Understand Mergers and Acquisitions
As the world enters the era of globalization, significant changes are being observed across all countries in the manner in which businesses operate and strive to flourish. When a company wants to improve its performance and take the lead in its market sector, the idea of mergers and acquisitions seems appealing.
According to data, India recently recorded whopping deals worth more than $82 million through M&A. This makes mergers and acquisitions a burning topic for discussion.
What are mergers and acquisitions (M&A)?
Mergers happen when two companies unite to form a single entity. In other words, it is a merger of two or more companies in which the identity of one or more of the companies is lost, resulting in a single company.
Whereas, in an acquisition, a larger company acquires the business of a smaller company and absorbs its business into itself. In other words, the share capital or management interests of one company are taken over by a more prominent company.
What is Takeover?
A takeover can be achieved through mutual agreement or a hostile battle. But in a takeover, one company purchases the rights of another company. As a result, the target company loses its identity, and the identities of the target company and the acquirer become one.
Takeovers happen when a small company finds itself incapable of competing in a competitive world. However, the manner in which takeovers are conducted sparks much debate.
Hostile Takeovers: Such takeovers happen when an acquiring company secretly purchases the shares of non-controlling shareholders and becomes the major shareholder in the company.
Friendly takeovers: Such takeovers occur when the management of both companies agrees to a takeover and their shareholders vote in favor of it. In other words, the management and shareholders willingly sell the majority stake of the company to an acquirer.
How M&A takes place
Mergers and acquisitions (M&A) can happen in four ways:
- By purchasing assets of the target company.
- through purchasing shares
- by exchanging shares for assets
- And by exchanging shares of the target company with the shares of acquiring the company
Mergers and acquisitions look easy on paper, but these are pretty complex transactions in the corporate world. A lot of mergers and acquisitions draw legal scrutiny and take the form of legal tussles in the courts.
favor
So, keeping an expert lawyer in the loop during mergers and acquisitions can save your company from getting caught in unnecessary legal fights.
How We can help
Legal Eagles Eye is a well-known corporate law firm in Gurgaon. Because of our expertise, professional conduct, and maturity in handling corporate disputes, we are known as the best corporate dispute lawyer in Gurgaon.
