M&A Due Diligence in Vietnam: A Practical Checklist for Foreign Buyers

The short answer

M&A due diligence in Vietnam covers the same broad categories as anywhere — financial, legal, tax, commercial, and operational — but the specific risks concentrate differently than in mature markets: VAS-to-international accounting standard conversion, undocumented related-party transactions, land use rights validity, licensing completeness, and historical tax exposure are consistently where Vietnamese targets carry the most underappreciated risk.

Financial due diligence

• Reconcile Vietnamese Accounting Standards (VAS) financial statements to US GAAP or IFRS — not a translation exercise, but a genuine standards conversion covering revenue recognition, asset treatment, and provisioning differences

• Map all related-party transactions and informal financing between the target and its founders, affiliates, or shareholders, including undocumented loans and below-market arrangements

• Verify revenue quality — customer concentration, contract terms, and whether reported revenue reflects genuine arm’s-length pricing, particularly where related-party sales are involved

• Assess working capital normalization carefully, given Vietnamese businesses’ sometimes-informal cash management practices

  
  

Legal due diligence

• Confirm the target’s corporate structure, shareholding history, and any historical capital contribution irregularities

• •Verify land use rights — term, permitted use, transferability, and any restrictions specific to the target’s sector or foreign ownership status

• Confirm all operating licenses and sub-licenses are current, valid, and — critically — whether they transfer automatically in a share deal or require re-application

• Review material contracts for change-of-control provisions that could be triggered by the transaction

• Assess litigation, regulatory investigation, and compliance history

Tax due diligence

• Review historical corporate income tax filings and assess exposure to reassessment within Vietnam’s audit statute of limitations

• Assess transfer pricing exposure on historical related-party transactions under the current Decree 255/2026/ND-CP framework (and its predecessor decrees for prior years still within audit scope)

• Confirm Foreign Contractor Tax compliance on any historical payments to foreign vendors or affiliates

• Review personal income tax and social insurance compliance for the target’s workforce, including any expatriate staff

• Quantify — not just flag — the realistic range of historical tax exposure so it can be reflected in price, escrow, or indemnity terms

Commercial and operational due diligence

• Validate the customer and supplier base independently, not solely through management representations

• Assess key employee retention risk, particularly where the business depends on founder relationships or informal institutional knowledge

• Review employment contracts, social insurance contribution history, and termination cost exposure under Vietnamese labor law

Structuring diligence findings into the deal

Diligence is only valuable if it changes the deal. Findings should translate directly into:

1. Purchase price adjustments for quantified financial or tax exposure

2. Specific indemnities for identified risks that can’t be fully resolved before closing

3. Escrow or holdback arrangements sized to the realistic range of exposure, not a token amount

4. Closing conditions requiring remediation of critical issues (e.g., a missing license) before completion

How W&A Consulting helps

We conduct integrated financial, legal, and tax due diligence for foreign buyers acquiring Vietnamese targets, translating findings directly into negotiation positions and deal structuring recommendations — not just a standalone report. Our Managing Partner’s background spans qualified legal practice, FCCA/CPA credentials, and a KPMG Tax and Legal Director role.

Preparing for or currently in diligence on a Vietnamese target? Contact W&A Consulting for a due diligence scoping call.

FAQ

What’s most often missed in Vietnam M&A due diligence?

Undocumented related-party transactions and historical transfer pricing exposure, along with land use rights and licensing issues that don’t surface in a standard financial review.

How long does full due diligence typically take for a Vietnamese target?

It varies significantly by target readiness and business complexity, but founder-owned companies with informal historical practices generally require longer than a comparably sized business in a more mature market.

Should due diligence findings affect the purchase price?

Yes — quantified financial and tax exposure should generally be reflected in price adjustments, indemnities, or escrow arrangements rather than simply noted and set aside.