Corporate Restructuring Related to M & A, Amalgamations, Takeovers, etc.

Abstract

Corporate restructuring related to M & A, Amalgamations, Takeovers etc. Mergers & Acquisitions are an integral part of market oriented free enterprise economic system. Merger or Amalgamation is a combination of two or more companies into one company. Acquisition does not involve combination of companies. The control can be acquired though a friendly manner or through forced manner. The former is called Acquisition while the later is called Take over. There are many reasons for mergers like: Economics of scale; Operating economies; Synergy; Growth; Diversification; Tax shields; Increase in value; Elimination of competition; Better Financial Planning; Economic necessity.

There are three different types of take over arrangements: Acquire controlling interest and run the unit as a separate company; Acquire controlling interest and merge it with the present company; Purchase assets with or without liabilities without purchasing the company as a whole.

There are many issues to be considered in mergers and acquisitions like: How does it help the parent company? Why this unit is to be acquired? What are the current problems with the existing unit? What are the post merger issues seen from different angles? What would be the impact of the share price of the parent company on account of the merger/acquisitions? What is the right price? How are the values of the shares done?

There are different methods by which this can be done. This article would look conceptually into all these aspects with suitable examples from Indian corporates.

Keywords: corporate, restructuring