Recently, the domestic business sector in Vietnam is an area where the number of mergers and acquisitions (M&A) is vibrant. The synergistic value obtained from each merger and acquisition will help business operations be more efficient and the value of enterprise will be enhanced. Therefore, businesses come together to heal their business wounds, after Covid-19 outbreaks.

Based on the operating functions of member companies, the nature of mergers and acquisitions, can be classified in three forms:

• The first, horizontal mergers and acquisitions:

Horizontal mergers and acquisitions are transactions between enterprises which have similar groups of business products and services, the same industry, and the same production technology. Purpose to increase production scale and market share.

Example: A car manufacturing company acquires a car manufacturing company.

• The second, vertical mergers and acquisitions:

Vertical mergers and acquisitions are transactions between enterprises which have the same production and business chain. Purpose to develop the business chain, reducing dependence on external supply and demand.

Example: Coffee trading company acquires coffee farming company.

• The third, multi-way mergers and acquisitions:

Multi-way mergers and acquisitions are transactions between enterprises that do not have the same products or services, different industries. The goal is to diversify in investments.

Example: Furniture trading company acquires soft drink trading company.

When determining buying and selling prices, risk assessment related to financial statements is indispensable. In addition to valuation, the company's value according to existing assets and liabilities, the contents that need attention and identification in the financial statements, including:

• Whether there is management involvement that imposes accounting principles, distorting the nature of the company's current assets and obligations or not?
• Whether there is management commitment to related parties, above-average or excessive incentives or not?
• Whether there is a change in legal regulations related to the business's industry or not, but in recent years, the company's financial statements have not been updated.
• Whether there is a provisions for devaluation of inventories or not, or impairment of assets that have actually occurred, but not yet shown in the financial statements?
• Whether there are receivables, recorded revenue but uncertain that may change in the future or not.
• Unclear advances and personal payables.

An important content that needs further emphasis is the risk of tax liability, expressed in both present and potential forms in the financial statements.

Tax obligations that can be significantly affected to the transaction prices, as the business is uncertain: to what extent it has complied with the tax regulations; whether the data has been fully and properly declared or not; whether all tax risks have been estimated or not; Have taken full advantage of the tax incentives?

Enterprise value in mergers and acquisitions is the value of current net assets after deducting liabilities and other liabilities. In addition, it is necessary to provide for additional risks that may occur in the future, due to improper performance of tax obligations in the past, before buying and selling.

Buyers agree to buy, sellers agree to sell, which is always the goal of business. Therefore, M&A is an opportunity for investors to develop their business and make a profit. Don't let it become a financial burden for investors after this deal.