Mergers and Acquisitions - Swarit Advisors
                     MERGERS & 
ACQUISITION
S
www.swaritadvisors.com
MEANING OF 
MERGER & 
ACQUISITION
There exists confusion between the meaning of merger and acquisition and a 
lot many times, both are considered the same. However, there is a 
considerable difference between these two terms.
Merger involves combining or coming together of two entities and formation of 
the two into a single entity. Acquisition takes place when one entity buys 
another entity and the buyer entity combines the other entity with itself. Both, 
merger and acquisition, represent organic growth process.
FOR ESTABLISHING 
TO ELIMINATE A BIGGER MARKET 
COMPETITION SHARE;
Reasons for 
Mergers and 
Acquisitions
SETTING OFF THE 
CREATING A LOSSES OF ONE 
POWERFUL BRAND; COMPANY WITH THE 
PROFIT OF THE 
OTHER.
BENEFITS OF 
M&A
ADVANTAGES OF MERGERS AND ACQUISITIONS
INCREASE IN CONSTANTLY 
INNOVATING AND 
SIZE CREATING IDEAS
Via merger or acquisition, 
companies can increase their size 
manifold, which otherwise could 
have taken years. These strategic 
tools are quicker way of 
increasing the company size ad 
operations.
REDUCED 
COMPETITION
Mergers and acquisitions are a quick way for reducing the 
competition as they allow for combining strengths with one’s own 
competitors. This way the company taps the consumer base of the 
other. The mergers and acquisitions aim at winning more consumers 
by synergizing their strengths and cutting the competition.
CUSTOMERS 
ENGAGEMENT
When two companies 
combine their power, they 
become dominant players 
in the market. This way 
they can dominate the 
other players as they now 
have a bigger market 
share. Attracting more 
customers also becomes 
easier.
INCREASED 
POWER
TAX BENEFITS
Mergers and Acquisitions also have the tax 
benefits. The losses of one company can be 
written off against the profit of the other, 
thereby reducing the net taxable income. Also, 
foreign entities with high corporate tax can use 
its overseas merged/acquired company’s 
domestic tax payment system in order to pay 
lower amount of tax.
BETTER RESEARCH AND VISIBILITY
Since mergers and acquisitions make two 
market players come together, their 
resources of research and market visibility 
combine. This way they can come up with 
better and more innovative ideas of 
attracting consumers and increasing their 
market share.
HORIZONTAL MERGER
TYPES OF This occurs when two or more 
companies which are in direct 
MERGERS competition and indulge in identical products and markets 
bases, merge.
VERTICAL MERGER
This is the merger between a 
company and its supplier or a 
company and its customer.
CONGENERIC 
MThEis RisG thEeR m:erger between 
companies that offer 
complimentary products to the 
same consumer base. This way 
the new company is the 
expanded version of the 
merged companies.
CONGLOMERATE
This is the merger of companies that 
have completely different business fields 
and have no common ground
MARKET-EXTENSION MERGER
This is the merger of the companies that 
sell similar products in different markets.
PRODUCT-EXTENSION 
MERGER
This is the merger between companies 
that sell related products in different 
markets.
APPLICABILITY 
OF COMPANY 
LAW
WHAT'S IN STORE?
MERGERS
The strategic arrangement of merger between the 
company, the shareholders and the creditors are 
governed by Sections 390 to 394 of the 
Companies Act, 1956 and Sections 230-234 of the 
Companies Act, 2013.
ACQUISITIONS
As per the provisions of the Indian law, acquisition 
can take place in the following two forms:
• Acquisition of existing shares of the target 
company
• Subscription to new shares of the target 
company
PROCEDURE FOR MERGERS AND ACQUISITIONS IN 
INDIA
EXAMINE THE MOA OF THE COMPANY INFORM THE STOCK EXCHANGE
The very first step to M&A is to scrutinize Secondly, when you are going to enter 
the Memorandum of Association (MOA) of mergers and acquisitions, you must 
the company properly to conduct a search inform the stock exchange of the same. 
and verify whether the power of merger is Further, you need to send copies of 
bestowed on or not. 1 2 resolutions, orders, and notices to the 
stock exchange on a timely basis.
DRAFTING OF MERGER PROPOSAL 3 4 FILING APPLICATION TO THE HIGH 
The Board of the Director of both the COURT
Once the Board of Directors have 
involved companies needs to submit a 
confirmed, the merger company needs to 
confirmation on the draft of the merger 
send an application to the High Court of 
proposal. Besides, it is also required to 
the concerned state where the company 
pass the resolution to authorize its key 
has its headquarter.
managerial personnel to carry on the 
matter.
PROCEDURE FOR MERGERS AND ACQUISITIONS IN 
INDIA
NOTICE TO CREDITORS AND FILE ORDERS WITH THE ROC
SHAREHOLDERS
The company needs to file a truly certified 
5 If the High Court has granted the 6 copy of the order from the High Court with 
approval, the company must send a notice the Registrar of Companies within the 
to all the creditors and shareholders prescribed limit as specified by the High 
regarding the meeting to be held 21 days Court.
prior. 
ISSUANCE OF SHARES AND 
DEBENTURES
MERGING OF ASSETS AND LIABILITIES Lastly, when the companies have been 
7 8 merged and got the status of a separate Next, the process of merging of assets 
legal entity, then the company is eligible 
and liabilities of both company will take 
to issue its shares and debentures on the 
place
stock exchange after listing
CONCLUSION
Mergers and Acquisitions are strategic tools used by 
companies for immediate tremendous growth. The 
companies use the strengths of each other for getting 
a larger consumer base and entering more markets. 
The legal aspects of getting into a merger or 
acquisition are quite complicated. These processes 
are usually undertaken by professionals who hold 
years of expertise in the field.Our team of experts is 
well-versed with the entire procedure of mergers and 
acquisitions. 
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