One of the leading Mergers and Acquisitions law firms in India has been advising clients across the globe on their most complex and important transactions. The firm has been at the forefront of developing innovative structures to simplify the complexities inherent in Mergers and Acquisitions transactions including but not limited to complex cross border transactions spread across various jurisdictions. The company has been ranked amongst the top Mergers and Acquisitions law firms in India year on year. The team consists of some of the top M&A lawyers in India who have time and again been recognised as the go-to Merger and Acquisition lawyers.

The mergers and acquisitions in India in which the corporate entities are greatly restructured is one of the commonest activities of corporate finance in the present time. You may have often come across the transactions of M&A in which the smaller companies consolidate and merge together to form a larger corporation or are usually acquired by the bigger companies. While many people have a fair idea about the theoretical aspects of the deal, the practical aspects of the restructuring process are not usually taught to the students of the law school. What are some of the things that create successful deals?

Understanding the Stage of Mergers and Acquisitions Due Diligence

Mergers and Acquisitions

Once the Mergers and Acquisitions deal opens and the proposition comes to the table and the primary target is to negotiate a deal with the buyer, the first activity with which the buyer begins is due diligence. Conducting this process is essential to determine the risks associated with the business and check whether the seller follows the financial, legal, technical, and the accounting compliances.

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Before finalizing the transaction, the buyer has to ensure what it is planning to buy and the obligations that are to be fulfilled. To expand on this, the buyer must collect information on the extent and nature of the contingent and the current liabilities of the seller. Furthermore, it is also necessary to find out information related to the general corporate affairs such as the constitution or the charter document of the organization, issues present in the employment or management, the hazards in the contracts, regulations of the government, litigation and insurance, the risks of insolvency and the matters related to intellectual property.

Extracting all the information may be necessary if the seller company has not undergone such scrutiny of the public markets and the security commissions, and there is no information available from the other sources. The report of due diligence provides a true reflection of the position of the target company and allow the buyer to identify the risks related to the transactions and consolidates the consideration of purchase. With the help of the mergers and acquisitions law firms, companies can accomplish the process of due diligence successfully.

Phase of share purchase

Mergers and Acquisitions

The buyer company, on the other hand, tries to find out the risks related to the transaction and negotiates with the target company to create the deal. The process of acquisition and the transfer of shares go through an official agreement based on the execution of the share purchase agreement. For accomplishing the share transfer from the seller to the buyer, the legal deal of share purchase allows the provisions of the agreement to facilitate the deal.

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The primary purpose of the share purchase agreement is to bring the change into effect that is in control of the business of the seller company. The following points highlight some of the most important aspects to be included in the deal and examined by the mergers and acquisitions lawyers for the best results.

  • It must clearly mention the general purpose of the agreement including the sale of shares and the percentage and the number of shares that are to be transferred to the buyer company.
  • Inclusion of the declarations, undertakings, and the covenants through certain statements and assertions made by the seller that guarantees the representation of the company and the status whose shares are being sold. Falsifying such statements and inaccuracy creates an obligation on the seller company to compensate for the damages or the losses that the buyer incurs.
  • The agreement must also state the sale price or the price to be paid by the buyer company for purchase as decided for acquiring the shares.
  • The circumstances that lead to the default and the regime of liability that furnishes the amount of compensation due in the event of unexpected breach. Make sure you appoint the top mergers and acquisitions law firms to verify the compensatory damages to be paid and the veracity of the circumstances.
  • Furthermore, the agreement must also include some of the miscellaneous clauses related to statutory notifications, assignments, notices, waivers, the governing laws, the partial disability issues, resolving the disputes among the rest.

The closing phase

After the successful completion of the due diligence phase, and the execution of the share purchase agreement, which is also commonly known to assign, the formalities are carried out by both the parties involved in the deal. However, the deal is yet to be finalized as there is no transfer or ownership of the shares that work in favour of the buyer. One of the primary reasons for this is that in most of the cases, the parties in the transaction decide to make the process effective that is also subject to a set of conditions that are to be satisfied or accomplished within a stipulated time frame before the deal is closed.

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When viewed from the point of view of the law, the signing resembles a decision to sell or the promise to purchase depending on the obligation. After the effective transfer of the shares, the deal comes to close and it is reflected through a public document. While the process of signing refers to the completion of the execution of the agreement, closing refers to the end of the fulfilment of the obligations by both parties. The M&A law firms are appointed to review the agreements properly so as to identify the errors of any and abolish the mistakes resulting in a genuine process of the transaction.

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