What is the difference between a merger, demerger, and slump sale?
A merger combines two or more entities into one, usually through a court / NCLT-approved scheme. A demerger separates one or more undertakings into a new entity. A slump sale is the transfer of an undertaking as a going concern for a lump sum consideration without assigning values to individual assets and liabilities, with specific tax treatment.
How are companies typically valued in M&A?
Common valuation methods include Discounted Cash Flow (DCF), comparable companies and precedent transactions, net asset value, and rule-based methods under Income Tax and FEMA. Most deals use a combination — a 'football field' showing valuation ranges from multiple methods to support negotiation.
What approvals are required for an M&A transaction?
Approvals depend on structure and parties involved and may include Board, shareholder, NCLT (for schemes), Competition Commission of India, RBI / FEMA (for cross-border), SEBI (for listed entities), sectoral regulators, and lenders. Listing each approval in advance is critical for timeline planning.
How is the SPA different from the SHA?
The Share Purchase Agreement governs the transfer of shares — purchase price, conditions, representations, warranties, indemnities, and closing mechanics. The Shareholders Agreement governs the ongoing relationship among shareholders post-closing — board composition, reserved matters, exit rights, drag and tag, and transfer restrictions.
What is post-merger integration and why does it matter?
Post-merger integration covers the practical work of bringing two organisations together — finance and reporting, HR, IT, customers, vendors, and culture. Many deals fail to deliver expected value not because of the price paid, but because integration is poorly planned and executed.
How is confidentiality managed during M&A?
Confidentiality is managed through NDAs, code names for the project, controlled circulation of information, secure data rooms, and a small core team on each side. Public disclosures, particularly for listed entities, are governed by SEBI and stock exchange requirements and are carefully timed.
Can M&A be used for family business restructuring?
Yes. Family businesses frequently use mergers, demergers, slump sales, and trust-led structures to professionalise governance, separate businesses among family branches, plan succession, and prepare for external investment or listing while maintaining family control.