In most mergers and acquisitions (M&A) transactions, the buyer is usually the one taking the greater risk. After paying the purchase price and completing the transfer, the buyer can not only receive the assets or shares of the target enterprise, but also potential debts, undisclosed disputes, open tax obligations, labor issues, etc environment, business licenses, or even risks arising from data and technology. A deal that is attractively priced at the negotiating table can quickly become an underperforming investment if these risks appear after the transaction has been completed.
The value of protecting buyers in M&A today lies more in the quality of the contract than in the legal regulations themselves
Therefore, the question is not whether Vietnamese law protects buyers, but whether buyers know how to use existing legal tools to protect themselves. The practice of M&A over the past many years has shown that most disputes do not arise because of a lack of legal regulations, but because the contract does not fully anticipate possible situations. In other words, the value of protecting buyers in M&A today lies more in the quality of the contract than in the legal regulations themselves.
The law only creates a framework, the contract determines the level of protection
The practice of M&A over the past many years has shown that most disputes do not arise because of a lack of legal regulations, but because the contract does not fully anticipate possible situations. In other words, the value of protecting buyers in M&A today lies more in the quality of the contract than in the legal regulations themselves.
Unlike many other legal fields, Vietnam does not have a specialized law on buyer protection in M&A transactions. the Competition Law, the Securities Law, specialized laws and regulations on procedures and arbitration.
Each text regulates only part of the transaction. The Law on Enterprises determines the conditions for the transfer of shares or contributed capital; The Law on Investment regulates the purchase of capital by foreign investors; Competition Law on control of economic concentration; The Law on Securities regulates public tender offer activities; while the Civil Code creates the foundation for the validity of contracts and compensation liability. That means that the law only creates the "skeleton" of the transaction. The "muscle" part that helps buyers hedge risks lies in the contract itself that the parties agree on themselves.
This is also the reason why the two deals are similar in size but the results of dispute resolution can be completely different. Not because of the application of different legal provisions, but because of the quality of different contract terms.
Information asymmetry is still the biggest risk for buyers
In every M&A deal, there is a reality that is difficult to change: the seller always understands his business better than the buyer.
The seller is well aware of potential debts, unfinished inspections, contracts that are in danger of termination, internal disputes, or weaknesses in the governance system. Meanwhile, buyers only have a relatively short period of time to conduct due diligence before deciding to invest. This information gap is the source of most M&A disputes.
Therefore, the terms of representations and warranties are not merely promises made by the seller. They are the basis for determining liability if the information provided is untruthful or incomplete; is the basis for claiming compensation, adjusting the purchase price, or even terminating the transaction in extreme cases.
However, an undertaking clause is only really valid when it is tied to a specific enforcement mechanism. If the contract only stops at recording that the "seller undertakes" without clearly stipulating the legal consequences when the guarantee is violated, the ability to protect the buyer will in fact be very limited.
The most important clause is sometimes not the indemnity clause
In many M&A negotiations, the parties spend a lot of time negotiating the terms of compensation. This is understandable because compensation is a direct remedy when a risk arises. However, from a practical perspective, what determines the effectiveness of the buyer's protection is not necessarily the right to compensation but the ability to actually recover that compensation. Many disputes end with the buyer winning the lawsuit, but the seller no longer has the financial capacity to fulfill its obligations.
Therefore, in international transactions, instruments such as escrow accounts, holding back mechanisms, price adjustments or specific indemnity are increasingly important. These mechanisms do not give rise to new rights for the buyer, but help ensure that the rights can be enforced in practice.
For the Vietnamese market, where title insurance and M&A transaction insurance are not yet popular, cash security mechanisms in the transaction itself are particularly important.
M&A disputes in Vietnam show that the problem lies more in the contractual technique than in the legal gap
The disputes that have been published in the past time reflect a fairly clear commonality: the cause does not stem from the lack of protection mechanisms in the law, but from the contract's failure to adequately handle predictable risks.
There are cases that arise because the real value of the business depends on a foundation project or an important license but the contract only describes the transaction object as a share. When the project encounters problems, the economic value of the shares changes significantly and disputes arise. There is a case stemming from the fact that the buyer has not fully checked the conditions for transferring the contributed capital according to the Law on Enterprises. There are also cases where the contract stipulates obligations that are too general, making it difficult for the dispute settlement agency to determine the responsibilities of the parties.
These cases show that buyers should not only be interested in the transferor but also determine the economic assets that actually create the value of the business. It could be land use rights, business licenses, contracts with large clients, core technology, or customer data. When the value of the deal is tied to these assets, the entire protection mechanism, from the prerequisites to the price adjustment clause, also needs to be designed around them rather than just around shares or capital contributions.
Another notable change is that the scope of legal due diligence activities is expanding rapidly.
W&I insurance can become a new trend in Vietnam
In developed M&A markets, Warranty & Indemnity Insurance (W&I Insurance) is becoming a popular tool to transfer some of the risk from the parties to the insurer. Instead of having to withhold a portion of the purchase price for years or continue to debate the seller's limitation of liability, the buyer can claim compensation from the insurance company if important warranties are breached.
In Vietnam, this type of insurance has only appeared in a number of large-scale cross-border deals. The cost of insurance, the small size of the market and the experience of domestic insurers make W&I Insurance not yet a practice. However, as the value of deals grows and the involvement of international investment funds increases, W&I Insurance is likely to become a familiar part of the M&A transaction structure in the coming years. At that time, the concept of "buyer protection" will not only stop at the contract between the two parties but will also be extended to the risk allocation mechanism with the insurance market.
Personal data is becoming an asset that needs due diligence
Another notable change is that the scope of legal due diligence activities is expanding rapidly.
If in the past the due diligence process mainly focused on land, finance, labor, taxes and licenses, now personal data has become a content that cannot be ignored.
The entry into force of the Law on Personal Data Protection in 2025 has significantly changed the way target businesses are assessed. Questions such as on what legal basis the data was collected, whether there was valid consent of the data subject, whether the data was transferred abroad, or whether the enterprise has fully fulfilled the required impact assessment obligations can all directly affect the value of the deal. In many cases, a customer database that seems to be a competitive advantage can become a significant source of liability if it is formed or exploited improperly.
This also means that the undertakings and guarantees in M&A will have to extend to the field of personal data protection instead of being limited to tangible assets and financial obligations as before.
AI due diligence will be the next evolution of M&A activities
Parallel to data is the rapid development of artificial intelligence (AI). More and more businesses own AI models, machine learning algorithms, or automation systems that are considered great assets. However, the value of these assets is highly dependent on the source of training data, intellectual property rights, compliance with data laws and the ability to exploit commercially. Therefore, the concept of "AI Due Diligence" has begun to appear in the world - in-depth due diligence of AI systems before implementing M&A.
In the near future, buyers will not only evaluate the revenue or tangible assets of the target business, but also the legitimacy of the training data, ownership of the AI model, the risk of copyright infringement, the level of compliance with personal data protection regulations, and the interpretability of the algorithms.
This shows that the concept of "assets" in M&A is changing very quickly and along with that, the buyer protection mechanism must also be designed in a more comprehensive way.
Vietnam's M&A market is entering a more mature phase, where the value of a deal is no longer determined primarily by the price or the pace of completion but by the ability to allocate and control risk after the transaction is closed. Where in the past negotiations focused on "how much to buy", today the focus has shifted to the question of "what to buy" and "how to make sure what you buy meets expectations".
In this context, the buyer protection mechanism is no longer a set of technical terms located at the end of the contract, but has become a component that determines the value of the entire transaction. Law continues to play a fundamental role, but it is the contract, with careful preparation from the due diligence and negotiation stages, that is the most important "shield" to help buyers protect their investment in an increasingly complex and competitive M&A market.
