APPRAISAL MERGING AND BUYING AND SELLING ENTERPRISE IN VIETNAM

How to conduct merger and acquisitions appraisal in Vietnam.

The business market in Vietnam is developing and challenging. Regardless of whether you are purchasing a business such as a company stock acquisition, merger or acquisition, it is necessary to conduct an appraisal of a company in Vietnam.

Validation is the process of investigating the details of a potential investment, such as performance verification and the management and validation of data. Due diligence is very important in determining the risks and benefits of entering into a particular transaction and cannot be ignored, avoided or ignored under any circumstances.

Appraisal involves an in-depth investigation of the business. It requires reviewing a lot of documents such as legal documents, financial statements and tax returns etc. to fully understand the business and be able to determine a reasonable purchase price of the business, and determine any unexpected business debt that the buyer is likely to be responsible for after you become a business owner.

In general, there are three main areas of due diligence: legal due diligence, financial due diligence and intellectual property due diligence. All three areas are related, but each has its own unique issues that are of particular importance.

1. Financial appraisal of mergers and acquisitions of enterprises in Vietnam

Financial due diligence is mainly concerned with establishing a clear business image of continuity of goals. The area of ​​interest is the financial profile and forecast of revenue, profit and cash flow; list of assets and liabilities; analysis of customer lists; review of supply agreements and sales practices; Review your bank accounts and tax records.

Financial due diligence is not an audit. An audit is relevant only to historical financial statements and provides an opinion on whether financial statements present a "real and reasonable" view of a companys operations. Financial due diligence, on the other hand, will incorporate a larger range.

Financial due diligence will not only look at the financial performance of a business, but also look at the companys forecasted financial performance according to its current business plan and consider the reasonableness of that forecast.

A major difference between auditing and financial due diligence is that, the audit report is based only on the truthfulness and reasonableness of the financial results, the financial appraisal will investigate the reasons for the trends observed in the The companys performance results for relevant time periods and this report on suitability for proposed transactions.

In general financial due diligence will usually involve considering the following areas: historical financial results, current financial position; forecast financial results; working capital needs; regulations on employee benefits; pricing impact; risks and opportunities; and tax impact.

Key issues in financial due diligence include determining the true financial position of the target business, especially in regards to outdated inventory, R&D costs, outstanding fixed costs off-balance sheet debt, bad receivable accounts and tax provisions.

a. What information is needed for a financial due diligence?

The information required to complete a financial due diligence is determined by the scope of the agreement as well as the reporting capabilities of the target company. The main sources of information to consider financial due diligence include:

Historical financial data includes statutory accounts, detailed management accounts and income tax statements and returns. Where an account has been legally audited, access to audit records can also assist with the financial due diligence process. In Vietnam, the heir to the business can be held responsible for tax liabilities incurred in previous years purchased by the enterprise. To make sure that you have similar sales that have been filed with the tax authorities, you can ask the seller for written approval so you can request a copy of the actual tax return directly from the agency. tax applicable. Should consider any tax lien filed on any property owned by the target business.
Current financial figures as account manager year to date. The seller of the business is required to provide detailed financial statements (including balance sheets and profits and losses) for the prior 3 to 5 years.
Business plan and forecast financial information (including budget and cash flow forecast).
Director meeting minutes and management meetings.

b. What to realize from financial due diligence?

Depending on the scope of the procedure being conducted, the financial appraisal will answer the following questions:

Is the information provided by reliable targets / suppliers?
Does the company have a sustainable historical earnings history?
What is the companys potential future earnings?
What are the possible synergies related to the proposal acquisition?
What are the immediate and future tax consequences of the sale?
Is the purchase price reasonable to get the results of the appraisal process? Based on the results of the appraisal there are any hidden money deal breakers, is the structure of the purchase appropriate and is there any problem such as including guarantee in the purchase record?

2. Intellectual property appraisal during mergers and acquisitions of enterprises in Vietnam

IP due diligence focuses on establishing the interests a company may have in different intellectual property and where it can be based on the intellectual property of another company. Scope of interest is patents, copyrights and trademark records; introduce corporate IP protection procedures; license agreement.

An important consideration in IP due diligence is to establish ownership that the business holds in a certain portion of the IP. The discovery of a "cloud" in IP property ownership can significantly reduce the value of the target business.

Intellectual property includes patents, copyrights, trade secrets, trademarks, service marks and trade names. Patents, copyrights and trade secrets tend to be the most important types of intellectual property.

According to Lawyervn.net

Indochina International Investment & Appraisal Joint Stock Company (INA)

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• Hotline: 0934 252 707 / Email: info@inavn.vn