M&A Deal Structuring
When acquiring a business in Vietnam, the buyer faces a fundamental structuring choice: a share deal (buying shares/capital contribution portions and taking over the entire business) or an asset deal (buying only the specific assets, contracts, and land use rights it needs). This choice is not a matter of preference — it determines what the buyer inherits (including debts and hidden risks), which procedures must be completed, how tax applies, and how employees are handled. This article systematically compares the two structures so buyers choose correctly from the start.
The nature of the two structures
Share deal: the buyer acquires shares or capital contribution portions in the target. The target’s legal personality continues uninterrupted — all assets, contracts, licenses, liabilities, and hidden obligations stay in the company and belong to the buyer together with the shares. Legal procedures focus on the capital transfer and changing the enterprise registration.
Asset deal: the buyer (usually a new or existing legal entity of the buyer) purchases specific assets: factories, machinery, inventory, land use rights, customer contracts, brands. Whatever is not purchased — including debts and hidden obligations — stays with the seller. Legal procedures are more complex because each asset type has its own transfer procedure.
Detailed comparison
1. Subject matter and scope of succession
Share deal: the buyer inherits everything — assets and debts, known and hidden obligations (undetected tax debts, simmering disputes, product warranties). Asset deal: the buyer takes only the assets listed in the contract and may exclude unwanted debts and obligations. This is why asset deals are often chosen when the target has a “complicated history” the buyer does not want to shoulder.
2. Legal procedures
A share deal is procedurally leaner: the capital transfer contract (SPA), then changing the enterprise registration contents at the Department of Finance. If the buyer is a foreign investor falling under Clause 3, Article 21 of the Law on Investment 2025, the capital contribution/share purchase registration procedure must be completed before changing members/shareholders.
An asset deal is far more complex: transferring land use rights requires procedures at the land registration authority; transferring land-attached assets and machinery may need valuation and separate procedures; assigning contracts requires third-party consent (customers, suppliers); transferring licenses (sub-licenses, investment incentives) is not always permitted — many licenses attach to a specific legal entity and are non-transferable.
3. Tax
Share deal: tax obligations arise mainly for the seller on income from the capital transfer (corporate income tax for organizations, personal income tax for individuals). The buyer inherits the company’s “tax history” — including the risk of retroactive collection for prior years. Asset deal: the seller bears tax on income from transferring each asset; the buyer may depreciate assets at the new purchase price (a future tax advantage). However, real estate transfers in an asset deal are subject to VAT and land financial obligations. For details see tax due diligence in M&A transactions.
4. Employees
Share deal: the legal entity is unchanged so labor contracts continue in effect — employees are barely affected. Asset deal: the buyer does not automatically inherit employees; taking on staff must follow agreement, and employees not taken on are entitled to termination benefits. This is a sensitive point requiring skillful handling both legally and in labor relations.
5. Licenses and investment incentives
Share deal: the target’s investment registration certificate, sub-licenses, and tax incentives are in principle retained (but check whether incentive eligibility attaches to the old ownership structure). Asset deal: the buyer usually must apply anew for an investment registration certificate and licenses for its own entity — meaning the seller’s investment incentives may not transfer.
6. Debts and hidden obligations
This is the decisive difference. Share deal: the buyer takes everything — so thorough legal due diligence and indemnity provisions in the SPA are mandatory. Asset deal: the buyer can exclude bad debts and hidden obligations — but must be careful with the “obligations attached to assets” principle (e.g., environmental obligations attached to land, tax debts attached to assets).
When to choose which structure?
Choose a share deal when: the target has a clean legal history (thoroughly diligenced); the buyer wants to keep licenses, investment incentives, and customer contracts intact; wants fast, lean procedures; or the value of intangibles (brand, customer relationships, team) exceeds the value of tangible assets.
Choose an asset deal when: the target has bad debts, disputes, or compliance risks the buyer does not want to inherit; the buyer needs only part of the operations (one factory, one business line); or wants to depreciate assets at the new purchase price for tax optimization.
In practice hybrid structures also exist: buying shares but carving out certain assets/obligations before closing, or buying assets with the seller guaranteeing certain obligations. The structure choice should be decided after preliminary due diligence results, not locked in the LOI.
Structure-specific risks in Vietnam
- Share deal — the “black box” risk: the largest hidden obligations usually lie in tax (retroactive collection for many years), land (land origin, unfulfilled financial obligations), and labor (severance allowances, underpaid social insurance). Without deep due diligence, a share deal is a gamble.
- Asset deal — procedural risk: transferring land use rights to a new entity may face conditions on land use purpose and remaining land term; assigning contracts needs each counterparty’s consent — a single major counterparty refusing stalls the whole deal.
- Both — competition risk: if the transaction exceeds the thresholds in Article 13 of Decree 35/2020/ND-CP, the economic concentration notification obligation applies to both structures.
FLAT LAW FIRM helps choose the deal structure
FLAT LAW FIRM advises on deal structuring based on actual due diligence results, not templates: analyzing the pros and cons of share deals and asset deals for each specific transaction, quantifying the tax difference between the two options, drafting the sale contract suited to the chosen structure, and handling asset, land, and license transfer procedures in asset deals. See also our M&A services in Vietnam.
Frequently asked questions
Can a foreign buyer do an asset deal to acquire land use rights?
This is complex. Foreign-invested economic organizations generally cannot receive land use right transfers directly like domestic enterprises in many cases, but mainly lease land from the State or sublease land in industrial parks. An asset deal with a land element and a foreign buyer therefore needs careful structuring — sometimes a share deal is the more feasible way to access the target’s existing land use rights.
Does an asset deal fully avoid the seller’s tax debts?
In principle, the seller entity’s tax obligations do not pass to the buyer in an asset deal. However, note financial obligations attached to the transferred assets (e.g., unpaid land use fees, land rents) and cases where the law provides for joint liability. Asset due diligence in an asset deal should still cover tax aspects and asset-attached financial obligations.
Can you switch from a share deal to an asset deal midway?
Yes, if the parties agree and the transaction is not yet completed. In practice, quite a few transactions start as share deals but switch to asset deals after due diligence uncovers major risks. This requires renegotiating the entire price, tax, and procedure structure — so preliminary due diligence should be done early, before locking the structure in the LOI.
Are employees automatically transferred to the buyer in an asset deal?
Not automatically. In an asset deal, the buyer does not inherit labor contracts as a matter of course as in a share deal. Taking on employees follows agreement between the parties and employee consent; those not taken on are settled under labor law. The HR plan should be part of the deal structure from the outset.
Useful links
You should speak with a lawyer if:
- Torn between a share deal and an asset deal for an upcoming transaction.
- The target has debts or a complicated legal history.
- The transaction involves land and the buyer is a foreign investor.
- You need to quantify the tax difference between the two structures before locking the price.
- You have chosen a structure but need to re-check after due diligence results.
Speak with a lawyer at FLAT LAW FIRM
Send us information about the target and the transaction objectives — we will analyze the most suitable structuring option.
Send a legal advice requestThe content on this website is for general information purposes only and does not replace legal advice for any specific matter.
Legal regulations, the competence of state authorities, and administrative procedures may change over time, by locality, and by specific dossier. You should consult a lawyer before making decisions or carrying out transactions.
