Merger & Acquisition

How the merger and acquisition transaction in India are different today than before and what has improved?

As India carries on being one of the attractive investment places, the merger and acquisition activity has progressed significantly over the last three-four years. A steady and firm central governed with a concrete political will, demonstrated by the policy alterations and regulatory liberalisation has paved the path for steady expansion in the activity of merger and acquisition across all the sectors.

On the policy platform, many schemes like “Skill India” “Make in India” “Start-Up India” “Digital India” and “Stand-Up India” have displayed a favourable outlook for the inbound investments into the nation. Simultaneously, provisions offer some grip on outbound mergers. There are many efforts being put into making overhaul dated regulations and the central government has provided a major thrust to its agents of the “Ease of Doing Business in India” that merger and acquisition activity in the nation has reached over $64 billion in the year 2016, which is a proof that domestic as well as foreign investors are doing everything that they can to be in the Indian market.

From the perspective of a deal mechanic, there is a wider degree of deal sophistication linked with the Indian markets, while the procedures and the structures common in merger and acquisition transaction abroad are now being implemented in the country as well.

Employing the use of the auction procedures for sales has been on a great rise. The post-closing for other adjustments including working capital is becoming a routine. Warranty insurance and indemnity is gaining more traction. Acquisitions via stocks are now usual, especially in the sector of e-commerce. With the promoters being more mindful and proactive for their obligations and rights, negotiations are now turning out to be balanced. The investors, on the other hand, are accepting the policy framework even on no guaranteed return and are weighing other means for a fruitful and smoother exit.

In fact, it is the promoters who are looking for more rights encompassing guaranteed returns in the form of upside sharing. The cases involving guaranteed returns to the investors are now decreasing and there are minimum instances of the negotiations made being lopsided in the favour of the investors.

Irrespective of the development, there are yet certain structures that are common abroad but tough to implement in India.

A conventional influence buy-out that might lest seem rather straightforward is not permissible under the regime of the Indian law. In order to make a leverage buy-out function, the acquirers will have to demonstrate innovative, unique and exclusive structures.

Although the initiatives for the policies are laudable, the letter of law in certain instances kills the spirit that makes deal making much more difficult and hard to carry on.

Hiring for yourself an experienced lawyer for the merger and acquisition activities in India will be the right way to do the work in regards with the law of the nation, which will result in the best outcomes and profit.


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