M&A Due Diligence in Vietnam vs US Standards: Where the Gaps Actually Are
The short answer
US-style M&A due diligence assumes a level of documentation, GAAP-consistent accounting, and legal formality that Vietnamese target companies — particularly private, founder-owned businesses — frequently do not have in the same form. The gaps aren’t a sign of fraud or bad faith; they reflect genuine differences between Vietnamese Accounting Standards (VAS) practice and US GAAP, informal historical practices around related-party dealings and cash transactions, and a legal and land-use rights system with no direct US equivalent. A US-standard diligence checklist applied without adaptation will either miss real risks specific to Vietnam or flag false positives that aren’t actually problems, wasting time and credibility with the seller.
Where Vietnamese practice most commonly diverges from US expectations
Accounting standards. Vietnamese Accounting Standards (VAS) differ from US GAAP and IFRS in areas including revenue recognition timing, fixed asset treatment, and provisioning — a VAS-prepared financial statement generally cannot be read as if it were a US GAAP statement, and needs a proper IFRS/VAS conversion and reconciliation, not a translation.
Related-party transactions and informal financing. Founder-owned Vietnamese companies frequently have informal loans between the company and its owners, undocumented or loosely documented intercompany arrangements, and historical related-party pricing that was never benchmarked — all of which need to be identified, valued, and unwound or formalized as part of the transaction, not discovered after closing.
Land use rights, not freehold land. Vietnam does not have private freehold land ownership in the US sense — businesses hold land use rights for defined terms, subject to specific conditions and, for foreign-invested entities, additional restrictions. Confirming the validity, term, and transferability of land use rights is a distinct diligence workstream with no direct US parallel.
Licensing and conditional sector compliance. Vietnamese operating licenses, sub-licenses, and conditional sector approvals need to be individually verified as current, transferable (or not, in a share deal vs asset deal), and free of unresolved compliance issues — an area where US buyers often underestimate the granularity required.
Tax exposure and statute of limitations differences. Vietnamese tax audit statute of limitations and penalty structures differ from US norms, and undisclosed historical tax exposure (including transfer pricing exposure under the current Decree 255/2026/ND-CP framework) is one of the most common sources of post-closing disputes in Vietnam M&A.
Labor and social insurance compliance. Vietnamese labor law, social insurance contribution history, and termination cost exposure need dedicated review — an area with materially different rules and risk profile than US at-will employment norms.
Practical implications for US buyers
Budget for a genuine VAS-to-US GAAP conversion, not a translation, as part of financial due diligence.
Treat related-party and informal transaction history as a core workstream, not a footnote — it’s usually where the real financial risk hides.
Verify land use rights and licensing independently of what the target’s own counsel represents, particularly for asset-heavy or regulated businesses.
Model post-closing tax exposure explicitly, including transfer pricing risk on historical related-party transactions that will now sit inside the acquirer’s group.
Use local counsel and accountants who understand both sides, not just Vietnamese practice or just US expectations — the value is in the translation between the two, not either standard alone.
How W&A Consulting helps
We conduct financial, legal, and tax due diligence for foreign acquirers of Vietnamese targets, with the specific mandate of translating findings into terms a US or international buyer’s deal team can actually use — VAS-to-GAAP reconciliation, related-party transaction mapping, land use rights and licensing verification, and tax exposure quantification. Our Managing Partner’s background spans qualified legal practice, FCCA/CPA accounting credentials, and a KPMG Tax and Legal Director role advising on cross-border transactions.
Evaluating a Vietnamese acquisition target? Contact W&A Consulting for a due diligence scoping call.
FAQ
Can US GAAP financial statements be used directly for a Vietnamese acquisition?
No — Vietnamese targets generally report under Vietnamese Accounting Standards (VAS), which require proper conversion and reconciliation, not simple translation, to be assessed on a US GAAP basis.
Does Vietnam have freehold land ownership?
No — businesses and individuals hold land use rights for defined terms and conditions rather than freehold title, requiring a dedicated diligence workstream in any Vietnamese M&A deal.
What’s the most commonly underestimated risk in Vietnam M&A due diligence?
Undocumented or unbenchmarked related-party transactions and historical informal financing between the target and its founders or affiliates.
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