Hanoi (VNS/VNA) - Mergers and acquisitions (M&A) in thetechnology sector have been witnessing a rebound in recent years as tech giantshave employed M&A to expand their ecosystems.

Data from VnEconomy showed that M&A in the technology sector tripled invalue and nearly doubled in activities in the past few years, from 22 deals in2020 to 42 deals in 2021, reaching roughly 1 billion USD.

Tran Vinh Du, Strategy and Transactions Leader of Ernst & Young Indochina,remarked that private equity and venture capital investments in the sectorcontinued to sustain strong growth in the first half of 2022 despite someturbulence in equity and debt markets.

A sizeable deal during the period was the deal of the Vietnam-based e-commercesolution provider OnPoint, which successfully raised 50 million USD from anindirect wholly-owned subsidy of Temasek.

The deal targeted Vietnam's fast-growing e-commerce industry and became thelargest private fundraising round in Southeast Asia's e-commerce-enablerindustry in the last five years.

"According to our research, the total value of deals transacted in thefirst half of 2022 in the country was almost the same as the figure of thewhole of 2021 (4.97 billion USD)," Du said.

Ernst & Young also said global M&A activities would remain resilient in2022, but further shocks could derail the outlook. In Vietnam, the maintechnology fields that have attracted a large number of investments includeFintech, Edtech, Logistics and business automation.

Le Han Tue Lam, director of the investment fund Nextrans Vietnam, asserted thatfew tech giants in Vietnam can afford to own start-ups of multiple tens ofmillions of dollars outright.

"The demand is tight on Vietnam's startup M&A market," Lam said.

Hoang Thi Kim Dung, head of Genesia Ventures Representative Office in Vietnam,shared this view, saying that most start-up M&A deals in the country areworth less than 10 million USD each.

"M&A in the technology sector has been of limited success mostly becauseof the expectation mismatch between acquirers and acquirees," Dung said.

Some start-ups that are expected to reach near-unicorn status in the short termhave been valued at between 100 million USD to over 3 billion USD.

Dung believed such valuations are so high that not many buyers are financiallyadequate to make acquisitions. She revealed that Genesia Ventures Vietnam isassisting a tech start-up in its M&A negotiation but reaching an agreementon price is not an easy task.

Lam, in contrast, believed tech firms are normally under-valued in theirinitial public offerings (IPO). She said it is hard to tell how the marketwould move in the short term as many firms have begun to make IPOs abroad.

Kieu Ngoan, deputy general director of Fibo Capital Vietnam, highlightedseveral criteria to choose M&A partners, including healthy cash flows, anexpanding customer base, and a popular brand name.

"Choosing M&A partners is a four-tier process involving ten steps,focusing on their business system, financial, legal, human and riskfactors," she said./.