What is M&A?
M&A is an abbreviation of the English phrase: Mergers and Acquisitions. M&A is the activity of acquiring control of a business through a merger or acquisition between two or more businesses to own 1 or all of that business.
Specifically, such as:
The company merger is specified in Article 201 of the Enterprise Law 2020 and Clause 2, Article 29 of the Competition Law 2018. Accordingly, an enterprise merger is the transfer of all its legal assets, rights, obligations and interests by one or several enterprises to another enterprise, and at the same time terminates the business operation or existence of the merged enterprise.
M&A in businesses today
Image: Internet
Popular forms of M&A today
Vertical M&A form
Vertical M&A is a combination of companies and businesses with different production stages, but the same important links in a product or service supply chain. Vertical M&A deals are usually in cases when one company’s products are raw materials for the other company to produce finished products.
The benefits this type brings to businesses:
- Ensure the supply and input materials to manufacture finished products;
- Control input materials when supplying to competitors, reduce competition;
- Drive revenue;
- Reduce production costs.
Horizontal M&A form
Horizontal M&A is a combination between companies and businesses that provide the same product or service or have similar functions to customers. Often companies that conduct horizontal M&A are direct competitors to each other.
The benefits this type brings to businesses:
- Optimizing product production lines, minimizing costs;
- Increase the business market;
- Product diversification;
- Increase direct competitiveness with other rival companies;
- Help control the market, price, influence better.
Combined M&A form
Combined M&A is a combination between companies and businesses that share the same customer market in the same industry, but do not provide the same products and services. Companies that do combined M&A are companies that have complementary products, which come together with the aim of creating a better customer experience. The combined M&A type will usually make up the corporation.
The benefits this type brings to businesses:
- Product diversification;
- Create a better user experience, increase competitiveness;
- Increase revenue;
- Create opportunities to enter new markets but minimize risks.
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M&A in businesses today.
Image: Internet
Prohibited corporate mergers
Pursuant to Article 10 of Decree 75/2019/ND-CP on prohibited enterprise mergers as follows:
- A fine of 01% to 05% of the total turnover in the relevant market of the merged enterprise and the merged enterprise in the fiscal year preceding the year in which the merger act is carried out is prohibited under Article 30 of the Competition Law.
- Remedies:
- Force division and separation of merged enterprises;
- Forced to submit to the control of competent state agencies on purchase prices, selling prices of goods, services or other transaction conditions in contracts of the merging enterprise.”
Prohibited business acquisitions
Pursuant to Article 12 of Decree 75/2019/ND-CP on the act of acquiring prohibited enterprises as follows:
- A fine of the acquiring enterprise from 01% to 05% of the total turnover in the relevant market in the fiscal year preceding the year of the violation of the acquiring enterprise and the acquired enterprise for the act of redeeming part or all of the contributed capital, assets of other enterprises are prohibited under Article 30 of the Competition Law.
- Remedies:
- Forcibly resell part or all of the contributed capital and assets purchased by the enterprise;
- To be subject to the control of a competent state agency within a certain time limit on the purchase price, sale price of goods, services or other transaction conditions in the contract of the acquiring enterprise.
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