Dear Reader
The present epidemic has disrupted the supply chain, affected the manufacturing capacity, national and global payment circle is at halt and pandemic will substantially reduce the spending capabilities of consumer at large across the globe, wherein, the effect of all circumstances will largely reflect in businesses monetary flow and their valuation, all these scenario will promote the Merger of businesses or acquisition of Businesses.
ABOUT MERGER & ACQUISITION;
These are the transactions through which ownership or control of Companies or units are transferred or consolidated with the other Companies or entities. For example; Merger of Vodafone and Idea, Acquisition of Flipkart major equity by Wal-Mart, It can be also expressed as the process of combining two Companies with the objective to achieve synergy and to strengthen the business of Transferee Company.
LEGAL FRAMEWORK OF MERGER AND ACQUISITION IN INDIA
Merger and acquisition in India is governed by the Companies Act, 2013, The Competition Act, Indian Stamp Act, SEBI Guidelines, Foreign Exchange Management Act, 1999, Income Tax Act, 1961 and based up on the nature of transaction various regulatory bodies are involved in the process of any merger such as Registrar of Companies, Competition Commission of India, National Company Law Tribunal, Reserve Bank of India, Income Tax Department, Securities and Exchange Board of India. In Merger there is majorly no financial involvement but the swipe of equity shares, however, acquisition has involvement of financials. Valuation is the significant factor in any sort of merger or acquisition, wherein, value is assessed based up on the various factors such as present books of accounts, assets of business, capital of business, good will, and supply chain network, warehouses, manufacturing capacity, stock in trade, future growth prospects and related factors.
M&A ESSENCE POST PANDEMIC
The survival of many businesses may turn out to be a big challenge post pandemic, therefore, merger can be a solution to strengthen the client base, utilisation of manufacturing capacity, warehouse network, marketing network and eradication as well as reduction of unnecessary cost, utilisation of patents, encouragement of innovation, therefore, merger will bring the synergy and may strengthen the survival, apart from this factor, equity shares of private or public company may have the lowest valuation on account of pandemic impact, therefore, it can be a genuine merger or acquisition opportunity and also Merger can be the next regime for “Sustainable Business Development”.
“Mergers generate substantial synergies”
-Roger Altman
DUCTUS EDGE 