Selling a business in Vietnam is a prevalent business practice for foreign investors to roll the money into the next profitable venture.
However, before selling a business in Vietnam, there are things you must consider. In this article, Cekindo has listed out some of the important ones.
Selling a Business in Vietnam (Company Dissolution)
1. Know the Realistic Market Value
First and foremost, you need to know your business’s real market value and how you can achieve the maximum sale price. Your business’s sale price must meet not only your expectations but also the buyer’s expectation as a fair market price.
To determine the value of your business that you are going to sell, you need to consider the following items:
- Earning Before Interest, Tax, Depreciation, and Amortisation (EBITDA)
- Discounted Cash Flow (DCF)
- Debt and asset components
2. Determine if You Have a Proper Company Structure for Easy Exit
Investors buying your business want a company structure that can gain profits and facilitate easy exit as company restructuring is often arduous, costly, and time-consuming. Therefore, you must make sure that you have an appropriate company structure and a well-built exit strategy to boost your business’s market value.
A proper company structure can consist of an onshore special purpose vehicle structure, an offshore holding vehicle, an innovative mix that is constructed to ensure compliance, operational and corporate advantages, tax optimisation, and ease of sale.
3. Find Out if There Are Applicable Taxes from Proceeds from Selling Your Business in Vietnam
Regardless of whether you are selling a business in Vietnam as an individual, a corporate, a non-tax resident, or a tax resident, you will need to pay taxes on various rates based on proceeds obtained or the net gain.
4. Learn About the Investment Teaser/Teaser and the Information Memorandum
Do figure out if you need a teaser and an information memorandum for selling a business in Vietnam. These two documents are vital as they are often included in a merger and acquisition (M&A) deal.
You make use of a teaser and an information memorandum to showcase your business’s unique selling points and other relevant information to your potential buyers. An information memorandum contains mostly technical information with 50 to 80 pages.
And in reality, the information memorandum serves as a marketing document to give accurate and comprehensive information about your business in the past, present, and future. As for an investment teaser, it is a two-to-five page document highlighting and summarising your business’s operations, projected growth, and finances.
5. Establish a Proactive Data Room
A well-prepared data room during the selling process is essential to ensure a successful and fruitful transaction. Before the potential buyer carries out the due diligence on your business, you should already have your data room ready to thoroughly handle the information and data requests from the buyer and ease the entire buying and selling process.
During the deal process, a buyer will request a considerable amount of information and data to conduct their tax due diligence, financial due diligence, commercial due diligence, and legal due diligence on your business.
6. Perform Vendor Due Diligence
Before a buyer conducts due diligence, it is best that you also perform a vendor due diligence yourself. This vendor due diligence that you carry out can help you discover and identify the risks and limitations associated with your business. With this proactive assessment, you will then implement proper corrective action before the investor or buyer finds out the issues that may jeopardize the deal.
How Cekindo can Assist
The process of selling a business in Vietnam varies for different types of legal entities and business categories. Therefore, It is better to partner with Cekindo – a leading professional business consultancy in Vietnam.
At Cekindo, we have a team of business specialists with the required knowledge and expertise to dive into the details and help you with the process. Our experts can provide in-depth guidance and advice to all types of business sales, and the entire process for selling a business in Vietnam can be simple and straightforward if you seek the right help.
Contact us for a quality consultation by filling in the form below.