Nowadays, lawyers and law firms are increasingly playing an important role in mergers and acquisitions (M&A) deals in Vietnam. Involved parties in the deal, no matter the stage of the deal, want lawyers to advise and represent them.
BLawyers Vietnam describes below the role of lawyers in business mergers and acquisitions.
1. Why are they called mergers and acquisitions lawyers?
Lawyers who often assist clients in a particular legal area are often referred to as lawyers in that area. For example, corporate lawyers, investment lawyers, labor lawyers, litigation lawyers, divorce lawyers, etc. Lawyers who often assist in mergers and acquisitions (M&A) transactions are called mergers and acquisitions lawyers (or M&A lawyers).
2. Role of Mergers and Acquisitions lawyers
M&A lawyers often play the role of “guide” and “connector” for M&A transactions. In an M&A deal, M&A lawyers must work very hard to help the M&A transaction take place and be completed according to the plan of the seller and the buyer. In particular, as follows:
a. Expression of intent stage
In mergers and acquisitions transactions, the first stage in the transaction process involves the seller and the buyer to meet and discuss their intentions. Accordingly, the parties often need to prepare documents recording the preliminary outline of the entire M&A transaction, such as:
- Letter of intent;
- Term sheet; or
- Memorandum of understanding (MOU).
M&A lawyers, initially, participate in the role of advising relevant Vietnamese regulations and supporting the seller by preparing the documents above. The buyer can ask its M&A lawyers to help explain and check the seller’s intentions through these documents. Although these documents are not very long and the content is not detailed, they contain the possibility of an extremely large asset transfer which will affect several people in the future.
Most of the information discussed during this period is not legally binding on both-side parties. However, there have been many cases where M&A transaction disputes arise from these first intentions. Therefore, parties need people who can fully and accurately understand and explain their intentions. In some cases, M&A attorneys also act as a guarantor of confidence for the buyer or the seller.
b. Target company appraisal stage
The next stage, before the buyer makes the acquisitions wholly or partly of an enterprise/project in Vietnam, the buyer usually requires M&A lawyers to become involved. The M&A lawyers will prepare documents such as a legal due diligence report or a disclosure letter. M&A lawyers will prepare these documents based on official and real documents of the target enterprise to ensure the accuracy and truthfulness of its matters. One of the main reasons that the buyer requires these documents prepared by M&A lawyers is the lawyers’ professional reputation and legal practice ethics to ensure the objectivity of the documents. The professional ethics of M&A lawyers has helped instill confidence in parties using their services in mergers and acquisitions transactions.
c. Transaction negotiation stage
The role of M&A Lawyers is clearly seen in:
- Working with the involved parties toward the transaction. Most M&A transactions have the participation of many parties (buyer, seller, parent companies and subsidiaries from many countries, credit institutions sponsoring the transactions, etc.) and often go through many stages with a relatively complex level.
- Supporting the parties by advising on the transaction structure to ensure the shortest transaction execution time, and to mitigate potential risks and have the lowest transaction costs (mainly tax savings).
- Assisting in drafting documents to officially record M&A transactions and legally binding between parties, such as: shareholder agreement, share subscription agreement, share sale and purchase agreement, memorandum and articles/charter, non-disclosure agreement, a deed of non-competition agreement, and other documents agreed to by the parties.
- Supporting the parties to negotiate drafted documents and to help the parties close the transaction successfully.
- Supporting the parties to register the buyer’s purchased share portion with competent authorities in Vietnam.
3. Requirements for M&A Lawyers
To best support clients in an M&A transaction, M&A lawyers are often very quick and have good knowledge, a business mindset, and legal thinking. M&A lawyers must design a simple and easy-to-understand transaction structure to present to the seller/buyer and analyze the pros and cons of the transaction structure for the parties to consider and decide. At this time, the role of M&A lawyers is extremely important; they ensure that transactions are done legally, safely and financially for all parties.
At the document preparation stage, M&A lawyers must be able to write clear, complete and overarching terms of the entire transaction.
During the negotiation phase of an M&A transaction, the parties may not find a common voice for some issues such as payment terms, handing-over assets, transferring risks, receiving and using existing personnel, etc. M&A lawyers will connect the parties to finalize a common solution and avoid the worst-case scenario of a transaction failure (the breaking of a deal) when disputes arise.
In summary, for a successful mergers and acquisitions transaction, M&A attorneys play a very important role. From time to time, they must hold and fulfill different roles.
With many years of practical experience supporting mergers and acquisitions in Vietnam with both domestic and foreign parties, BLawyers Vietnam’s M&A lawyers look forward to supporting you in your M&A transaction. For further details, please contact us at firstname.lastname@example.org.
Writer: BLawyers Vietnam