Steps For Manufacturing Plant Acquisition - Apolat Legal

Steps For Manufacturing Plant Acquisition

The industrial real estate market in Vietnam has become increasingly dynamic due to the growing trend of relocating manufacturing plants from China to neighboring countries. To expedite their production and business operations, many investors opt to acquire an existing operational manufacturing plant instead of embarking on the construction of a new one. For such acquisitions, investors can choose between two main options: acquiring the entire manufacturing company (Stock M&A) or acquiring specific assets, including land use rights and land-attached assets (factories), machinery and equipment, product brands, and other tangible and intangible assets (Asset M&A). 

Steps For Manufacturing Plant Acquisition
Steps For Manufacturing Plant Acquisition

In Asset M&A transaction, to carry out the acquisition of a Manufacturing Plant in an industrial park (“Manufacturing Plant“), the typical steps below should be taken: 

Step 1. Identify the assets to be transferred 

To prepare an appropriate acquisition plan, the involved parties must accurately identify the types of assets to be transferred. This includes distinguishing between registered and non-registered, as well as tangible and intangible assets. Assets of a Manufacturing Plant may encompass land use rights and land-attached assets (factories), machinery and equipment, production formulas, trade names, product brands, and more. In many cases, the Acquirer may only acquire land use rights and assets attached to the land (factories) for the purpose of producing a product different from that of the Seller. 

Step 2. Sign preliminary agreements 

In order to express their intent to engage in the transaction, the parties can execute several preliminary agreements, including Confidentiality Commitments, Letters of Intent (LOI), Memoranda of Understanding (MOU), and Deposit Agreement (DA). If the Seller requires an upfront deposit to secure the transaction, the parties will enter into a Deposit Agreement explicitly specifying the deposit amount, the date of Acquisition Agreement execution, and outlining the consequences including the forfeiture of the entire deposit in case of the Acquirer’s refusal to continue the acquisition or a penalty equal to the deposit and the return of the entire deposit to the Acquirer in the event of the Seller’s refusal to continue the sale. 

Step 3. Conduct due diligences on the Manufacturing Plant  

Depending on the Acquirer’s specific requirements and the type of assets to be transferred, the Acquirer can conduct legal, financial, technical due diligences, and evaluate the current quality and quantity of each asset, etc. Due diligence on the Manufacturing Plant may occur either before or after Step 2 (signing of preliminary agreements), contingent on the Parties’ agreement. 

On the legal front, the Acquirer must meticulously scrutinize the legal documentation pertaining to the Manufacturing Plant, thereby determining the Seller’s legal ownership of the assets to be transferred, the Seller’s authority to asset sale, and the procedures required for the acquisition of registered and non-registered assets, as well as the necessary invoices and supporting documents for the acquisition. 

Step 4. Seek approvals 

Approval from the Infrastructure Development Company: In order to transfer a Manufacturing Plant, including its land use rights and land-attached assets, in the Industrial Park, the Seller must seek an approval of the Infrastructure Development Company. To ensure compliance therewith, the Parties must review the acquisition provisions in the Land Lease Agreement between the Seller and the Infrastructure Development Company to determine whether the Seller needs to notify or seek approval from the Infrastructure Development Company, the Seller’s manufacturing operations are in line with the Industrial Park’s development plan, or there is any fee/charge payable to the Infrastructure Development Company or not (if so, such fee/charge as well as other associated taxes, fees and charges incurred in the transaction can be negotiated between the parties). 

Internal approvals: both the Seller and Acquirer should obtain its own internal approvals for the sale and acquisition of the Manufacturing Plant. Adhering to their respective company charters, internal regulations, and the value of the Manufacturing Plant, the decision-making competence may belong to the General Meeting of Shareholders, the Board of Directors, and the General Manager (of a Joint Stock Company), or the Board of Members, Company President, and General Manger (of a Limited Liability Company). 

Step 5. Sign the Acquisition Agreement 

The Parties will execute an Acquisition Agreement that comprehensively outlines the acquisition of all assets and the method for transfer of each asset type (registered or non-registered, tangible or intangible assets); the timeline for acquisition; payment methods and conditions; other agreements to be executed for asset registration; and penalties for violations and damages, etc. 

If the assets to be transferred include only land use rights and land-attached assets, the Parties may consider bypassing Step 5 and instead signing an agreement at a notary office in Step 6 below. 

Step 6. Notarize the agreement on transfer of land use rights and land-attached assets 

Under law regulations, the agreement on transfer of land use rights and land-attached assets must be notarized at a notary office or competent authority (“Notary Office”). Accordingly, the Parties shall sign an additional agreement, which is then notarized and authenticated by the Notary Office for registering changes in land use and land-attached assets. The agreement usually follows the format made by the Notary Office located in the province or municipality where the Manufacturing Plant is located. 

Step 7. Register ownership of assets 

Assets that require ownership registration, such as land use rights, land-attached assets, vehicles, product brands, and more, must be registered for ownership transfer in accordance with law regulations.  

Among the assets to be transferred, land use rights and land-attached assets often have substantial value and represent a significant portion of the overall acquisition price. The Acquirer should diligently complete the registration process at the Land Registration Office to obtain a Certificate of land use rights and ownership of house and land-attached assets (“Red Book“). Delays in registration and failure to obtain the Red Book can pose risks to the Parties’ successful completion of the transaction. 

Step 8. Renegotiate agreements with the Infrastructure Development Company 

Typically, the Seller must liquidate the Land Lease Agreement and utility use agreements with the Infrastructure Development Company, whereby settling outstanding debts and fulfilling its obligations. Simultaneously, the Acquirer will negotiate new land lease and utility use agreements with the Infrastructure Development Company, with the agreement terms being mutually agreed upon. 

Step 9. Apply for licenses and certificates 

Before commencing operations of the Manufacturing Plant, the Acquirer must apply for licenses and certificates as per the requirements of the law. The specific types of licenses and certificates to be obtained will vary depending on the Acquirer’s production activities. These may include the investment registration certificate, environmental license/registration, and written approval of fire safety design, among others. 

The above-mentioned steps represent the typical process for acquiring a Manufacturing Plant in an industrial park. Depending on the nature of the assets to be transferred, transaction structure, and the Parties’ agreements, the sequence of these steps may be adjusted, as necessary. 



This article is for general information purposes only and is not intended to provide any legal advice for any particular case. The legal provisions referenced in the content are in effect at the time of publication but may have expired at the time you read the content. We therefore advise that you always consult a professional consultant before applying any content.

For issues related to the content or intellectual property rights of the article, please email

Apolat Legal is a law firm in Vietnam with experience and capacity to provide consulting services related to  M&A Consulting  and contact our team of lawyers in Vietnam via email

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