system, and operation – each step serves an important role in ensuring the success of the transaction.

A successful M&A transaction would bring not only financial gains but also a strategic boost that would help expand the enterprise’s scope of business, increase competitive capabilities, and achieve long-term growth targets. However, the challenges encountered in this procedure are rather significant, as such,  wise leadership, close coordination among relevant parties, and detailed plan to manage all aspects of the transactions are required. Therefore, utilize opportunities, optimize competitive advantages, and reach higher heights.

Pictures taken from the training session

Training session with the participation of all CNC’s personnel

Contact

If further support or counsel pertaining to Mergers and Acquisitions or any other fields is required, please contact us via email: contact@cnccounsl.com or call us via: +84 028 6276 9900 or hotline: +84 0916 545 618.

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CNC | A Boutique Property Law Firm

The Sun Avenue, 28 Mai Chi Tho, An Phu Ward, Thu Duc City, Ho Chi Minh City, Vietnam

T: (+84-28) 6276 9900 | Hotline: (+84) 916 545 618