Strategies of Mergers and Acquisitions are globally adopted by the companies to survive in this vying
world. Mergers and Acquisitions are also known as M&A. Companies Act 2013, define merger as the
collaboration of two or more companies to form a new company. The acquisition, on the other hand, is
defined as a process of selling one company to another. When one company decides to amalgamate with
another company and setup itself as the new company, this process is called acquisition.
In simple term, the merger can be defined as an agreement between two companies which decides to
merge with the aim to form a new company. Merger is done with the desire to expand the business and
to widen its reach in every corner of the market.
Whereas, acquisition is an act of unfriendly deals where target Company has no desire to be
purchased. Therefore, a purchasing deal between two companies often falls under the criteria of
merger and acquisition depending on the type of purchase, ie, whether the purchase is friendly or
hostile.
Types of Merger & Acquisition in India
Merger
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1
Horizontal Merger
A merger between two companies who deals in the same product or services
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2
Vertical
This type of merger happens between those entities who are
involved in the dealing of complementary goods and services.
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3
Co-Generic Mergers
A merger between two parties that are somehow related to each
other
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4
Conglomerate Mergers
A merger between organizations that deal in different types of business
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5
Cash Mergers
A kind of merger where shareholders get cash instead of shares of
the merged entity
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6
Forward Mergers
When an organization decides to merge with its buyers
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7
Reverse Mergers
When an entity decided to merge with its suppliers of raw material
Acquisition
Acquisition is also known as the takeover that includes selling and buying of entire business
between the included entities. Acquisition can happen in either friendly manner or hostile
manner. Well, it involves the process of either acquiring the assets and liabilities of the
target company or buying the shares of the target company. A demerger is likewise a type of
acquisition where a solitary element is divided into at least two elements.
Joint Ventures
At the point when at least two companies meet up for a characterized reason – it could be
entering another market or another business or for a particular ability, that adjoining is known
as the Joint Venture. It could be for a restricted period or for an unlimited term.
Process of Mergers & Acquisitions in India
Companies Act 2013 defines the whole process of mergers and acquisition in India. During the process
of mergers and acquisitions, analysis of the companies is done which includes accessing company’s
information, going through its insights and coming to a conclusion regarding implementing the
process of mergers and acquisition. An effective and complete execution of mergers and acquisition
process includes technique which is structured with the aim to maximize the profit and minimize the
level of risk.
Steps To Follow While Going Through Mergers And Acquisition In India
Dig Into Memorandum To Examine The Object Clause
The primary and paramount thing to do while going for M&A in India is to scrutinize the
memorandum of association of the company with the purpose to carry a search and check whether
the power of merger is endowed in it or not.
Share A Word With Stock Exchange
It is a good idea to illuminate the stock exchange about the proposed merger and acquisition
occurring and send all the relevant documents such as notices, resolutions, and the orders to
the stock exchange within a stipulated time.
Draft A Merger Proposal
The Board of the Director of both the organizations will introduce an affirmation on the draft of
the merger proposition and furthermore pass the resolution for approving its key administrative
staff and different administrators to further pursue the issue.
File An Application To The High Courts
In the wake of getting the affirmation on a proposal by the Board of the Director, the merger
organizations should record an application to the Hon'ble High court of the individual state
where the organization’s headquarter is situated.
Notice Dispatched To Shareholders And Creditors
With the earlier approval of the High court, a notification ought to be sent to all the investor
and creditors of the organizations about the gathering to be held and 21 days timely
notification is required. The notification will be distributed in two papers one in the
vernacular language of the state and the other one is an English paper.
Filing Of The Orders With The Registrar Of Companies
The genuine confirmed copy of the request for the High Court of the state must be documented with
the registrar of companies within the limited time period as indicated by the High Court.
Assets And Liabilities Of Both The Company Should Be Merged
The assets and the liabilities of both the organization ought to be passed on to the blended
organization.
Issue For Subscription Of Shares And Debentures
When the merged organizations go to the presence as a different lawful substance then the
organization can give offers and debentures after listing on stock exchange.
Need of M&A Advisory Services
Mergers and Acquisitions are incredible way to accomplish development for an organization yet include
complex steps and procedures to be trailed by the involved companies to shape the new business. The
Companies Act, 2013 should be followed for M&A to traverse, with inclusion from Court, SEBI
(Securities Exchange Board of India) in the event of listed organizations, the Central Government as
an Official Liquidator (OL) and the Regional Director of the Ministry of Corporate Affairs and so
on. Since there are various parties involved, the procedure is for quite some time drawn, monotonous
and on occasion problematic.
Consequently it is insightful to counsel an expert for the merger and acquisition or to take mergers
and acquisitions advisory administrations as the procedure includes rigid ramifications of laws and
rules and contradicting which, makes an issue in future. There are various Mergers and Acquisitions
advisory firms who control their customers through this change procedure including complicated
financial, legitimate and accounting issues.
Mergers And Acquisitions Services Provided By Different Firms
- Investment Banks that go about as money related advisors to their customers. They have some
expertise in endorsing, additionally go about as brokers and take up mergers and acquisitions
advisory jobs as well.
- Law offices - driving global and local law offices to provide M&A counselling services
particularly to business elements that are being merged or acquired cross borders.
- Audit and Accounting Firms – these organizations work in auditing, bookkeeping, and tax
assessment matters. They give expert advice in the financial matter related to M&A advisory
firms.
- Consulting and M&A Advisory firms – these organizations give committed M&A support whether it is
cross-industry or cross-border as their group has industry specialists to help choose the best
M&A strategy.