In any M&A or capital transfer transaction, due diligence is not just a procedural step — it is the foundation for every investment decision. Before signing any agreement, investors must understand the true condition of the target company. Depending on the transaction’s purpose, the due diligence process may focus on legal, financial, tax, labor, or intellectual property matters. The ultimate goal is to identify hidden risks and determine the company’s actual value.

Essentially, a due diligence report answers two critical questions: does the target enterprise meet the requirements of the transaction, and where do potential legal or financial risks exist? To perform this review, the company being evaluated usually provides a comprehensive set of documents — from business registration certificates, charters, and licenses, to ownership records, capital contributions, land and asset titles, intellectual property registrations, contracts, and tax reports. Each document offers insight into the company’s structure, obligations, and compliance status.

The legal due diligence process usually includes three main parts: confirming the company’s legal status and legitimacy, reviewing ownership and contractual obligations, and assessing risks that may affect the deal. Common issues include disputes over assets, unpaid taxes, unclear ownership of shares or intellectual property, and contracts that may contain unfavorable terms for investors.

In practice, many Vietnamese enterprises face challenges during due diligence. Records are often inconsistent or outdated, data sharing may be slow or incomplete, and some companies treat the process as a “check” rather than a professional evaluation. This mindset can delay negotiations or reduce transaction value.

From a strategic perspective, a well-prepared due diligence report brings significant benefits to both parties. For investors, it reveals legal and financial risks early, allowing more accurate valuation and stronger negotiation positions. For sellers, providing transparent, well-organized records demonstrates professionalism and credibility — increasing trust and the likelihood of a successful closing.

Ultimately, due diligence is not merely an administrative requirement. It is a legal safeguard that protects the interests of both buyers and sellers, helping every M&A transaction proceed with clarity, confidence, and compliance — and that is exactly why professional legal due diligence should always be viewed as an investment, not an expense.