Exclusivity is the price a seller pays for a buyer’s commitment. Granting it takes the business off the market while diligence and documentation are done, which is reasonable where the buyer is genuinely progressing and expensive where it is not.
The drafting problem is that most clauses are written as a single prohibition with a fixed end date.
A better clause is conditional: it defines precisely what the seller may not do, preserves the strategic alternatives the seller genuinely needs, and falls away automatically if the buyer stops meeting agreed milestones.
Handled that way, exclusive arrangement protects the process without handing one party a free option over the other’s business.
Exclusivity can give a buyer the confidence to invest in diligence and documentation, but an overbroad clause can leave it trapped in a weak process.
Sellers also need certainty without surrendering all leverage for an open-ended period.
This guide explains how parties in Vietnam M&A can negotiate exclusive arrangement while preserving appropriate strategic alternatives and maintaining momentum toward signing.
What negotiating exclusivity is for
Exclusivity should create a defined window for serious negotiation. It is not a substitute for deal readiness, information access or an agreed timetable.
1. Define prohibited conduct
State whether the seller may solicit, encourage, discuss, negotiate, provide information or enter arrangements concerning competing transactions. Clarify whether minority investments, asset sales, joint ventures and financing proposals are covered.
Prohibited conduct should be listed, not described in general terms.
A workable clause prevents the seller and the target from soliciting or encouraging competing offers, entering into or continuing negotiations with another party, providing information to a competing bidder, or signing any agreement inconsistent with the proposed transaction.
Vague wording such as taking any step that might prejudice the transaction is unenforceable in practice and simply gives the buyer a grievance rather than a remedy.
2. Identify who is bound
Apply obligations to relevant shareholders, the target, directors, employees and advisers within the seller’s control. Avoid language that promises control over parties the seller cannot legally direct.
3. Set a proportionate duration
The period should reflect transaction complexity, diligence scope and approval timing. A short initial period with objective extensions often works better than a long unconditional lock-up.
Duration should be built from the workplan.
Four to eight weeks is normal for a straightforward Vietnamese target where diligence is scoped and the buyer’s approvals are in place; longer periods are justified only where merger control clearance or a sector licence is genuinely on the critical path.
Where a long period is unavoidable, break the arrangement into stages with an interim milestone, so that the seller recovers its freedom if the buyer is not progressing.
4. Link negotiating exclusivity to buyer performance
Require the buyer to meet milestones for information requests, management meetings, diligence completion, draft documents and internal approvals. Delay should shorten or terminate negotiating exclusivity.
5. Link negotiating exclusivity to seller access
The buyer’s commitment should depend on timely access to a complete data room, management, sites and advisers. Missing information should not consume the exclusive period.
6. Preserve defined strategic alternatives
Carve out ordinary financing, employee incentive issuances, required restructurings or other transactions that do not compete with the proposed acquisition. Draft exceptions narrowly.
Sellers should carve out the alternatives they actually need rather than seeking a general reservation.
Common carve-outs are continuing an existing fundraising already under way, responding to an approach from an existing shareholder exercising a pre-emption right under the charter, continuing group reorganisation steps agreed before the exclusive period, and complying with disclosure obligations owed to a lender or regulator.
Each should be described specifically, because a general right to consider alternatives defeats the clause entirely.
7. Address unsolicited approaches
Decide whether the seller must reject, disclose or merely refrain from engaging with unsolicited interest. Consider confidentiality duties and whether disclosure of another bidder’s identity is appropriate.
8. Use termination triggers
Permit termination if the buyer reduces price without a diligence basis, fails milestones, changes key terms or indicates it will not proceed. The buyer may seek termination if material information is withheld.
9. Consider extension mechanics
Extensions can be automatic when agreed milestones are met or require written confirmation. Regulatory review may justify a separate signing-to-closing framework rather than extending pre-signing negotiating exclusivity.
10. Negotiate remedies carefully
Specify whether breach supports injunction, damages, reimbursement or a break fee. Remedies should reflect proof, causation and enforceability rather than operate as an unexamined penalty.
Remedies for breach of negotiating exclusivity are difficult to quantify, which is why they are usually structured rather than left at large.
Reimbursement of documented adviser costs up to an agreed cap is the most common approach and the easiest to enforce.
A liquidated sum can be added, but in Vietnam a payment framed as a penalty for breach of a commercial contract is subject to the statutory cap, so it should be characterised as agreed compensation supported by a genuine estimate of cost, and the arrangement provisions should say expressly that the remedy is without prejudice to injunctive relief.
11. Protect confidentiality and communications
Coordinate negotiating exclusivity with the confidentiality agreement, announcement controls and permitted disclosures. Employees and commercial partners should not learn of the transaction prematurely.
12. Preserve financing flexibility
A buyer may need to engage lenders, co-investors or syndication partners. Define permitted financing contacts while preventing disclosure to strategic competitors.
13. Avoid accidental binding acquisition duties
State that negotiating exclusivity does not oblige either party to sign or complete the transaction. Identify which term-sheet clauses are binding, consistent with Vietnam M&A term-sheet principles.
14. Build a practical process
Attach a schedule for diligence, first drafts, issue lists, approvals and signing. Assign decision makers and escalation paths. Exclusivity is most effective when it supports a managed process.
Common mistakes in negotiating exclusivity drafting
Interaction with Vietnamese competition law
Sector-specific exclusivity issues in Vietnam
Core terms an exclusivity letter should state expressly
Vietnamese courts and arbitral tribunals interpret standstill obligations narrowly, so a short exclusivity letter that simply says the seller “will negotiate exclusively” is difficult to enforce if a dispute arises. A properly drafted exclusivity letter should state, in separate numbered clauses: the identity of every bound party, including any parent company or controlling shareholder who could otherwise solicit competing offers; the exact calendar start and end date of the standstill, expressed as fixed dates rather than “60 days from signing” to avoid disputes over the trigger date;
the specific prohibited conduct, distinguishing between actively soliciting a competing bidder and merely responding to an unsolicited approach; and the governing law and dispute resolution mechanism, since a Vietnam-law exclusivity letter that is silent on venue can end up litigated in an inconvenient forum.
The letter should also state what happens to due diligence materials and confidential information if exclusivity lapses without a signed acquisition agreement: whether documents must be returned or destroyed, whether the confidentiality obligation survives independently of the exclusivity term, and whether the buyer retains any right to make a further approach after a cooling-off period.
Sellers frequently overlook this point and discover, only after a deal collapses, that a disappointed bidder still holds sensitive financial and customer data with no contractual deadline to give it back.
Exclusivity provisions should be tailored to the sector under acquisition. In conditional sectors such as banking, insurance, education, real estate brokerage and logistics, the target may need a State Bank of Vietnam, Ministry of Finance or Ministry of Planning and Investment approval before closing, and the approval timeline is often longer than the parties initially expect. A buyer negotiating exclusivity in a conditional sector should build the regulatory approval step into the duration calculation from the outset, rather than granting a generic 60- or 90-day period and extending it later from a position of weakness once the seller senses delay.
Where the target holds land use rights, exclusivity should also be coordinated with any pre-closing land valuation, planning confirmation or change-of-use approval that the buyer needs from the provincial People’s Committee, since those approvals can take longer than corporate due diligence itself.
A seller granting exclusivity in a land-heavy deal should require the buyer to show it has engaged local counsel and, where relevant, a licensed valuer, before the exclusive period starts running, so that the standstill is not consumed by the buyer’s own mobilisation delay.
In deals involving a state-owned enterprise or a partially equitized target, exclusivity is harder to grant because the seller-side decision maker may itself need internal or supervisory approval to commit to a standstill, and any exclusivity commitment should be conditioned on that internal authorisation being obtained within a short, stated number of business days.
Buyers should ask for evidence of the relevant corporate or ownership-representative approval before treating an exclusivity letter as binding, since an unauthorised signatory cannot bind a state-owned seller to a standstill it has no power to grant.
Finally, cross-border buyers should confirm how exclusivity interacts with any foreign exchange or capital account registration steps that follow signing. Vietnamese law does not require pre-signing regulatory notice of an exclusivity agreement itself, but the buyer’s subsequent capital contribution or share purchase will still need to be registered, and a well-drafted exclusivity clause should not create a false expectation that regulatory timing risk sits with the seller once the standstill period begins.
An exclusivity commitment between a buyer and a seller is a bilateral pre-signing arrangement, not a restraint on the target’s ongoing trading, so it rarely engages the Law on Competition 2018. It becomes relevant only in the narrow case where the buyer and seller are horizontal competitors in the same relevant market and the standstill period extends to commercially sensitive information sharing that goes beyond what due diligence requires.
In that situation, counsel should structure a clean-team protocol so that pricing, customer and margin data are reviewed only by advisers and non-competing personnel, and the exclusivity clause itself should be limited to a no-shop and no-solicit obligation rather than any coordination of market conduct.
Foreign investors should also confirm whether the transaction requires a notification to the National Competition Commission once signed; if the deal crosses the market-share or asset thresholds under the Law on Competition and its implementing decrees, exclusivity during the interim period should be drafted to expire automatically if clearance is refused, so that the buyer is not left holding a dead deal without recourse.
Vietnamese counsel typically link the exclusivity end date to the earlier of signing, a walk-away date, or notice of an adverse competition ruling.
- An undefined scope covering unrelated transactions.
- No buyer milestones or seller access commitments.
- An exclusive period disconnected from diligence reality.
- No response to unsolicited approaches.
- Automatic extensions despite buyer delay.
- Remedies that are disproportionate or unclear.
- Failure to coordinate financing and confidentiality.
- Language suggesting an obligation to complete.
Conclusion
Balanced negotiating exclusivity rewards genuine progress. It should protect the buyer’s investment, preserve the seller’s leverage against delay and maintain carefully defined alternatives until the parties are ready to sign.
Frequently asked questions about exclusivity
How long should an exclusive period be?
Long enough to complete the workplan and no longer. Four to eight weeks is typical for a Vietnamese target with scoped diligence; three months or more is justified only where a regulatory approval sits on the critical path.
Where the period is long, stage it against milestones so the seller is released if the buyer stops progressing rather than being locked up by a date it cannot influence.
Is an clause binding if the term sheet is not?
Yes. Term sheets are normally expressed as non-binding except for defined provisions, and exclusivity is one of them alongside confidentiality, costs and governing law. Those clauses are enforceable contracts in their own right, so the drafting deserves the same care as the acquisition agreement even though the commercial terms around them are not yet fixed.
What should a seller insist on before granting exclusivity?
Three things: evidence that the buyer can actually transact, in the form of a funding confirmation or investment committee approval; a defined workplan with dated milestones; and automatic termination if the buyer misses them, withdraws its indicative price, or seeks to reduce it other than on the basis of a specific diligence finding.
Without those the seller has given away optionality for nothing.
Can a seller respond to an unsolicited approach during exclusivity?
Only if the clause allows it. Most well-drafted agreements permit the seller to acknowledge receipt and to inform the approaching party that it is bound by exclusivity, but nothing further, and require the seller to notify the buyer.
Directors of a Vietnamese company also owe duties to act in the company’s interest, so an absolute prohibition on even considering a materially superior offer should be resisted.
What happens when exclusivity expires?
Unless the parties extend it in writing, the seller is free to negotiate with anyone. The confidentiality obligations, cost provisions and any standstill continue according to their own terms, which is why they should be drafted with separate durations.
Extensions are common where a filing is pending, and should be documented in a short side letter that also updates the milestone dates rather than simply pushing back the end date.
Next step
Under the Law on Enterprises 2020, parties remain free to agree pre-signing conduct rules such as exclusivity by ordinary contract, provided the arrangement does not restrain competition unlawfully; see the Law on Enterprises for the underlying corporate framework. IVLF Lawyer negotiates and drafts exclusivity, term sheet and process-letter provisions for buyers and sellers in Vietnam M&A deals as part of a full Vietnam M&A lawyer service; contact IVLF Lawyer for legal services or to discuss a transaction.
Before signing the term sheet, write the workplan first and the exclusive period second. html” target=”_blank” rel=”noopener”>Law on Enterprises, then set the milestones and the end date against that timetable.
IVLF Lawyer negotiates term sheets, exclusivity and process letters for buyers and sellers in Vietnam, and advises boards on their duties when a competing approach arrives.
Vietnam M&A lawyer will keep the clause enforceable without freezing the seller’s business. See our legal services or contact IVLF Lawyer.
Related reading: Confidentiality agreements in Vietnam M&A transactions, Deposits and break fees in Vietnam acquisition agreements, and Using due diligence findings to revise an acquisition offer
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This article is provided for general information only and does not constitute legal advice for any specific case. Regulations may change – please consult a qualified professional before acting. Should further analysis be required, please contact one of our lawyers below.
