In any M&A transaction, one of the first questions for the parties to the transaction is how the deal should be structured.  At times, the choice for the optimal structure is apparent and quickly agreed. So, between share acquisition and asset acquisition, which is better in terms of time? Through this article, Apolo Lawyers (Tel: (+84) 903419479) would like to give some information about the advantage of share acquisition.

One of the most important issues is how fast the M&A process is. First, find out how long it takes to acquire shares or asset.

1. Time taken to share acquisition and asset acquisition

Due to the fact that the acquirer must inherit the duties and responsibilities of the target company, the parties to a share acquisition often spend a lot of time in the legal review process. However, the process of transferring ownership from the buyer to the seller is quick, especially when the buyer and seller are both domestic individuals or organizations. In other words, if you choose to buy shares, the buyer will quickly become the new owner of the target company, while all business licenses, contracts, human resources, internal regulations, documents proving ownership of the target company assets are generally unchanged.

On the contrary, in the asset transaction, the parties will have to perform many separate procedures to transfer the ownership of the property from the buyer to the seller. Procedures for name change and ownership change for many types of assets (such as project implementation rights, land, intellectual property rights, etc.) are quite complicated and time consuming. Labor contracts must also be re-signed with each employee. Transfer of rights and obligations in commercial contracts must also be agreed upon by each other party in the contract. Licenses also need to be revised or renewed.

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2. Advantages of sharing acquisition

This feature is even more evident in Vietnam when administrative procedures are complicated and often cost the parties a lot of time and effort. Due to the rapidity of the transfer of ownership from the seller to the buyer, the purchase of shares does not have a significant impact on the going concern of the target company. Conversely, an asset purchase can disrupt the acquired business due to a lengthy title transfer process. Thanks to the advantages of business continuity after a share purchase, this method is most commonly used for M&A transactions in Vietnam.

If you are considering a significant M&A transaction, whether as the potential buyer or seller, you should consult with your legal counsel and tax and accounting advisors early in the process to avoid potential delays and unnecessary expense.

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3. How can Apolo Lawyers support foriegn investor to conduct M&A activities?

Apolo Lawyers is a law firm with many years of experience in legal issues relating to merger and acquisition transactions, especially cross-border mergers and acquisitions field. Clients who are conducting merger and acquisition transactions can contact Apolo Lawyers for:

• Advice on the process of mergers and acquisitions.

• Support due diligence process and intellectual property due diligence

• Consulting for foreign investor about the regulations of tax law.

• Advice on the notes when making M&A transactions, legal regulations, and common risks when merging and acquiring businesses.

• Consulting and representing in the negotiation process of merger and acquisition transactions.

For further information, please contact us: Apolo Lawyers via email at contact@apolo.com.vn or Hotline - (+84) 903419479 for the best legal advice and support.

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