In the past few years, the healthcare sector is witnessing a strong wave of mergers and acquisitions (M&A). Not only private hospitals but also clinic chains, testing centers, and medical technology companies have also become attractive investment targets. But for a deal to be successful, especially in a specific field like healthcare, the key factor lies in careful legal preparation. This article will give you a comprehensive overviewLegal procedures in M&A transactions in the medical field, as well as important notes to ensure the transaction goes smoothly and legally.
Before diving into the procedure, let's look at the big picture. With the increasing demand for health care, along with the wave of medical socialization and foreign investment pouring into Vietnam, businesses operating in the medical field have great profit potential.
However, this is also an area that is strictly regulated by relevant lawslicense, ownership conditions, specialized personnel and many other specialized regulations. Therefore, M&A in the medical field is not simply a transfer of shares or assets - but a processComplex legalNeed in-depth advice and industry understanding.
For an M&A deal in the medical and hospital fields to be successful, it is necessary to go through the following basic legal steps:
Each M&A deal needs to clearly define the form: purchase and sale of shares/capital contribution, acquisition of assets, or full merger. In the healthcare industry, the choice of transaction structure must be based on factors such as: type of business, ownership of foreign individuals, medical licensing conditions, and maintenance of hospital/clinic operations after transfer.
Some fields such as hospitals and polyclinics require a medical operating license issued by the Department of Health, and the professional head must have an appropriate practice certificate. If the buyer does not meet this condition, it will not be possible to maintain operations after M&A without thorough restructuring.
This is an indispensable step to evaluate the overall target business. In the health sector, the review should pay special attention to:
Legal status of medical operating license
Practicing certificate of medical team
Ownership status of land, machinery, and medical equipment
Professional liability insurance contract (if any)
Tax records, labor and potential disputes
Legal Due Diligence not only helps investors understand risks, but also serves as a basis for negotiating the price and terms of transfer contracts.
After agreeing on the negotiation contents, the parties will sign a number of legal documents such as:
Contract for buying and selling shares/capital contributions
Memorandum of Understanding (MOU)
Loan contract, deposit contract (if necessary)
Confidentiality contracts, non-competition contracts...
Especially in the medical field, it is necessary to add additional provisions on commitment to maintain service quality, conditions for continued operation, and legal responsibilities related to medical records and specialized assets...
Immediately after signing the contract, the next step is implementationrequired legal procedures, include:
Change business registration at the Department of Planning and Investment
Adjusting the investment registration certificate (if there is a foreign element)
Notify the Department of Health and adjust the medical examination and treatment license (in case of changing the professional representative)
Update legal representative on child license, practice license...
Each type of medical business will have its own procedures, for example, a specialized clinic is different from a general hospital. If you miss this step, you will easily be subject to administrative sanctions or even suspension of operations.
To avoid "stumbling" on the M&A path, below are the notes that businesses need to pay special attention to:
In a medical M&A deal, value lies not only in the brand or revenue but also inoperating license. Some investors mistakenly believe that simply holding executive power is enough, but without a license, the business cannot operate legally.
Machinery, medical equipment, medicine... can be large assets, but if there is no valid invoice or proof of origin, it is easy to be excluded from the transaction or have tax arrears collected.
Mergers are not simply "buy and you're done". For medical businesses, the transition process needs a clear operating plan, especially in terms of medical personnel, medical record management system, health insurance connection, cooperation with third parties (insurance, equipment suppliers...).
DEDICA – Trusted legal partner
At DEDICA, we have a team of lawyers and legal experts with extensive experience in M&A transactions in the field of healthcare, hospitals, and clinics. We not only understand the law, but also understand the industry, from medical practice licenses, professional conditions to operating a medical business after a merger.
DEDICA has successfully advised many large M&A deals in the fields of health, education and technology. We are committed to accompanying customers in every step, from consulting on transaction structure, legal review, contract negotiation to completing registration procedures and adjusting medical licenses.
Although M&A transactions in the medical field have great potential, they also contain many legal risks if not properly advised. Understanding legal procedures and careful preparation not only helps businesses save time and costs but also creates a solid foundation for sustainable development after the deal.
Are you planning to invest in the medical field through M&A?
Let DEDICA Law Firm accompany and provide you with comprehensive legal solutions - ensuring effective transactions, complying with the law and consistent with your business strategy.
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