This article has been written by Mr. Aditya Raj Pandey, a 2nd Year BA LLB student from Symbiosis Law School, Hyderabad

INTRODUCTION 

As we know that, India is developing in every sector rapidly and in order to grow and advance properly, the concept of merger and acquisition were proposed by the agencies of the central government. After its proposal, the concept spread rapidly around the territory as well as world like a fire in the jungle and hence became so popular among the corporations and firms. Now, it is important to think that why this concept become so popular within the territory. The prominent reason among various different reason is that, the competition in between the firms are very high in domestic market and therefore in order to supersede each other, they start using unhealthy practices which in turn harms the overall competition in the market. Now, in order to eradicate these unhealthy competitions, the government introduced the concept of merger and acquisition and received overwhelming response from the company’s as they agrees to connect through M&A transactions. 

Now, we know the little history of the M&A, so it is the time to move on to meaning or the connotations of merger and acquisition term. In general, we know that merger means when we combine or merge to more things. Specifically, in the terms of business, it is the procedure from which two or more firms syndicates together to form a single firm or corporation and further it will function as one company. While the combination takes place, then it is important to penned down that, all the assets as well as liabilities are acquired by the operating corporation and primarily the merger is carried out with the intention to increase the share in the market, connection and all these in turn increases the revenue and benefits of the company or corporation. Secondly, acquisition in wide-range can be defined as to purchase something. According to M&A, acquisition means to acquire any minor firm or corporation by the big one. Acquiring all the portion or any particular portion of the other company for the benefit of big company can be a way of acquisition. Therefore, it is very clear that, both merger and acquisition is carried out for the benefit or advancement of one company and sometimes is may causes loss to other or may creates huge profit for all of them. Thus, both are very vital topics in the corporate sector and in this article we will study about the various forms, advantages & the legal procedure involved in it. 

FORMS OF MERGER & ACQUISITION 

Merger, as we defined earlier is the combination of two or more businesses and the same can be of numerous types. Some of the vital mergers are described below: 

1. Horizontal Merger – It is the form of merger which commonly takes place in between those two to three companies or firms which are in direct competition to each other because of the reason that they produce and sell same products in one manner or the other. Illustrations: Maruti and Toyota, Nestle and Sunfest etc. 
2. Vertical Merger – Vertical merger generally takes place in between those two organizations or firms who have definite and authenticate buyer seller relationship.
3. Conglomerate Merger – The most surprising form of merger, it is because in this two or more corporations merger with each other who didn’t have any similarity in between them. They have different businesses and different customers as well. 

Now, as we already stated and explained the types or forms of merger, we are moving on to acquisition further. Acquisition simply means, acquiring any other corporation or firm. The types of acquisition are listed below: 

1. Horizontal Acquisition – The form of acquisition in which one company who manufactures or produces one type of product acquires the other one who is also in the same products. Therefore, we can say that, it is the type in which one company acquires the other company of same commerce.  
2. Vertical Acquisition – Vertical acquisition is the process in which a corporation who is well established and have high production and sells acquires those corporations which is little down in the market i.e., they have low production amount and less selling than the other corporation. 
3. Conglomerate Acquisition – The prominent form of acquisition in which one completely different corporations acquired the other corporation or firm whose business or commerce is different from the acquiring firm. This form basically persist to higher the share in marketplace and enlarge production of the commodities. 

Therefore, it is evident that both merger and acquisition have same categories but in different manners because both are dissimilar concepts and hence the difference is genuine in between the forms of both merger and acquisition. 

ADVANTAGES OF MERGER & ACQUISITIONS 

The two different forms of corporate combinations, which is used generally in overall management as well as administration along with the functioning of the firm. We know that through the process of combination, both firms gets benefitted in one way or the other but there are several other latent benefits as well, which we all get to know here. Thus, the advantages are listed below: 

1. When two corporations merges then a business synergy is created in between them which in turn helps to boom their production, sell and market value in very short duration. 
2. In the process of merger, if any new corporation merges with the old and well established one, then the new one will get various advantages in the competition which prevailed in the economy. 
3. Merger and acquisitions increases the efficiency of the cost, as it increases the spending power of the corporation along with negotiating techniques. 
4. Businesses which is combines through the process of combination, commonly receives very high exposure in the industry and also the range of products increases a lot due to combination. 
5. The process of merger and acquisition provides aid in increasing the marketing capabilities along with distributions of product in the market. Along with this, it also helps in improving and making good reputation of the corporation in the eyes of shareholders and stakeholders. 

LEGAL PROCEDURE OF MERGER AND ACQUISITION 

Around the globe, there were many laws drafted and executed in order to carry out the process of M&A smoothly and for the same purpose and with the similar intentions and motive, in India the government drafted and executed the bills and acts which in turn explains and governs the process of merger and acquisition. 

In the territory of India, Indian Companies Act of 1956, primarily governs the procedure of M&A and hence provides range of sections for the same. Firstly, in section 391 it is stated and explained that, the tribunal or committee who has the appropriate authority can impart the permission of compromise in between the company and members of the same. Similarly, under section 392, it is clearly mentioned that, the committee can use force in order to monitor the settlements with the affiliates. Now, once all the pre requisite processes are completed then the tribunal may offer the measures for the amalgamation of the firm or corporation. The same is provided under section 394 of the companies act. Apart from all the smooth functioning of the process, sometimes there may be some shareholders who didn’t agree with the majority then in that special situation the tribunal under section 395, have the sufficient powers to acquire his share for the profit of the company or the favour of corporation or any firm as such. Last but not the least, under section 396 of the companies act, the Union government have the power and aptitude to aid the process for the interest of the nation. 

Hence, overall in the process, the company first have to take permission from the members and then they can file for the merger or acquisition process after getting green signal from the concerned authorities. Meanwhile in the whole process, the tribunal will provide definite support and aid for the amalgamation of the firms or corporations as such. 

CONCLUSION 

In this article, we already discussed the concept of Merger and Acquisitions and it is crystal clear from the analysis that, from the process of combination of corporations, both the sides get advantages or be at advantageous point irrespective of their share, reputation and revenue in the market from the commerce. Towards the end, we also discussed the procedure for the M&A which is well depicted in the Companies Act section and the range is quite large in the same. 

REFERENCES 

1. Laws Regulating Mergers and Acquisitions in India, Prabhanshu, Legal Services India, https://www.legalserviceindia.com/article/l463-Laws-Regulating-Mergers-&-Acquisition-In-India.html 
2. All you need to know about the laws governing mergers and acquisitions, Aishwarya Shankar, iPleaders, 

https://blog.ipleaders.in/all-you-need-to-know-about-the-laws-governing-mergers-and-acquisitions/ 

1. M&A, Types, Structures and Valuation, Adam Hayes, Investopedia, November 2022
2. Mergers and acquisition in India and its effect on the operating efficiency of an acquiring company, Pranav Sethi, iPleaders, 

https://blog.ipleaders.in/mergers-and-acquisitions-in-india-and-its-effect-on-the-operating-efficiency-of-an-acquiring-company/#Introduction 

1. A study on M&A in India an its impact on operating efficiency of Indian Acquiring Company, Natika Poddar, Theoretical Economics Letters, Vol. 9 No. 4, April 2019. 
2. Analysis of Mergers and Acquisitions, Varun Hariharan, Enterslice, April 17, 2020
3. Analysis of Merger and Acquisitions, Dashmeet Kaur, Swarit Advisors, February, 2020

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