How to accurately and effectively determine post-investment enterprise value

In capital contribution activities, share acquisition, or investment in an enterprise, determining the post-investment enterprise value is an important step to evaluate the effectiveness of the investment and determine the ownership ratio of the relevant parties. However, in practice, such a valuation process still has many difficulties due to differences in valuation methods and the application of legal regulations. Therefore, understanding the legal provisions and factors affecting post-investment enterprise value determination is necessary to minimize risks and arising disputes.

I. Current situation related to determining post-investment enterprise value

In practice, determining post-investment enterprise value still faces many difficulties and may easily lead to disputes among the relevant parties. The main reasons stem from differences in valuation methods, methods of asset recognition, as well as the assessment of the enterprise’s development potential after receiving investment capital.

In addition, many enterprises and investors have not reached clear agreement on valuation mechanisms in their initial investment agreements, leading to numerous difficulties when re-determining the enterprise value after investment. In some cases, the failure to engage a valuation organization or the lack of transparent data also causes the process of determining post-investment enterprise value to lack objectivity and easily generate conflicts of interest among the parties.

II. Concept of determining post-investment enterprise value

1. What is determining post-investment enterprise value?

Determining post-investment enterprise value is the process of reassessing the total value of an enterprise after it has received investment capital or after an investor has contributed capital or acquired shares. Such a valuation aims to reflect changes in assets, capital sources, business operations, and the development potential of the enterprise.

The result of determining post-investment enterprise value is often used as the basis for determining shareholders’ ownership ratios, evaluating investment efficiency, and serving management decisions or subsequent transactions of the enterprise.

2. What factors affect the determination of post-investment enterprise value?

The determination of post-investment enterprise value is influenced by many different factors, including both financial and market factors. Some important factors commonly considered include:

• The financial condition of the enterprise: Asset scale, revenue, profit, cash flow, and outstanding liabilities.
• Business performance after receiving investment capital.
• The value of tangible and intangible assets such as brand value, technology, and intellectual property rights.
• The enterprise’s development prospects and market position.
• The capital contribution ratio and agreement conditions between the investor and the enterprise during the investment process.

These factors are important bases to ensure that the determination of post-investment enterprise value is conducted objectively and in accordance with the actual operations of the enterprise. 

3. Purpose of determining post-investment enterprise value

Determining post-investment enterprise value is conducted to accurately assess the actual value of the enterprise after investor participation through capital contribution. Through such a valuation process, the parties can more clearly identify changes in asset scale, capital sources, business performance, and the enterprise’s development potential. In addition, determining post-investment enterprise value also serves the following purposes:

• Determining the ownership ratio and rights of shareholders or investors after completion of capital contribution or share acquisition.
• Evaluating the effectiveness of the investment, thereby serving as the basis for further investment decisions or adjustments to business strategies.
• Serving as the basis for capital-related transactions such as share transfers, additional capital raising, or mergers and acquisitions.
• Enhancing transparency in financial activities and corporate governance, thereby helping to limit disputes among shareholders or between investors and the enterprise.

Determining post-investment enterprise value helps accurately assess the enterprise’s value after receiving investment capital and serves as the basis for determining the rights and ownership ratios of the parties. Therefore, such a process must be implemented transparently and in compliance with legal regulations to minimize risks and disputes.

III. Legal regulations related to determining post-investment enterprise value

1. What are the common methods for determining post-investment enterprise value?

In practice, determining post-investment enterprise value may be conducted through various valuation methods, depending on the purpose of valuation, operational characteristics, and financial condition of the enterprise. Some commonly applied methods include:

• Asset-based method: Determining enterprise value based on the total value of the enterprise’s existing assets after deducting liabilities.
• Market comparison method: Valuing the enterprise by comparing it with similar enterprises that have been traded or listed on the market.
• Discounted Cash Flow (DCF) method: Determining enterprise value based on the present value of expected future cash flows that the enterprise may generate.

Choosing an appropriate method helps ensure that the determination of post-investment enterprise value accurately reflects the actual value and development potential of the enterprise.

2. Must the determination of post-investment enterprise value comply with the principles of the Law on Enterprise 2020?

The determination of post-investment enterprise value must comply with the principles on valuation of contributed assets as prescribed by the Law on Enterprise 2020 (as amended and supplemented in 2025).

Specifically, according to Clauses 1 and 2, Article 36 of the Law on Enterprise 2020, contributed assets that are not cash, foreign currency, or gold must be valued by agreement among members or founding shareholders based on the principle of consensus or determined by a valuation organization. The value of contributed assets must be expressed in Vietnamese Dong.

In addition, if contributed assets are valued higher than their actual value, the persons participating in the valuation must jointly contribute the difference and be liable for any arising damages in accordance with Clauses 2 and 3, Article 36 of the Law on Enterprise 2020.

Accordingly, determining post-investment enterprise value must comply with the principles of contributed asset valuation prescribed in Article 36 of the Law on Enterprise 2020 (as amended and supplemented in 2025) to ensure transparency and accuracy in investment activities.

3. Is it mandatory to hire a valuation organization when determining post-investment enterprise value?

Current law does not require in all cases that a valuation organization must be hired when determining post-investment enterprise value. However, in many cases, the parties may choose to engage a valuation organization to ensure objectivity and transparency.

Pursuant to Clause 1, Article 36 of the Law on Enterprise 2020 (as amended and supplemented in 2025), contributed assets may be valued in two ways:

• Members, shareholders, or contributors may agree on the valuation based on the principle of consensus; or
• A valuation organization may be hired to determine the value of contributed assets.

In addition, the law does not mandatorily require engaging a valuation organization unless agreed by the parties or required by specialized laws. However, in practice, hiring a valuation organization is often applied when:

• The value of contributed assets is large or complex;
• It is necessary to ensure objectivity in determining enterprise value;
• It is necessary to avoid disputes among shareholders or investors after capital contribution.

Therefore, although it is not mandatory in all cases, engaging a valuation organization is still considered a solution that helps make the process of determining post-investment enterprise value more transparent and reliable.

4. In case of a dispute regarding post-investment enterprise value, how should the parties resolve it?

In the case of disputes relating to determining post-investment enterprise value, the parties may choose dispute resolution methods in accordance with the law.

Pursuant to Article 317 of the Commercial Law 2005, disputes in commercial activities may be resolved through the following methods:

• Negotiation between the parties: The parties directly discuss and agree again on the valuation method or valuation result.
• Mediation through a third party: The parties may request an intermediary organization or individual to assist in resolving the dispute.
• Resolution by commercial arbitration: Where the investment contract or capital contribution agreement contains an arbitration clause, the dispute may be resolved in accordance with the Law on Commercial Arbitration 2010.
• Court proceedings before a competent court: Where the parties cannot reach agreement, they have the right to initiate legal proceedings before the Court or request resolution by commercial arbitration in accordance with the law to determine the responsibilities and obligations of the relevant parties.

Accordingly, when disputes arise relating to determining post-investment enterprise value, the parties may prioritize negotiation or mediation before choosing formal dispute resolution methods such as arbitration or court proceedings in accordance with the law.

IV. Questions related to determining post-investment enterprise value

1. Must post-investment enterprise value be higher than pre-investment enterprise value?

The law does not require that post-investment enterprise value must be higher than pre-investment enterprise value. Under the Law on Enterprise 2020 (as amended and supplemented in 2025), the value of contributed assets, which serves as the basis for determining enterprise value, is determined by agreement among the parties or by a valuation organization.

Specifically, pursuant to Clauses 1 and 3, Article 36 of the Law on Enterprise 2020, contributed assets may be valued by agreement among members, shareholders, or contributors, or by engaging a valuation organization. Therefore, post-investment enterprise value depends on the valuation result and the agreement among the parties, and there is no legal requirement that it must be higher than the pre-investment value.

Post-investment enterprise value is not required to increase compared to pre-investment value, but is determined based on the asset valuation result and the lawful agreement of investors under Clauses 1 and 3, Article 36 of the Law on Enterprise 2020 (as amended and supplemented in 2025).

2. Does post-investment enterprise valuation affect the ownership ratio of existing shareholders?

Post-investment enterprise valuation may directly affect the ownership ratio of existing shareholders, especially where the enterprise increases its charter capital or accepts additional new investors.

Pursuant to the spirit of Clause 1, Article 112 of the Law on Enterprise 2020 (as amended and supplemented in 2025), when a joint stock company issues additional shares or receives new capital contributions, shareholders’ ownership ratios are determined based on contributed capital or the number of shares held over the total charter capital of the enterprise.

Therefore, if the enterprise is valued higher or lower at the time of new investment, the amount of capital that an investor must contribute to own a certain percentage of shares will change, which may reduce or maintain the ownership ratio of existing shareholders.

Post-investment enterprise valuation may change the ownership ratio of existing shareholders, particularly when the enterprise increases capital or issues additional shares to new investors under the Law on Enterprise 2020 (as amended and supplemented in 2025).

3. Does post-investment enterprise value affect the investor’s voting rights?

Post-investment enterprise value does not directly determine voting rights, but it may indirectly affect them through the investor’s shareholding ratio or contributed capital ratio.

Under the Law on Enterprise 2020 (as amended and supplemented in 2025), voting rights of shareholders in a joint stock company are determined based on the number of shares owned by the shareholder. Specifically, pursuant to Clause 1, Article 115 of this Law, each ordinary share corresponds to one voting right.

Therefore, when post-investment enterprise valuation changes the investor’s shareholding ratio or contributed capital ratio, voting rights within the enterprise may also change accordingly.

Accordingly, post-investment enterprise value does not directly determine voting rights, but if the valuation changes shareholding ratios, the investor’s voting rights will also change.

4. Can post-investment enterprise value be adjusted if errors are discovered?

If errors are discovered during the valuation process, the parties may agree to adjust the post-investment enterprise value to ensure that it accurately reflects the actual value of the assets or contributed capital.

Under the Law on Enterprise 2020 (as amended and supplemented in 2025), valuation of contributed assets may be conducted by agreement among members or shareholders or by a valuation organization according to Clauses 1 and 3 Article 36. Where contributed assets are valued higher than their actual value, the persons participating in the valuation must jointly contribute the difference and be liable for any resulting damages under Clauses 2 and 3 Article 36.

Where errors are discovered, the parties may adjust the post-investment enterprise value or re-conduct the valuation to ensure the correct actual value and avoid legal liability under Article 36 of the Law on Enterprise 2020 (as amended and supplemented in 2025).

5. Must post-investment enterprise value be publicly disclosed in all cases?

The law does not require post-investment enterprise value to be publicly disclosed in all cases. Under the Law on Enterprise 2020 (as amended and supplemented in 2025), information on charter capital, capital contribution ratios, or shares of members and shareholders is recorded in enterprise registration dossiers and the company’s shareholder register.

Specifically, pursuant to Article 122 of the Law on Enterprise 2020, a joint stock company must establish and maintain a shareholder register containing information on shareholders and the number of shares owned. Such information is provided to shareholders in accordance with the law but is not always required to be publicly disclosed externally, except where specialized laws or regulations applicable to listed companies require disclosure.

Post-investment enterprise value is not required to be publicly disclosed in all cases, but is mainly managed through internal records and enterprise registration information in accordance with the Law on Enterprise 2020 (as amended and supplemented in 2025).

V. Why you should seek legal consultation from NPLaw regarding determining post-investment enterprise value

Determining post-investment enterprise value may directly affect ownership ratios, management rights, and the interests of investors. Therefore, when legal issues arise, seeking advice from lawyers specializing in corporate and investment law is necessary.

When using consultation services at NPLaw, clients may receive support with:

• Advising on legal regulations relating to enterprise valuation under the Law on Enterprise 2020 (as amended and supplemented in 2025).
• Reviewing investment contracts, capital contribution agreements, and agreements relating to enterprise valuation.
• Proposing dispute resolution solutions in case of disagreements regarding post-investment enterprise value.
• Supporting work with valuation organizations or competent authorities when necessary.

The above information is for reference purposes only. For detailed consultation regarding your specific case, please contact NPLaw for immediate legal advice.