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Mergers and Acquisitions

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What is the definition of ‘Mergers’ and ‘Acquisition’?

Mergers and Acquisitions, in short referred as M&A, which is generally defined as consolidation of companies. Globally, Companies have adopted these strategies to continue persist in the present competitive market. The Merger is defined as the amalgamation of two or more business entities to form a new entity. In contrast, the Acquisition involves one party taking over business of other party to form as single entity.

How Mergers and Acquisition can take place?

  • by acquiring assets of an entity
  • by acquiring common shares of an entity
  • by interchanging shares for assets
  • by interchanging shares for shares

What is the basic purpose of Mergers and Acquisition?

  • The reasoning behind M&A is to form all new company by combining two separate entities to form more valuable business entity.
  • For the purpose of expansion of business unit with the objective of wealth maximization.
  • In order to expand the business in the market by making an entry to new segments for gaining market limelight.
  • For the purpose of flaming their services around the world and also to contribute sustainable development.
  • In order to remove competition
  • To institute bigger market share
  • To minimize tax liabilities
  • To set off the losses of one entity against the profit of the other entity

What are various types of Mergers and Acquisitions in India?

1. Mergers:

  • Horizontal mergers – a merger between two entities that deal with the same or similar product or services and are in direct competition
  • Vertical mergers – a merger between entities that provide corresponding goods or services. Example ice cream and cones.
  • Co-generic mergers –a merger between entities that are related to each other or which supply the same consumer base in different ways.
  • Conglomerate mergers - a merger between entities that have different types of business
  • Cash mergers –a merger between entities where shareholders receive cash instead of shares of the merged entity.
  • Forward mergers – where an entity merges with its buyer
  • Reverse mergers – where an entity mergers with supplier of the raw materials

2. Acquisitions:

Acquisition is the process that requires selling and purchasing of whole business entity between the parties. It can be friendly or hostile and it is generally done in order to strengthen the acquiring company.

3. Joint Ventures

In joint ventures two or more business entities come together for a designated purpose. It could be for the purpose of admission in a new market or a new business entity for a specific skill or purpose. The duration may be for a prescribed limited period or for an unlimited period of time.

What are the services Lawyerinc offers for Merger and Acquisition?

Our services:

Our comprehensive range of end-to-end solutions includes following:

  • End to end services for Merger and Acquisition.
  • We have expertise in getting Merger and Acquisition.
  • We will get in touch with you through renounced lawyers in this field.
  • Our Experts shall guide you through the procedure and supply you with a detailed checklist of the required documents.
  • We shall verify the documents you provide.
  • We will draft and file a petition for Merger and Acquisition.
  • Free consultation for any enquiry that you may have about Merger and Acquisition.
  • You will get your Merger and Acquisition done without any hassles.

*Any fee, stamp duty and miscellaneous charges shall be payable extra.

Do contact us in case of any query related Merger and Acquisition and much more.

To avail any of the above-stated services, kindly establish contact by posting a query at our site.

What is the Procedure of Mergers and Acquisitions in India?

The whole procedure of Merger and Acquisition in India takes place as per the provisions of the Companies Act, 2013. There are certain steps that need to follow while going for Mergers and Acquisitions in India-

  • Step-1: Evaluation of market value of Target Company by the acquiring company.
  • Step-2: To inspect Object Clause in Memorandum of Association: The foremost step in Mergers and Acquisitions in India is to inspect the memorandum of the association of both the companies in order to check object clause. It is to examine whether the merging power is vested in companies object or not.
  • Step-3: Both the parties can sign Non-disclosure Agreement to secure confidentiality.
  • Step-4: Inform Stock Exchange authority about the merger process: The next step after inspection is to inform stock exchange authority about the proposed merger and acquisition of the companies. During this companies need to share all copies of resolution process, notices and the orders to the stock exchange authority within prescribed time.
  • Step-5: Drafting of Merger Proposal: The draft of merger proposal will be prepared by Attorney after receiving confirmation from the Board of the Director of both the companies. The Board of the Director will pass the resolution to authorize its key managerial personnel as Authorized Representative to further pursue the matter.
  • Step-6: Filing of merger and amalgamation application before Hon’ble High Courts: Once the draft is prepared by Attorney and got confirmation by Board of Directors, the merger companies shall proceed to file an application before Hon'ble High court of the respective state where the headquarters of the company is situated.
  • Step-7: Supply of Notice to Shareholders and Creditors along with copy of application: Merger companies shall send 21 days advance notice to all the shareholder and creditor of the companies about the meeting to be held.  The notice also need to be published in two leading national newspapers one in the vernacular language of the state and the other one is an English language.
  • Step-8: Filing of the final Order of court with the Registrar of Companies: Once the application heard and allowed by Hon’ble High court, parties are required to file the certified copy of the order with the Registrar of the Companies within the limit as specified by the High Court.
  • Step-9: Assets and Liabilities of both the Company should be merged: The assets and the liabilities of both the companies need to be informed to the merged company.
  • Step-10: The issue for Subscription of Shares and Debentures: After the order passed by high court and filing of order with ROC, the merged companies come to the existence as a separate legal entity. Now the new legal entity can issue shares and debentures after listing it with stock exchange.

Frequently Asked Questions

  • 1. Do I need lawyer during mergers and acquisitions process?

    Merger and Acquisition is a legally complex process that requires proper due diligence of company and negotiation of a share purchase agreement, So in order to minimize the risk it is advised to hire an attorney.

  • 2. What is difference between merger and joint venture?

    In a merger, two different entities combine permanently to make one new separate legal entity that is separate entity, and the previous entity usually cease to exist. But in case of joint ventures two or more business entities come together for a designated purpose. And both companies usually remain exist after joint venture also.

  • 3. What due-diligence is required to be done before merger and acquisition?

    Legal, financial, commercial, strategic, operational, any debt due etc need to check.

  • 4. Why to get merger and acquisition done through lawyerinc?

    Lawyerinc is a complete blend of professionals from across the globe. In –house team of lawyers and attorneys, CA, CS. All professional work together in Lawyerinc, providing you end to end solution. It guarantees delivery in the shortest and most reasonable rate in India. It enjoys a global presence.

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