This document provides an overview and agenda for a presentation on mergers and acquisitions (M&A). It discusses the definitions of mergers and acquisitions. It also outlines the classification of M&A into horizontal mergers, vertical mergers, conglomerate mergers, and acquisitions and takeovers. The document describes the six waves of M&A activity historically. It then details the generic process of M&A in six stages: pre-merger planning, planning for M&A, execution, delivering on targets, and unlocking value. Finally, it lists some of the key Indian regulatory acts that govern M&A activity.

1. Mergers & Acquisitions
ITM – SMBA Batch 1
Presenters:
1.) Omkar Khalap 2.) Ganesh Murthy 3.) Ashish Dhargalkar

2. Agenda
Overview 1
Objectives 2
Background 3
Generic Process of M&A 4
Generic Process of M&A 5
M&A Regulatory Environment – Indian Market 6
Institute of Technology & Management 2

3. Overview
 A merger is a combination of two or more businesses into one business.
 It is a merger of one or more companies with another or the merger of two or more companies to form a new company, in such
a way that all assets and liabilities of the amalgamating companies become assets and liabilities of the amalgamated company
and shareholders not less than nine-tenths in value of the shares in the amalgamating company or companies become
shareholders of the amalgamated company.
 An acquisition may be defined as an act of acquiring effective control by one company over assets or management of another
company without any combination of companies. Thus, in an acquisition two or more companies may remain
independent, separate legal entities, but there may be a change in control of the companies.
 When an acquisition is 'forced' or 'unwilling', it is called a takeover.
Classification of M&A
M&A
Conglomerate
Horizontal Merger Vertical Merger Acquisitions Takeovers
Merger
Institute of Technology & Management 3

4. Objectives
Largely refers to ideology that A profitable company can buy a loss
Economy of combined companies can reduce their maker to use the target's loss as their
Taxation
scale operating costs and operate at better advantage by reducing their tax
profit margins. liability..
Refers to efficiencies associated with Resources can create value through
Economy of demand-side changes, e.g. increasing either overcoming information Resource
scope or decreasing the scope of marketing asymmetry or by combining scarce transfer
and distribution for different products. resources.
This assumes that the buyer will be
Increased reve Double marginalization occurs when
absorbing a major competitor and thus Vertical
nue or market both the upstream and downstream
increase its market power (by capturing
firms have monopoly power.
integration
share increased market share) to set prices.
Some companies use acquisitions as
A manufacturer can acquire and sell
an alternative to the normal hiring
Cross-selling complementary products to increase Hiring
process. This is largely in start-up
sales volume.
phase.
Gain better bargain power in buying Absorption of
This could be for eliminating market
Synergy products from suppliers and selling similar
competition and gain price leadership.
products to consumer. businesses
Institute of Technology & Management 4

5. Background
Sixth Wave
Fifth Wave
 Shareholder
Activism, Private
Fourth
Equity, LBO
Wave  Cross-border
 Mixed strategies
mergers
for M&A
Third Wave  Inspired by
 Hostile takeovers
globalization, stoc
 High value
Second k market boom
takeovers
Wave  Conglomerate
 Involved foreign
and deregulation
mergers  The M&As were
takeovers
First Wave  Inspired by stock largely equity
 Vertical mergers  Sectors involved
prices, interest financed rather
 Industries – pharma,
rates and strict than debt finance
involved were banking. Oil and
 Horizontal enforcement of  The mergers were
primary industries gas, airline
mergers antitrust laws driven long term
– metals, oil and
 M&A Failure due  Ended rather than short
gas, etc
to 1903 and 1904 introduction of term profit
 Ended with stock
slowdown new policy to split motives.
market crash in
 Companies – conglomerates
1929
road and rail
1897–1904 1916–1929 1965–1969 1981–1989 1992–2000 2003–2008
Institute of Technology & Management 5

6. Generic Process of M&A 1 2
Unlocking Value
Deliver on
Targets
Execution
Planning for
M&A
Pre-Merger
Planning
Institute of Technology & Management 6

7. Generic Process of M&A 1 2
Pre-merger Planning Planning for M&A Execution Deliver on Targets Unlocking Value
 Undertake Due  Pair IT and business  Common Vision and  Implement the post  Integrate to unlock the
diligence and across merged entity to Strategy Workshops ‘Execution phase’ plans true potential of the
Assessment of form cross functional  Experiential Learning  Enable automatic assets through the
integration effort teams to develop Workshops consolidation of Book of synergistic
 Finalize the Insurance detailed area wise  Creating effective  Business based on combinations identified
portfolio for re- integration plan & governance groups Straight-Through- from the ‘target
alignment prepare for joint IT  New culture supporting Processing assessment’ phase
 based on the list from governance new enterprise strategy  Comprehensively  Unlock value based on
‘Target Assessment’  Conduct joint dry runs  Implement the new implement IT optimal levels of
Phase and perfect execution organization design & Governance plans application and
 Identify possible plans IT governance plans infrastructure
change in company  Enable communication  Implement business rationalization (inline
rating and anticipate the to all stakeholders processes that match with business model)
rating agency reaction  Provide BAU services customer, cost, quality  Achieve strategic
 Structure the deal to (Helpdesks, Production and employee business agility based
best monetize the support, System satisfaction goals on plug and play IT and
assets availability, Scalability, e Business com7ponents
 Plan for Day One and tc)  Stress test the strong
conduct internal dry  Enable fulfillment of foundation developed
runs regulatory and legal for future M&A and
requirements strengthen as
 Enable cross-selling necessary
and up-selling
Institute of Technology & Management 7

8. M&A Regulatory Environment – Indian Market
The Companies
Act, 1956
Competition The Income Tax
Act, 2002 Act, 1961
FEMA, 1999 MRTPA, 1967
The Acts mentioned above are the broad headers. There were several amendments made to this act periodically by the governing bodies.
Hence, these acts follow a continual process of modifications as per requirement from a larger perspective.
Institute of Technology & Management 8

9. Thank You