In a merger, one firm combines with another and loses ownership, while another dominating corporation obtains higher value and can absorb or merge with another But in an acquisition, the receiving company buys the interests of acquired shareholders and ceases to have an interest.

1. ACQUIRING A COMPANY OR ITS
BUSINESS UNDERTAKING
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Presented by:
Navya Chopra

2. INTRODUCTION
WHAT ARE MERGERS AND ACQUISTIONS
In a merger, one
firm combines with
another and loses
ownership, while
another dominating
corporation obtains
higher value and
can absorb or merge
with another
But in an
acquisition, the
receiving company
buys the interests
of acquired
shareholders and
ceases to have an
interest.

3. Stock/Share Sale
Slump Sale
Amalgamation
Asset Sale
1.
2.
3.
4.
Demerger
5.
TYPES OF ACQUISITION

4. • An asset acquisition is the purchase of a
company by buying its assets instead of its
stock. Which company assets are included in
the ownership transfer depends on the kind of
transaction.
• Any company transfer that does not take the
form of a share acquisition is referred to as an
asset deal. This means that the sale of a firm is
often either an asset deal or a share
agreement/stock purchase.
• With an asset purchase, the buyer may choose
which assets to acquire and which ones to
reject. Additionally, it offers the purchaser the
choice not to take on any responsibilities.
ASSET SALE

5. • A buyer directly purchases the shares of a target
firm from the selling shareholders in a stock
acquisition. With a stock sale, the buyer
acquires ownership of the company's assets as
well as its liabilities, including any possible
liabilities resulting from the company's prior
conduct.
• Since a stock sale entails purchasing the entire
company, the buyer is exposed to enormous
prior financial and legal obligations.
• A buyer may be considering a stock acquisition
if they believe that the company's stock has
room to rise in value at the moment and/or that
the company's existing and future obligations
are manageable or modest.
STOCK/ SHARE SALE

6. SLUMP SALE
Finance Act of 1999: Section 2 (42C) and 50B, Income Tax Act, 1961
A slump sale, also known as a
business transfer, is the entire
business undertaking that is
transferred on a "going concern"
basis.
They are typically conducted in
order to increase corporate
performance, sharpen focus,
eliminate inefficient synergies,
encourage strategic investment,
or take advantage of any
associated tax and regulatory
benefits.

7. Apex Court treated the sale
of the business as a going
concern for a lump sum
payment as an itemised sale
CIT v. Artex Manufacturing
Co.
There was no evidence to
support the assertion that the
slump price is attributable to
any assets, the sale of the
business as a going concern
was regarded as a slump sale
CIT v. Electric Control Gear
Mfg. Co.
examined the application of S. 41(2),
45, and 50B;
the Court ruled that in order to
generate capital gain, the charging
part and the computing portion are
integrated pieces of code, and if one
fails, the other also fails,
PNB Finance Ltd. v.
Commissioner of Income Tax

8. • Amalgamation is a type of external
reconstruction in which two or more
businesses are combined, either
through a merger or a takeover.
• Following the merger, the transferee
firm's assets and liabilities consist
entirely of the reserves and surplus of
the transferor business. The combined
entity's equity owners continue to own
a proportionate part of it. After the
merger, the transferee firm is meant to
continue the transferor company's
operations.
AMALGAMATION

9. • A demerger is a business arrangement in
which a portion or undertaking of one
company is transferred to another that runs
independently from the original firm.
• Demergers are carried out primarily for two
reasons. The first is a corporate restructuring
exercise, while the second, in the case of
family-owned businesses, is a family division
exercise
• Definition: Section 2 (19AA), IT Act, 1961;
Section 391 to 394, Companies Act, 1956
AMALGAMATION

10. CONCLUSION
NEED TO DISCUSS THIS TOPIC
As the realm of M&A is explored more and more everyday, it becomes
necessary so as to understand the process of M&A as it provides a way
to swifly expand business.
There is no set process for each transaction; it is entirely dependent
on the particular facts and conditions. The method of acquisition that
a company seeks can have a variety of effects on both the buyer and
the seller. As a result, if the transaction structure is not designed
carefully and appropriately, it might easily sabotage and ruin the sale,
particularly in a nation like India.
So, it becomes important to understand the different methods of
acquisition so as to choose the best option available for the firm.