Merger is a process whereby two or more enterprises may come together sharing their liabilities, responsibilities, assets and trade objectives.
Some of the reasons requiring the need of merging of entities are listed below:
i. Synergy of operational capabilities;
ii. Efficient allocation of managerial capabilities & infrastructure;
iii. Expansion and diversion in extended domestic and global markets;
iv. Revival and rehabilitation of a sick unit by adjusting its losses against profits of a healthy company;
v. Acquisition of raw materials and access to scientific research and technological advancement;
vi. Capital restructuring by appropriate to reduce the cost of servicing and improve return on capital employed;
vii. Improve corporate performance.
- Horizontal mergers
- Vertical Mergers
- Congeneric Mergers
- Conglomeration Mergers
- Consolidation Mergers
Difference between Merger and Acquisition in India
Merger happens when different entities join hands to become one single new entity. Whereas in Acquisition happens when one entity completely buys another entity.
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To know more about Commercial Contracts & Agreements in India, read below: