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Research proposal

Merge and Acquisition in Vietnamese banking sector

Table of Content

1 Introduction ........................................................................................................................ 3

1.1 Rationales for chosen topic ......................................................................................... 3

1.2 Research aim and objectives ....................................................................................... 4

2 Literature Review............................................................................................................... 4

2.1 Theoretical Framework ............................................................................................... 4

2.1.1 Definitions............................................................................................................ 4

2.1.2 Effects of M&A ................................................................................................... 7

2.2 M&A practices .......................................................................................................... 11

2.2.1 In the world ........................................................................................................ 11

2.2.2 M&A practices in Asia ...................................................................................... 12

2.2.3 M&A practices in Vietnam ................................................................................ 14

3 Research Methodology .................................................................................................... 16

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3.1 Research Approach ................................................................................................... 16

3.2 Empirical Data........................................................................................................... 16

3.3 Data Analysis ............................................................................................................ 19

4 Research Structure ........................................................................................................... 21

References ................................................................................................................................ 23

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1 Introduction

1.1 Rationales for chosen topic

Strategic alliances and Mergers and Acquisitions (M&A) are the dominant corporate

strategies followed by organizations looking for enhanced value creation (Maire and

Collerette, 2011). The growing tendency towards mergers and acquisitions (M&As)

worldwide, has been forced through intensifying competitions (Reuters, 2009). There is a

need to reduce costs, reach global size, take economic benefits in scales, increasing

investments in technologies for strategic gain, desire to expand business into new areas and

improve shareholder value. Moreover, corporate restructuring including M&As have given

rise to a host of important issues for business decision, for public policies, formulations and

economic regulation. Marks and Mirvis (2013) indicated that while enterprises show both

internal and external growths, with increased international, it is considered as imperativeness

for the enterprises to have inorganic gains those are external.

In Vietnam, M&A activities have the socio-cultural traits, which provide guidance in

explaining economic happening, through anomaly and transitional characteristic, rather than

what provides by completed empirical data (Vuong et al., 2010). Proceed from sales of

current asset and enterprise flows focusing on the high speculation security industries, banks,

financial institutions, portfolio investment as well as real estates. In long run, the effects of

Vietnamese M&A activities are, therefore, questionable. It is observed that volatilities are at

high degrees in the process of M&A that possibly blow out the highly expected results

through various speculators in case ex post realization is arrived (Pham and Duda, 2009).

However, there is limited investigation studying on M&E activities in Vietnam. This

dissertation thus aims to provide an overview of recent trend of Vietnamese M&A.

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1.2 Research aim and objectives

This dissertation aims to evaluate the effects of mergers and acquisitions (M&A)

activities in Vietnam. The objectives are as following:

To analyze the factors influencing M&A activities in Vietnam

To study the post-M&A performance of the firms and the reasons behind it.

Besides, the review of literature discusses a wide range of topics some of which

regarding the theories of motivations for M&A, M&A in Vietnam as well as examples of

success and failures of M&A activities.

2 Literature Review

2.1 Theoretical Framework

2.1.1 Definitions

Mergers & Acquisitions or M&A refers to the consolidation of two or more firms in

order to achieve targeted goals in their business strategy. M&A activities have the same

characteristics as firms’ in general: diversity and they are carried out under many different

forms and contents:

1. Merger is the combination in which one or many firms of same kinds (called

mergered firms) transfer all its properties, rights, responsibilities and legal

interests to another one (which is called merger firm). The merger firm is

called target firm whose existence will end right after being mergered. Also,

the brand of target firm disappears, and will be matched with the brand of the

receiving firms.

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2. Consolidation is the combination of two or more firms (consolidated firm) to

form a new firm (consolidation firm) by transferring all their properties, rights,

responsibilities and legal interests to a consolidation firm and at the same time

ending consolidated firms’ existences.

3. Acquisitions are the combination in which one firm will buy one part or all of

the stocks of another one. The goal of this activity is to capture the market,

distribution network or make use of distribution network to bring new products

and services to the market. The target firms are those who are operating

efficiently and effectively and having stable market shares. However,

acquisitions sometimes are related to buying or selling debts and the objectives

could be firms that are going to be wound up or bankrupt, unable to maintain

its business operation. This could also be called reform of firms.

The above-mentioned M&A usually exits when a small firm has been bought by a

large one. Sometimes, large and long-standing famous firm is managed and controlled by the

smaller one and its reputation is kept. This is called reverse takeover. Normally, acquisitions

are realized under two ways as follows:

1. Stock acquisitions: Target firm’s voting stock and share or other securities can be

purchased by money, and this amount of money will be divided to the

shareholders of the target firm.

2. Property acquisitions: The firm can purchase all or one part of the target firm's

properties.

Differentiating mergers and consolidation

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Carrying out mergers or consolidation is meant to end the business operation of one

or both parties. However, the difference is: for merger transaction, only one party ends its

existence (the mergered one) and the merging firm always has a stronger voice in every

general decision; for consolidation transaction, the parties with the same economy of scale

will consolidate and form a new legal entity, and legal entities of both parties will no longer

exit. Such a fair merger is called “merger of equals”, there is always a balance in making

decision about the operations of the new organization.

Differentiating mergers and the entire acquisition

Mergers and the entire acquisition have the same nature where there is a combination

of two or more parties to form a single one in operation. However, merger is the combination

of two similar parties (in scales, prestige, or financial capacity) with a view to create friendly

cooperations and mutual interests for both. And, acquisition is normally related to the “big

fish eat small one” action of one powerful party against the weaker one for its possession.

However, in fact, there are not many mergers of equals, or consolidation cases but most of

them are acquisitions. Normally, one firm can purchases another one with the condition that

the purchased firm can state about the merger of equals, instead of an acquisition on a

technical level. Most of trade affairs do not even have the agreement from both sides, and the

execution party will apply as many approaches as possible to make an acquisition and the

story is not as pleasant as it seems. Because mergers and consolidations would require closer

cooperations between two parties in which the potentialities of this trade affair must be seen,

an agreement in working practice must be made, and later management would need the

reasonable shareness between two parties. In some cases, an acquisition could also be

considered as a merger if the managers of both parties agree to sit together and discuss about

the general development plan to bring the best interests for two sides. That a trade affair

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could be considered as an acquisition or a merger depends on how it would be tanked place:

Is it friendly or complusory to acquire?

In general, M&A is like a method of capital mobilization. According to the enterprise

laws, investors could have the rights to join the capital in a business, purchase the enterprises’

stocks and M&A is also a right of investors. However, M&A is different from raising capital

in stock market because it’s not only the matter of raising capital but also the establishment

of the strategic partnership relationship in which buyers – strategic partners - not only join the

capital but also improve the value for acquired firms with management capacity,

technological skills, and the available distribution systems. Therefore, the goal of M&A is to

take the control right at a certain level, not just purely the matter of financial investment,

capital or stocks possession like other small investors.

2.1.2 Effects of M&A

Positive effects – M&A’s benefits

Emterprises decide to do M&A transactions with a view to get benefits from these

activities. Their expectations are to enhance competing potentialities, and to increase higher

value of shareholders after M&A compared with total current value of both parties under

separate operations…Also, M&A activities help save much cost and time compared to the

establishment of a new firm. “One plus one equals to three” – this formula states that the

special “transformation capacity” can be achieved after each M&A transaction. It is the

resonance – the most important and magical motive of M&A, which helps business

operations become more effective and raises the value of the new firm if the M&A

transaction is successful. Specifically, those resonance values (benefits) are as follows:

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1. Improving the financial situation: After M&A, the firm can achieve more

capital to use, improve capital access possibilities, share business risks, and

increase the transparency of finance system.

2. Decreasing employees, lean machine: Normally, the mergers between two

or more parties can lead to the decrease of indirect jobs related to

marketing, administration, accounting finance… Also, through M&A,

buyer can have a chance to meet highly skilled and experienced human

resources and discard those unnecessary and ineffective positions.

3. Achieving effectiveness based on the economies of scale after M&A or the

brand of the partner: A lager firm can always gain more advantages in

doing transactions with partners and negotiating with customers. Moreover,

large economies of scale also helps decrease costs and expenses:

decreasing the identities in distributing network, saving operation,

administration, and management costs… or doing an M&A with a famous

and well-known partner can help the firm get such benefits as strong brand

name or prestige.

4. Absorbing new technology: Through Merger and Acquisition, a new firm

can make use of technology or techniques of each other in order to create

competitive advantages. Besides, abundant capital has become one

favourable condition for the firm to be equipped with modern technology

for better business operations.

5. Increasing competing abilities, consolidating market positioning: After

realizing M&A, both sides can exploit mutual advantages, increase market

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share, make use of customer relationship, cross-sale products and services,

enhance competitive capacity and create new business opportunities.

However, the resonance cannot be easily achieved under the expectations of both parties,

and it does not come as a matter of fact when both sides are doing an M&A. This activity is

like the marriage: firstly, two sides wish for a happy life in the future; however marriage

may fail if there is no well-prepared knowledge, living skill as well as family happiness

protections. So is M&A, when two sides do a merger, the abilities to gain profits can easily

be seen but sometimes it can be counter-productive. As a consequence, in some cases, one

plus one equals less than two.

Apart from the benefits that M&A can bring to two sides, the economics is also benificial as

the following details:

1. M&A will make a contribution to the diversification process of investment

partners and investment methods.

2. M&A activities will make contributions to change the structure of economy

according to the general development requirements of the whole country.

These also create job opportunities for the labourers working for the target

firm which is on the edge of bankruptcy and try to sustain national financial

market system.

3. The state and the government will feel more assured and avoid the waste of

resources in order to overcome the consequences of firm bankruptcy,

especially those operating in finance and banking.

Negative effects

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As mentioned above, the value of resonance from such unsuccessful M&A trade

affairs can be minus (one plus one equals less than two). It can be due to cursory

negotiations in the process of M&A, leading to later disagreements in such aspects as:

business strategy, finance, management, human resources…The differences and un-

similarities in cultures of both parties, especially for international M&A transactions, or the

difficulties and overlapping of organization and management could result in such an

uncontrollable condition.

Besides, firms can lose their brand name after doing an M&A transaction. Brand is a very

precious asset, generating huge values of total values. However, due to domestic firms’ lack

of experience and perception about the importance of brand and M&A activities, they do not

highly appreciate the brand assessment or easily accept the loss of their brand name for other

un-proportional benefits. Therefore, it could steadily create a chance for the partners to do

an acquisition.

These are M&A’s consequences to firms, and for the economy, M&A can also cause

negative results as follows:

1. If there is no tight control of market management authorities, monopoly

will become one unavoidable issue. In theory, one firm or a group of firms

holding 25 % or over of market shares could have monopolistic activities

over the whole market such as: increasing interest rate, or applying high-

price services…

2. In some cases, firms can take advantage of Mergers and Acquisition

transaction to avoid tax, and after tax-free period, they declare to be

wound up and merge with other firms.

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3. After being mergered, new firm may reorganize their human resources and

narrow personal system, and the increase of job losses will cause negative

influences on workers’ lives as well as the difficulties to the whole

economy.

2.2 M&A practices

2.2.1 In the world

M&A has appeared and developed through many ups and downs in the world market,

especially in America. Beginning from 1890 to 2000, M&A in this state has gone through 5

difficult periods. After the U.S, M&A has appeared in England since the 60s of 20th

century.

This transaction also appeared in the market of the rest of many European countries in the

1980s. Since the transaction appeared in all markets, it seemed that the M&A wave taken

place in the U.S would lead to strong waves in the markets of England and Europe; the

reason is due to economic globalization of these giant economies all over the world with

mutual close relationship in the development process.

After Asian financial crisis, M&A activities were taking place even stronger, declined

during period from year 2000 to 2003, and got back on track since 2004. According to the

reports of Thomson Financial agent, in 2006 and 2007, there have been many new records of

transaction value in the global market of M&A. 2006 is the remarkable year with many

records on the speed of transaction value increase and total transaction value saw an increase

to 34% compared to 2005. In 2007, it increased by more than 21% compared to 2006.

Economists assess that 2007 is the year of M&A market explosion due to financial crisis

mainly operating in developed countries led by Europe and the U.S. In this year, mergers and

acquisitions mostly focus on banking, finance, gas oil industry, information technology, and

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auto industry. In finance, the most typical transaction is the acquisition of the Netherland’s

ABN Amro bank by three Scottish banks.

In the early 2008, global M&A market has shown the signs of negative growth with

the decrease of transaction value to 25% compared to the previous period. However, in the

context of the economy with lots of obvious changes and implicated influences on business

operations, normally the next period will be fast growth and continuous development of

M&A market. Therefore, M&A market all over the world is estimated to keep the speed of

record growth.

2.2.2 M&A practices in Asia

The M&A markets in Asia have become increasingly important as its share in the number

of international transactions gained about 10 percent in 15 year-period since 1995. The total

value of the M&A transactions also increased from 13.3% to 20.0% during the period

(Kummer, 2009). M&A activities are useful for restructuring business firms, at least in the

era of fast-changing economic conditions and post-crisis consolidations. The roles of cross

border M&Es in Asian economic restructuring, presented by Mody and Gegishi (2000), are

relevant to the understanding. In East Asia, there have been a large volume of M&As

attracted since 1998, which can be divided on the basic of two distinctive motivations: to

resolve past issues and to grasp prospective opportunity. In terms of transitional economies,

one of the largest targeted regions in cross border M&As is Lation America, in which, most

of these activities focused in privatization program. Although M&A has been done largely

through sales of private enterprises, East Asia has considered as the fastest growing targeted

region.

With regard to Malaysian M&A activities, the painful lesson of the recent Asian financial

crisis where the viability of the economic sectors of the South East Asia countries were

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threatened, the Malaysian regulatory authorities have responded proactively (amongst other

measures) by embarking on a program of strengthening the financial sectors. Fauzias (1995)

showed that the acquisition of public listed companies did not result in improvement in the

earnings performance after the take-over. Contrary to the actual performance of the

companies, the investors’ perception on the value of the target increased. Shamsudin and

Fauziah (2000) concluded that the relevant authorities have overlooked the dire consequences

of such mergers on the above-mentioned variables. The effect of merger on financial

institutions in Malaysia is also mixed. Mergers between small firms appear to increase

lending to small business, but mergers between larger firms generally decrease this type of

lending or leave it unaffected. More recent, Ramlee and Said (2009) on trends and practices

in Malaysian financial industries provides for some useful insight, particularly, might

possibly compare to the recent M&A trends in Vietnam, included major cross-border

transactions like HSBC-Techcombank. Vuong et al. (2010) explains that globalizations,

financial deregulation, advance in technologies, cost saving, and desires for acquiring larger

share in markets, are main drives to prompt commercial consolidation that takes in M&A

form. Similar to other ASEAN countries, M&As in Malaysia are non-market driven. Recent

crises expose fragility of its economy. Thus, there is a need of being pushed to strengthen

weakness in financial system and Malaysian government saw that speeding up consolidation

is significant to facilitate the recoveries.

In a research of the Philippines’ market for large-scaled M&A, Castillo (2009) claims that

the M&A activities are subject to substantial regulation, regardless deregulations in financial

service industries since 1980s. It provides context and history of Philippine since 1950s, and

discusses regulation that is introduced in facilitating or prompting M&As. The current trend

in M&As is postulated to have emerged from the mid-1990 consolidations in the financial

sector, resulting a wave, and then followed by post-1997 monetary crisis consolidations. It

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concludes that M&As are considered by enterprises as methods in improving the financial

position and taking competitive advantages, although not much evidence empirically applied

in achieving that. Firms also employ M&As as ways of fending off competitions through

remaining powerful financial service player in metropolitan hub.

Mergers and acquisitions (M&A) between Japanese corporations began to increase rapidly

during the late 1990s. The pace of merger activity in Japan, which had been hovering at

around 500 transactions a year in the 1990s, began to pick up from around the end of that

decade to reach an annual volume of 3,725 transactions in 2011 (Arikawa and Miyajima,

2011). This represented a five-fold increase in M&A transactions over a 10-year period. For

most of the postwar era, Japanese firms rarely resorted to mergers and acquisitions as a

growth strategy or as a means of corporate restructuring. In contrast, M&A activity in the

form of deals between domestic corporations and foreign takeovers of Japanese firms surged

since the late 1990s. More recent, Yasumaru (2009) discusses the rationale for the Japanese

SMEs to adopt M&A in recent period of its economic evolution. The study indicated that

merger and acquisition is one of the four major options to further develop or maintain

existing businesses of SMEs. Moreover, the society considers this a better option because by

undertaking merger, small enterprise possibly gain better accesses to not only credits but also

equity financed, while they still remain their ability in securing jobs for their labour.

2.2.3 M&A practices in Vietnam

The recent wave of M&A in Vietnam was expected to bring in more diversity in financial

products and institution that is true (Nguyen and Chen, 2010). Competitions are expected to

serve as a driving force for the financial system to be growing up sound and viable. The

social expectation towards result of the economic reform path has also been part of a

continuous surge of M&A activities. According to Vuong et al. (2010), the surge of M&A

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activities has been shown quite volatile, and dependent on various externalities to the

Vietnamese economy itself.

Firm law which came into force in 1999 had mentioned “merger and acquisition” as a

form of reorganizing firms, leading to the foundation of M&A in Vietnam. The activity

started in Vietnam in 2000 and has expanded since 2005 till now. According to the reports of

auditing company PricewaterhouseCoopers (PwC):

Table: Quantity and transaction value of M&A activity in Vietnam from 2005 to July 2009

Year Total trade

affairs Increase/Decrease

Total value

(millionUSD)

Increase/Decrease

2005 18 61

2006 38 111% 299 390%

2007 113 197% 1.753 486%

2008 146 29% 1.000 -58%

First 6months of 2009:112trade affairs –232millionUSD

Source: Vuong et al. (2010)

It can be seen from the statistics that M&A in later years has increased many times

higher in both quantity and value than the previous year. However, there was a decrease in

value in 2008 and in the first six months of 2009 due to global financial crisis. The most

special thing in the period is that 2007 is considered as the year of remarkable development of

M&A in Vietnamese market and it is evaluated to have the fastest growth in the Asia Pacific

region, in which 76 % of M&A trade affairs are related to banking and finance. Thus, finance

can be regarded as the most dynamic in recent years, followed by industry branch. However,

M&A activities in Vietnam are still limited in comparison with those in the region and all

over the world. PwC also published a table of data about the overview of M&A activities in

the Asia Pacific in 2006, in which lots of information related to the price, the quantity, M&A

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trade affairs in 14 countries in the region has been mentioned and given. When talking about

M&A activity, people usually think about selling the whole business or those popular

mergers of top companies. However, in Vietnam most of M&A transactions are quietly taken

place in the form of buying one part of the business and the mergers of medium scales (from

5 USD to 250 million USD).

To sum up, it is mentioned during the literature review, there is a virtual existence of no

substantial works provided direct studies on Vietnamese M&As. Thus, this dissertation uses a

date set organized and compiled to extend the efforts to academic investigation on recent

trend of M&A activities in Vietnam.

3 Research Methodology

3.1 Research Approach

Market research on mergers and acquisitions is readily available over the Internet from

a variety of sources. Traditionally, the advanced research and analysis surrounding mergers

and acquisitions in global markets was the exclusive purview of strategic research companies.

Information was hard to access, and these specialized companies with expertise in gathering

information were the gatekeepers. The Internet has significantly changed access to market

research on mergers and acquisitions. Particularly, government use of the Internet to make

regulatory filings and statistical information easily accessible to the public has ushered in a

new information age. In this dissertation, data is collected through accesses relevant, detailed

information on industries, markets and corporations

3.2 Empirical Data

In this dissertation, the data set is constructed through many information sources

including: (1) information collected from firms; (2) analyses observed from public news and

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data released in regards of M&A transactions; and (3) financial reports of firms and

government. The collected data is categorized into: (1) M&A activities before 2005; (2)

M&A activities between foreign and local firms since 2005; and (3) M&A activities among

local firms since 2005. Each selected transaction is constrained following useful information:

dates; types; target and acquiring companies; transaction status; values in USD; and equity

stakes of the transaction.

During the period 1999 -2004, there were 46 banks in total, 10 of which must be

acquired. These were weak banks which are impossible to make payment and higher operations

only lead to higher losses. Specifically, the charter capital is relatively low, around 5 – 20

billion VND and bad debts are also big, probably accounting for 40-50% of gross debt.

Table: Some of M&A trade affairs between rural banks and urban major ones, 1999 – 2004:

Year Agricultural bank Urban major bank

1999 Dai Nam Bank Phuong Nam Bank

2001 An Giang Bank Dong A Bank

2001 Chau Phu Bank Phuong Nam Bank

2002 Dinh Cong Credit Institution Phuong Nam Bank

2002 Thach Thang Bank Sacombank

2003 Cai San Bank Phuong Nam Bank

2003 Tay Do Bank Phuong Dong Bank

2003 Nam Do Bank Bank for Development and Investment

2003 Que Do Bank International Bank

2004 Tan Hiep Bank Dong A Bank

(Source: Summary of different websites).

Since 2005 the merger of domestic banks has become less popular, capital investments

and stock purchasing of domestic and international investors on domestic commercial banks in

order to become their strategic partners become more widespread instead.

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Table: M&A trade affairs between domestic banks and international investors.

Acquirer Targeted Bank Percentage

HSBC AB Bank

15

Berhard 15

Societe Generale Sea Bank 15

OCBC Singapore VP Bank 15

Sumitomo Mitsui Bank Eximbank

15

Vina Capital and Mira Asset 10

BNP Paribas OCB 10

UOB PNB 10

ANZ

Sacombank

9.83

Dragon Financial Holdings 8.73

IFC 7.63

Standard Chater Bank

ACB

15

IFC 7.3

Connaught Investors Ltd 7.3

Dragon Financial Holdings 6.8

(Source: summary of different websites)

Apart from domestic banks’ stock purchases of foreign financial corporations and

banks, they also wish to strengthen their finance capacity by selling shares to major banks

and financial corporations with huge prestige and famous brand name.

Table: Some trade affairs among domestic banks, 2005 to 2008

Buying Bank Target bank

Bank for Foreign Trade of Vietnam

Gia Dinh Bank Vietcombank Fund Management

Saigon commercial bank (Sacombank)

Asian commercial bank (ACB)

Bank for Development and Investment Ho Chi Minh City Development Bank

Sacombank

Bank for Foreign Trade of Vietnam Phuong Dong Bank

Sacombank

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Bank for Foreign Trade of Vietnam

International Bank Bank for Agriculture and Rural

Development

Sacombank Military Bank

Hanoi Buildin Bank

ACB

Thuong Tin Bank

Dai A Bank

Kien Long Bank

ACB

Vietnam Export Import Bank

Bao Viet Securities JSC

Petrolimex Finance Company

Vietnam Capital Fund

Saigon Asia-Europe Financial JSC

Vietcombank

Ocean Bank Global Petro Commercial Bank

Petrolimex Finance Company

(Source: summary of different websites)

3.3 Data Analysis

The main approach of this dissertation is quantitative analysis focusing to assign data

entry into selected relevant classification aiming to try in capturing meanings observed from

data collected. Statistic discrepancy and contradictory result, speculation possibly appeared

during the analysis are presented to gain knowledge and judgments of the practical situations.

The main methods used to evaluate M&A activities are discount cash flow and adjusted

present value.

Discount cash flow (DCF) method

Discounted cash flow is the method to define the value of the company based on the

ability of revenue generation in the future, instead of the property value of the company.

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Time to define the company’s value is the ending time of the previous financial year. In other

words, this method allows the analysts to calculate the predicted revenues and future cash

flows through the calculation of incomes and tangible assets at an assumed capital expense.

However, the accuracy of this method depends much on the precise prediction of future cash

flows and discount rate. According to this method, some steps need to be carried out in order

to evaluate firm value as follows:

Estimate future free cash flows

Free cash flows can be cash inflows or cash outflows within a certain cycle, calculated by this

formula:

Free cash flow = net income + amortization + after-tax interests - change in net working

capital + increase in short-term debts – investment expenditure

Identify WACC - Weighted Average Cost of Capital

Discount rate could reflect opportunity cost of all capital suppliers to the firm (the

creditors of the firm or the shareholders) and this rate is calculated by the ratio of the

equivalent contributions to firm’s total capital. This investment is expected to be at least

equal to capital cost or average cost that the firm has to pay in order to get current business

capital. Therefore, capital expense of the firm is the average cost which needs to be paid to

achieve business capital within that firm. Therefore, discount rate can be calculated according

to WACC – weighted average cost of capital in the following formula:

WACC = (WD*rD) + (Wp*rp) + (We*re or ren)

Where: WD = debt portion of value of corporation

Estimate the growth rate of firms in the future

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Growth rate in the future (g) = ROE * (% detained income)

Where: ROE = Return on Equity

Only a small mistake in the estimation of g - future growth rate of the firm could lead

to the change of that firm’s value.

Define the forecasted terminal value (Firm value).

Firm value = (Cash flow at terminal period n +1)/[(WACC–g)(1+ WACC)n]

Adjusted present value (APV) method

Apart from the similarities with DCF analysis, APV analysis does not attempt in

capturing tax as well as other financial influences in WACC or adjusted discount rates.

Rather, APV analysis seeks in valuing these influences separately through following

equation:

In general, APV analysis is considered as more academic method since it is more accurate in

valuation comparing to DCF analysis.

4 Research Structure

In order to achieve the study purposes, the dissertation is structured as following:

Chapter Title Contents

Chapter 1 Introduction to describe overview and objectives of this study

Chapter 2 Literature review

to introduce and review recent study in the line of merger and

acquisition

1. Basic theory of merger and acquisition

2. International practices of merger and acquisition

APV = base-case NPV + sum of PVs of financing side effects

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3. Recent trend of merger and acquisition in Vietnam

Chapter 3 Research

Methodology

to explore the methodology

to address sampling and data processing issues

Chapter 4 Findings and

Discussion

to present the empirical and numerical results

to discuss about meanings of these results

Chapter 5 Conclusion and

Recommendation

to express the research findings

to recommend solutions to achieve efficiency in merger and

acquisition in Vietnam

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References

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Acquisitions: Issues and Perspectives from the Asia-Pacific Region, pp. 97-109

Fauzias, M.N. (1995). Post Performance of Malaysian Acquired Firms. Jurnal Pengurusan

(Universiti Kebangsaan Malaysian), 14(1), pp. 3-10.

Kummer, C. (2009). Overcoming the Challenges and Issues of Post-Merger Integration: Putting

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Issues and Perspectives from the Asia-Pacific Region, pp. 133-147

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integration project in the private banking sector. International Journal of Project

Management. 29, pp. 279 -294

Marks, M.L. and Mirvis, P.H. (2013). 3 A research agenda to increase merger and acquisition

success. Handbook of Research on Mergers and Acquisitions, 61.

Mody, A. and Negishi, S. (2000). The Role of Cross-border Mergers and Acquisitions in Asian

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