Real estate acquisition and contract implementation in Vietnam


Background: Tractus was retained by a multinational apparel company to support them in a real estate acquisition in Northern Vietnam. Tractus’ client, with a long time operating company in Vietnam, decided to expand their operation in the country by acquiring an existing garment plant, owned by a Korean investor in financial distress.

Project: Tractus was initially tasked with performing legal and commercial due diligence of the acquired target. The land documentation was studied to ensure that the acquired target was legally zoned and titled. We also conducted due diligence on the seller to verify their ownership title and all potential financial liabilities related to the land and assets attached to it, which might have impacted the acquisition timeline and administrative approval. Tractus led a four party negotiation involving the buyer, the seller, the creditors and the local government. We negotiated with the owner to get a lower purchase price for our client and then worked with the client’s legal team to draft contractual terms of the acquisition in order to minimize the risk for all parties.
Once the acquisition agreement was signed, Tractus managed the implementation process and worked with our client’s designated project team, their internal and external counsels, the seller and various government agencies to expedite the necessary approvals and implementation process. Since the target was not located inside an industrial zone, there were 8 different government agencies involved in the process including the Provincial People Committee, Department of Investment and Planning, Department of Construction, Department of Natural Resources and Environment, Department of Finance, Provincial Tax office, People Committee at commune level and Department of Natural Resource and Environment at district level.

Solution: The final purchase prices were successfully brought down by 23.3% from the initial asking price, saving US$ 1,400,000 for our client. All the legal documents including business licenses, construction permits and the ‘land use rights’ certificate were obtained in the planned timeframe and the client is currently running a successful operation.

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