Tom tat luan an eng nghiên cứu hoạt Động tư vấn m&a doanh nghiệp việt nam hiện nay

These issues have led to the underdevelopment of M&A advisory activities in general and M&A advisory services in particular in Vietnam, thereby failing to create strong momentum for the

STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING

BANKING ACADEMY OF VIETNAM

-

LUONG MINH HA

M&A ADVISORS IN VIETNAM

SUMMARY OF DOCTORAL THESIS

HANOI, 2024

STATE BANK OF VIETNAM MINISTRY OF EDUCATION AND TRAINING

BANKING ACADEMY OF VIETNAM

-

LUONG MINH HA

M&A ADVISORS IN VIETNAM

Major: Finance - Banking

Code: 9340201

SUMMARY OF DOCTORAL THESIS

Academic Supervisor: 1 Assoc Prof PhD TO KIM NGOC

2 Assoc Prof PhD DO THI VAN TRANG

HANOI, 2024

INTRODUCTION

1 Rational of the study

In the context of the increasingly developed and integrated market economy in Vietnam, enterprises view mergers and acquisitions (M&A) as an inevitable option among restructuring strategies to achieve growth objectives and create superior value for owners Since the first deals around 1995, M&A activities have a nearly 30-year history in Vietnam The total disclosed transaction value from 2000 to 2023 is estimated at over 90.5 billion USD Among these, the reverse merger between Vinfast (Vietnam) and Black Spade Acquisition Co (Hong Kong) in 2023 alone was valued at approximately 23 billion USD These developments underscore the indispensable position and role of M&A activities in the business cycle of enterprises and the development trend of the modern economy

M&A advisory services are understood as a set of strategies and solutions provided to Buyside or Sellside upon request to help complete transactions effectively and secure specific benefits The M&A transaction process often extends over a long period and involves multiple parties Advisory firms play a crucial role, as noted by Bowers & Miller (1990), in finding suitable partners, connecting information, facilitating the transaction, and supporting the transaction to create value for shareholders Between 1993 and 1996 in the U.S., Targets who hired investment bank (IB) advisory services received a premium price in the sale higher than the average surplus of 31.6%, compared to 26.1% without advisory services; meanwhile, if Buyers used advisory services, the premium cost paid in the purchase price was 30.3%, lower than the 32.3% of Buyers not using services (Mac Q.H., 2009)

In developed countries, advisory firms are present in a very high percentage of transactions, typically over 80%, when Acquirers and Targets engage in M&A However, in Vietnam, this rate remains low According to Thomson Reuters, the proportion of M&A transactions using advisory services is less than 35% Additionally, advisory content is not diverse, advisory effectiveness for Buyers does not meet expectations, and the market share

of advisory services largely belongs to foreign companies headquartered in Vietnam

This situation is due to multiple reasons Buy-sides and Sell-sides in M&A transactions have yet to fully recognize the role of advisory firms In many cases, advisory firms have not gained complete trust due to the unique characteristics of information in the Vietnamese market Furthermore, current M&A advisory activities of domestic companies remain

underdeveloped, and there is no organization ranking intermediaries like advisory firms This

is also one of the limitations hindering the country's path toward upgrading to an emerging market These issues have led to the underdevelopment of M&A advisory activities in general and M&A advisory services in particular in Vietnam, thereby failing to create strong momentum for the development of M&A activities, with the failure rate of M&A deals in Vietnam still high, at around 60% of announced transactions, according to a KPMG survey (Hoàng Ngân, 2024)

The development of M&A advisory services is not only significant for companies conducting M&A but also for the development of investment banking services and the improvement of the financial market However, research in Vietnam mainly focuses on M&A activities in general, in specific sectors like finance and banking or listed companies at certain stages, or explores in-depth aspects like legal, financial, or corporate governance post-merger

Based on these theoretical and practical issues, researching the theoretical foundation

of M&A advisory services, assessing the current development of M&A advisory services in Vietnam, evaluating the relationship between advisory service use and M&A transaction efficiency, and examining the factors affecting the demand for M&A advisory services in transactions will contribute to developing in-depth theoretical foundations and suggest solutions and recommendations for advancing M&A advisory services in Vietnam in the context of economic integration Therefore, “M&A Advisors in Vietnam” has been selected

as the topic of the doctoral thesis

2 Purposes of the study

2.1 General purposes of the study

The Thesis seeks to accomplish two overarching objectives as follows:

Firstly, to evaluate the contemporary status of M&A advisory service development in Vietnam from the perspective of advisory service providers, identifying the achievements attained, the persisting limitations, and the underlying causes of these limitations

Secondly, to propose a comprehensive system of solutions to advance the development

of M&A advisory services in Vietnam, grounded in an assessment of the current development status and aligned with the strategic orientation for future advancement

2.2 Specific purposes of the study

The specific research objectives to achieve the overarching research goals are as follows:

First, to construct a theoretical framework for the development of M&A advisory

services, with a focus on a list of indicators for evaluating the development of these services

Second, to analyze and assess the contemporary status of the development of M&A advisory services in Vietnam based on the established system of indicators

Third, to identify the factors influencing the development of M&A advisory services

in Vietnam, serving as a foundation for proposing development solutions

Fourth, based on the assessment of the current development status and the factors influencing the development of M&A advisors, to propose solutions for developing M&A advisors in Vietnam

4.2 Scope of the study

Scope in terms of content: M&A advisory activities include a broad and comprehensive

range, from objectives, motivations, means, and content to the process, actions, and related

parties necessary to achieve the objectives of this activity Thus, the Thesis focuses on researching the development of M&A advisory services in Vietnam from the perspective of advisory organizations to address the research problem effectively and in a focused manner

Scope in terms of geography: The Thesis conducts research on M&A transactions in

Vietnam and M&A advisory organizations in Vietnam

Scope in terms of time: On July 10, 2000, the Vietnam stock market officially began

operations, a highly significant event in the evolution of the financial market, providing an effective means for Vietnamese enterprises to undertake business projects requiring large amounts of capital, including M&A activities Securities companies, auditing firms, and law firms, as providers of general advisory services and specifically M&A advisory, started to emerge and develop from this time Therefore, the Thesis examines the development of M&A advisory services for M&A transactions in Vietnam during the period from 2000 to 2023 In-depth interviews with experts were conducted at the end of 2023 and early 2024 Policy recommendations are set out with an implementation timeline projected to 2030

5 Research methods

To achieve the research objectives, the Thesis employs both qualitative and quantitative research methods

Qualitative research: The Thesis utilizes descriptive statistical methods and analyzes

secondary data on M&A advisory in transactions as well as at M&A service provider companies Additionally, the Thesis employs semi-structured interviews (in-depth interviews) with senior experts experienced in executing and advising on M&A in Vietnam Semi-structured interviews are a common research method in qualitative studies, designed to gather assessments and perceptions of interviewees regarding research issues These interviews follow

a pre-established set of questions but are adjusted as needed based on the interviewees' responses to ensure relevance while covering the main content The duration of each interview ranges from 45 to 60 minutes All interviews are recorded with the interviewees' consent, both for use and to ensure information confidentiality Given this approach, the sample size for semi-structured interviews differs significantly from structured interviews, typically conducted through fixed survey questionnaires Usually, the sample size is determined by the saturation level of the information collected

Quantitative research: The quantitative regression techniques employed include

Logistic regression, Feasible Generalized Least Squares (FGLS), and event study analysis Specifically, event study and FGLS regression are employed to evaluate the effectiveness of

using advisory services in creating value for the shareholders of companies involved in M&A (Buy-sides and Sell-sides) The Thesis applies FGLS regression when the results of Ordinary Least Squares (OLS), Fixed Effects Model (FEM), and Random Effects Model (REM) regressions with panel data reveal significant issues affecting the robustness of the regression outcomes The dependent variable used in the FGLS model is the Cumulative Abnormal Returns (CAR) over a period of one week (5 working days) before and after the information disclosure date (Estimation Window) The presence of M&A advisory services acts as an explanatory variable for changes in CAR in M&A transactions of listed companies in Vietnam The estimation of CAR for Buy-sides and Sell-sides investors follows the established procedures used in popular event studies (Fama et al., 1969) and (Bradley Michael et al., 1988) The time frame for determining the Normal Return (NR) of stocks is 120 days before the event date of announcement (from day -135 to day -15 before day 0), under the assumption that no M&A events occur within this window period

Logistic regression is applied in the model to examine the likelihood of using advisory services in an M&A transaction based on the characteristics of the transaction, utilizing the model from the study by (Cao Kien et al., 2017) on the Malaysian market The model helps assess the development in the scale of M&A advisory services by evaluating the factors influencing the demand for advisory services in an M&A transaction in Vietnam

6 New contributions of the thesis

• The Thesis has systematically consolidated the theoretical foundation of M&A activities, emphasizing aspects pertinent to M&A advisory services

• The Thesis has articulated a scholarly perspective on the core theoretical framework

of M&A advisory services and their development

6.2 Practical contributions

The Thesis contributes to practical advancements in the following aspects:

Firstly, conducting a comprehensive analysis of the current state of M&A advisory service development in Vietnam, employing both qualitative and quantitative criteria, with a

focus on the period from 2000 to 2023 The Thesis stands as one of the pioneering empirical studies that offers in-depth and extensive evaluations of the development status of M&A advisory services in Vietnam from the perspective of advisory organizations

Secondly, formulating a structured system of strategic solutions to foster the development of M&A advisory services under the conditions specific to Vietnam, from the viewpoint of advisory service providers Furthermore, it presents comprehensive and effective policy recommendations aimed at implementing these solutions, thereby enhancing the development of M&A advisory services in Vietnam in both scale and quality

7 Structure of the study

Apart from the Introduction, Conclusion, References, Appendices, and List of Tables and Figures, the main content of the Thesis is structured into four chapters as follow:

• Chapter 1: Literature Review on the M&A advisors’ development

• Chapter 2: Theoretical Framework for the M&A advisors’ development

• Chapter 3: Contemporary Status of M&A Advisors in Vietnam

• Chapter 4: Solutions for Developing M&A Advisors in Vietnam

CHAPTER 1 LITERATURE REVIEW ON MERGERS AND ACQUISITIONS

ADVISORS’ DEVELOPMENT

1.1 Research on M&A advisors

The author has conducted a comprehensive review of studies related to the topic, concluding that research on M&A advisory services has garnered significant scholarly attention, primarily focusing on two main directions: the effectiveness of M&A advisory services and the factors influencing these services

1.1.1 Research on the relatedness between M&A advisors and M&A deals outcome

Occupying a prominent position among studies on M&A advisory services is research

on the effectiveness of M&A transactions involving advisory firms Scholars have found both positive and negative evidence of the impact of M&A advisory services on transactions, in both the short and long term Furthermore, the role of M&A advisory services extends to a macroeconomic perspective, contributing significantly to waves of M&A activity in various countries around the world

1.1.2 Research on factors impact M&A advisors

This topic can be regarded as one of the most extensively examined areas within studies on M&A advisory services, attracting significant interest from researchers The authors concentrate on analyzing the factors that influence the decision to engage M&A advisory services in transactions The primary factors encompass reputation, market share, the quality of advisory services, the personnel team, and the characteristics of M&A transactions

1.1.1 Research on the factors impact the supply of M&A advisors

The number of studies on the development of M&A advisory services remains very limited, while most scholars focus on two main aspects as analyzed in Section 1.1 In other words, authors primarily examine advisory services from either the supply or demand perspective, with very few studies exploring advisory services as a sub-sector from a market viewpoint

1.2 Research on the development of M&A advisors

The number of domestic and international studies on the development of M&A advisory services from both macro and micro perspectives remains modest Most authors primarily investigate advisory services from either the supply or demand side, with very few studies examining advisory services as a distinct sub-sector In terms of the development of

support services in general, there has yet to be research that specifically focuses on the development of M&A advisory services as the main subject

1.3 Research gap and research proposal

Building on the review of previous scholarly works, the author concludes: the development of M&A advisory services in Vietnam remains a subject that has not been comprehensively and meticulously examined, nor has it become a primary focus of concentrated academic research In contrast, M&A advisory services play a pivotal role in enhancing the efficacy of M&A transactions, contributing to the advancement of M&A activities on a macroeconomic scale, and thereby refining the financial market

Research orientation of the Dissertation: The Dissertation adopts a micro-level perspective from the standpoint of advisory service providers In the process of compiling and articulating the theoretical framework to assess the development status of M&A advisory services in Vietnam during the period 2000 to 2023, and to propose development solutions, comprehensive and holistic arguments and analyses are integrated with macroeconomic factors to ensure an inclusive and overarching approach

CHAPTER 2 THEORETICAL FRAMEWORK OF M&A ADVISORS AND THE

DEVELOPMENT OF M&A ADVISORS 2.1 Theoretical framework on Mergers and Acquisitions activities and Mergers and Acquisitions advisors

2.1.1 Mergers and Acquisitions activities – an overview

2.1.1.1 Mergers and Acquistions Conceptual framework

M&A refers to the restructuring activities of two or more companies, where one party is the acquiring company and the other is the target company, resulting in significant changes in the management of the participating companies

2.1.1.2 Categories of mergers and acquisitions

Depending on the classification purpose, the criteria used to categorize M&A activities may vary Common classification criteria include: i) legal consequences, ii) payment methods, and iii) geographical scope

• By legal consequences: M&A includes acquisitions, mergers, and consolidations

• By payment methods: M&A encompasses transactions paid in cash, transactions paid

in stock, and other forms of payment

• By geographical scope: includes domestic M&A and cross-border M&A

2.1.1.3 Mergers and Acquistions Tactics

The essence of M&A activities lies in the acquisition or gaining control over the business operations or company involved in the transaction To achieve this objective, the Acquirer may employ various methods Common methods include: tender offers, proxy fights, voluntary negotiations, and asset purchases

2.1.1.4 Mergers and Acquistions Participants

In addition to the participation of the Acquirer and the Target, M&A activities also involve various other entities, including external advisors, regulatory authorities, financial institutions providing capital, active investors, and arbitrageurs

2.1.2 Conceptual framework of Mergers and Acquisitions Advisors

2.1.2.2 Characteristics of Mergers and Acquisitions Advisors

M&A advisory is a type of service Therefore, the characteristics of M&A advisory services share similarities with general service types while also having distinctive features In this Thesis, the characteristics of M&A advisory services including intangibility, association with the service provider, high differentiation, the requirement for extensive expertise and substantial experience, a typically prolonged execution process, and the absence of a fixed template

2.1.2.3 The roles of Mergers and Acquisitions Advisors

M&A advisory services play a crucial role for businesses and the economy, reflected

in various aspects from the perspectives of the company conducting the M&A, the company providing M&A advisory services, and the market

• For the company conducting the M&A: M&A advisory helps efficiently complete

transactions and increases value for both Buy-sides and Sell-sides

• For the advisory service provider: Enhances business performance

• For the market: Improves Pareto efficiency through the effective distribution of value

between Buy-sides and Sell-sides, contributing to the suistainable development of the M&A market

2.1.3 Content of Merger and Acquisition Advisors and the Entities Providing Merger and Acquisition Advisors

The content of M&A advisory services is highly diverse and encompasses the business activities of companies engaging in M&A, but it is typically categorized into three main groups: Financial Advisory, Legal Advisory, and Other Advisory Services

2.1.3.1 Financial Advisors

Financial advisory helps companies engaging in M&A professionally handle financial matters related to the transaction: preparing financial documentation, conducting financial due diligence, preparing valuation reports, developing financing plans for the transaction, structuring the transaction's financial framework, addressing tax and accounting issues, and connecting with financial institutions to secure funding

2.1.3.2 Legal Advisors

Legal advisory services are carried out by lawyers or legal consulting firms This is a specialized service that requires high legal expertise and extensive experience from the advisory team Legal advisors handle tasks related to legal procedures, contract preparation, negotiations, and working with relevant authorities

2.1.4 Categories of Merger and Acquisition Advisors

Classification criteria include: advisory content, advisory process, parties involved

in M&A, and service providers

• By advisory content: M&A advisory services encompass various areas, with common

types including legal advisory, financial advisory, and other advisory services

• By advisory process: Advisory services include pre-M&A advisory, during-M&A

advisory, and post-M&A advisory

• By parties involved in M&A: Advisory services are classified as Buy-side Advisor

and Sell-side Advisor

• By service providers: Advisory services are offered by a diverse range of entities, the

most common being investment banks, securities firms, law consulting firms, auditing firms, valuation firms, and specialized consulting companies

2.1.5 Mergers and Acquisitions Advisors and the efficiencies of the deals

The Thesis systematizes various concepts of M&A transaction effectiveness and examines the effectiveness of M&A transactions in connection with the use of advisory services, based on the argument of business performance for the company and for shareholders For M&A activities, the effectiveness of advisory services is considered in two main dimensions: short-term effectiveness for clients and long-term effectiveness Short-term effectiveness is evaluated based on the cumulative abnormal returns (CAR) on stock prices for investors and company shareholders over a short period (usually measured in days) surrounding the event date (M&A announcement) for the group using advisory services compared to the group not using these services Long-term effectiveness of advisory services

is assessed using business performance indicators within the company, such as total asset growth, profitability, and other business performance metrics, comparing firms that conduct M&A with and without advisory services

Additionally, the Thesis discusses the perspective on the effectiveness of advisory services in correlation with other services and products offered by the advisory firm, reflected

in their contribution to the overall business performance of the organization, measured by indicators such as the contribution rate to total revenue and the contribution rate to total profit

2.2 Conceptual framework on the development of merger and acquistion advisors

2.2.1 Perspectives on the Development of Merger and Acquisition Advisory Services

“The development of M&A advisory services is defined as the enhancement and expansion in both the scale and quality of M&A advisory provisions.” The development of

M&A advisory services encompasses the improvement in both the quality and quantity of

these services

2.2.2 The indicators to assess the development of merger and acquisition advisory services

Based on the theoretical foundation, the Thesis presents a system of indicators to evaluate the development of M&A advisory services, including both quantitative and qualitative criteria The quantitative criteria include:

1 Increase in the number of entities providing M&A advisory services

2 Growth in the scale of value and number of transactions utilizing advisory services

3 Expansion in revenue generated from advisory service fees

4 Effectiveness of advisory services for the provider organization

5 Short-term effectiveness of M&A advisory services for buyers/sellers

6 Long-term effectiveness of M&A advisory services for buyers/sellers

The qualitative criteria, reflecting the quality development of M&A advisory services, include: i) Reputation of the advisory organization, ii) Enhancement of supporting advisory services, iii) Diversity of advisory organizations, iv) Quality of advisory services as assessed

by service users

2.2.3 The Necessity of Developing Merger and Acquisition Advisory Services

• For companies engaging in M&A: Enhancing the effectiveness of transactions in both the short and long term

• For M&A activities: The development of M&A advisory services positively contributes to promoting efficient M&A transactions, thereby increasing the overall benefits of M&A activities

• For advisory firms: Gaining financial and other benefits from providing advisory services

2.3 Factors Impacting the Development of M&A Advisory Services

The development of advisory services encompasses both the growth in scale and improvement in quality The development of M&A advisory services is influenced by factors both internal and external to advisory organizations From the perspective of advisory firms, subjective factors affecting the development include internal aspects such as the quality of advisory services, the caliber of advisory personnel, the completeness of the service product portfolio, and the information database External objective factors include the legal environment, the expansion of the M&A market in breadth (transaction value and volume) and depth (transaction characteristics such as deal size, payment method, legal structure, and geographic scope), and the awareness of companies engaging in M&A regarding the role of advisory services

CHAPTER 3 THE CONTEMPORARY STATUS OF MERGER AND

ACQUISITION ADVISORS IN VIETNAM 3.1 A brief capture of merger and acquisition activities in Vietnam

3.1.1 Volumn

After nearly 30 years appeared and development, the M&A activities in Vietnam has increased significantly on both volumn and value Especially since Vietnam has enterred World Trade Organization in 2007, the market size has increased more stronger than before (See Figure 3.1 for more details)

Figure 3.1: M&A Vietnam 2000 – 2023 by volumn (Source: IMAA)