COMMON RISKS OF BUSINESSES WHEN CONDUCTING MERGERS AND ACQUISITIONS TRANSACTIONS (M&A)

Recently, the Vietnamese market has recorded many diverse mergers and acquisitions (M&A) deals in life sectors such as banking, consumption, construction... such as Central Group's acquisition of Big C Vietnam, SK Group invested 410 million USD in VinCommerce, Bamboo Capital acquired 71% of AAA shares, etc… Besides successful M&A transactions, there are also M&A transactions that did not take place as expected due to both factors. subjective and objective. Find out with AZLAW in the article below to learn about common post-M&A risks that businesses need to pay attention to.

Common post-M&A risks that businesses need to pay attention to

In addition to the remaining issues of legal documents, Vietnamese businesses participating in M&A transactions also need to be carefully prepared for each step of an M&A deal to avoid problems. arising can lead to disputes and lawsuits after M&A.

According to actual records, there are a few unexpected risks that can occur after the M&A process, including:

Dispute over the issue of forged legal documents

Dispute over the issue of falsified legal documents when the seller intentionally presents these documents to persuade the buyer to perform an M&A transaction.

During the process of reviewing and evaluating legal documents, although the Buyer's appraisal team may have made every effort to control the quality of documents and papers, problems may still arise. The issue of legal documents is due to intentional forgery that cannot be assessed with the naked eye or senses as to whether they are original documents or not.

Therefore, the research and evaluation of legal documents needs to be done according to the correct process, synchronously and must have people who are truly knowledgeable about the specific field. In particular, it is necessary for the parties to carefully check these documents with the issuing agency.

In practice, it can be seen that when businesses conduct M&A transactions, the team performing legal document appraisal can be a combination of two human resources: inside the company and outside the company. Because, legal experts inside the company are people who have a better understanding of the transaction and how the company's leaders view the transaction, but these people are less experienced than the law. Professor specializing in M&A. Using a combination of resources will ensure efficiency as well as improved safety, avoiding errors in the collection and evaluation process

Labor disputes

Labor disputes when the new owner restructures the workforce, or terminates labor contracts with key employees in the old labor apparatus.

In most cases, when announcing the deal to employees, especially the Seller's employees will be the most disappointed. Therefore, in order to avoid possible problems related to the labor contracts of the Seller's employees, the Buyer needs to learn and plan carefully about personnel handling issues. The buyer or the company's new leadership should handle it in accordance with the law but consider the interests of employees already attached to the target company. The company should have a roadmap for retraining and job change before considering the plan to lay off workers.

Before that, the Seller can inform the employees about the deal that in addition to laying off some employees, most employees will basically continue to work and in turn receive better benefit packages, including more stable employment in the Buyer's larger business.

Disputes about business, trade, contracts, intellectual property... with cooperative partners

Normally, in addition to the legal appraisal of the enterprise, the buyer also conducts appraisal activities of the enterprise's activities that have been taking place in reality. To avoid shortcomings, the appraisal needs to be done seriously and professionally. After reviewing and making a list, what the buyer needs to do is specifically notify the company's partners of the situation and come up with an optimal handling plan to ensure the interests of all parties.

It can be seen that the main factor for the success or failure of M&A is the compatibility of the integration plan between the parties after the merger and acquisition process takes place. This plan needs to comprehensively address issues of human resources, compensation, investor relations, operational integration, asset sales and liquidation, competitor reactions, relationships and Communication between departments and member companies, contingency plans..., in particular, effective management and operations must be considered an important post-merger task.

In addition, the improvement of institutions and regulations of the legal system is also a practical factor that contributes to creating motivation for M&A transactions.

For any questions or comments, please contact:

OTIS AND PARTNERS LAW FIRM

Office address: K28 - Group K, Lane 68 Trung Kinh, Yen Hoa Ward, Cau Giay District, Hanoi

Email: [email protected]

Hotline: 0987748111