A merger occurs when one company is absorbed by another, while an acquisition takes place when a larger company takes over the shares and assets of a smaller company. Mergers and acquisitions allow companies to achieve economies of scale, gain market share, and increase competitiveness. However, they can also lead to integration difficulties and excessive debt if not managed properly. Some major mergers and acquisitions in India include the Reliance-BP deal, Essar exiting Vodafone, and Vedanta acquiring Cairn India. Reverse mergers allow private companies to go public by acquiring shell public companies.

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4. WHAT IS MERGER?
A merger is a combination of two or more companies where one
corporation is completely absorbed by another corporation.
WHAT IS ACQUISITION?
Acquisition essentially means ‘to acquire’ or ‘to takeover’. Here a
bigger company will take over the shares and assets of the smaller
company.

5. • The concept of merger and acquisition in India was not popular until the
year 1988.
• The key factor contributing to fewer companies involved in the merger is
the regulatory and prohibitory provisions of MRTP Act, 1969. (Monopolies
and Restrictive Trade Practices Act,1969)
• The year 1988 witnessed one of the oldest business acquisitions or
company mergers in India.
• As for now the scenario has completely changed with increasing
competition and globalization of business. It is believed that at present India
has now emerged as one of the top countries entering into merger and
acquisitions.

6. • Preliminary Assessment or Business Valuation- In this process
of assessment not only the current financial performance of the
company is examined but also the estimated future market
value is considered
Preliminary
• Phase of Proposal- After complete analysis and review of the Assessment
or Business
target firm's market performance, in the second step, the Valuation
proposal for merger or acquisition is given.
Stage of Phase of
Proposal
• Exit Plan- When a company decides to buy out the target Integration
firm and the target firm agrees, then the latter involves in Exit
Planning.
• Structured Marketing- After finalizing the Exit Plan, the target Structured Exit Plan
Marketing
firm involves in the marketing process and tries to achieve
highest selling price.
• Stage of Integration- In this final stage, the two firms are
integrated through Merger or Acquisition.

7. Different Types of Mergers
• A horizontal merger - This kind of merger exists between
two companies who compete in the same industry
segment.
• A vertical merger - Vertical merger is a kind in which two
or more companies in the same industry but in different
fields combine together in business.
• Co-generic mergers - Co-generic merger is a kind in which
two or more companies in association are some way or the
other related to the production processes, business
markets, or basic required technologies.
• Conglomerate Mergers - Conglomerate merger is a kind of
venture in which two or more companies belonging to
different industrial sectors combine their operations.

8. Different Types of acquisitions
• Friendly acquisition - Both the companies approve
of the acquisition under friendly terms.
• Reverse acquisition - A private company takes over
a public company.
• Back flip acquisition- A very rare case of acquisition
in which, the purchasing company becomes a
subsidiary of the purchased company.
• Hostile acquisition - Here, as the name suggests,
the entire process is done by force.

9. Difference between Mergers
and Acquisitions
Mergers Acquisitions
Meaning Meaning
Deal Deal
Effect Effect
Example Example

10. Motives for Mergers &acquisitions
 Economies of large scale business
large-scale business organization enjoys both internal and external
economies.
 Elimination of competition
It eliminates severe, intense and wasteful expenditure by different
competing organizations.
Economies of
Elimination of
large scale
 Desire to enjoy monopoly power business
competition
M&A leads to monopolistic control in the market.
Desire to enjoy Adoption of
monopoly modern
 Adoption of modern technology power technology
corporate organization requires large resources Lack of technical
and managerial
talent
 Lack of technical and managerial talent
Industrialization, scarcity of entrepreneurial, managerial and
technical talent

11. Benefits of Mergers and
Acquisitions
• Greater Value Generation.
Mergers and acquisitions generally succeed in generating cost efficiency
through the implementation of economies of scale. It is expected that the
shareholder value of a firm after mergers or acquisitions.
• Gaining Cost Efficiency.
When two companies come together by merger or acquisition, the joint
company benefits in terms of cost efficiency. As the two firms form a new and
bigger company, the production is done on a much larger scale.
• Increase in market share - An increase in market share is one of the plausible
benefits of mergers and acquisitions.
• Gain higher competitiveness - The new firm is usually
more cost-efficient and competitive as compared to its
financially weak parent organization.

12. Problems of Merger and
Acquisitions
• Integration difficulties
• Large or extraordinary debt
• Managers overly focused on acquisitions
• Overly Diversified

13. Impact of Mergers and
Acquisitions
• Employees:
Mergers and acquisitions impact the employees or the workers the most. It is a well known fact that whenever there is a merger or an
acquisition, there are bound to be lay offs.
• Impact of mergers and acquisitions on top level management
Impact of mergers and acquisitions on top level management may actually involve a "clash of the egos". There might be variations in the
cultures of the two organizations.
• Shareholders:
• Shareholders of the acquired firm:
The shareholders of the acquired company benefit the most. The reason being, it is seen in majority of the cases that the acquiring
company usually pays a little excess than it what should. Unless a man lives in a house he has recently bought, he will not be able to know
its drawbacks.
•
Shareholders of the acquiring firm: hey are most affected. If we measure the benefits enjoyed by the shareholders of the acquired
company in degrees, the degree to which they were benefited, by the same degree, these shareholders are harmed
•

14. Strategies of Merger and Acquisition
• Then there is an important need to assess the market by
deciding the growth factors through future market
opportunities, recent trends, and customer's feedback.
• The integration process should be taken in line with consent of
the management from both the companies venturing into the
merger.
• Restructuring plans and future parameters should be decided
with exchange of information and knowledge from both ends.

15. Laws and Regulation relating to
Merger and Acquisition

16. Indian Mergers and Acquisitions: The
changing face of Indian Business

17. Merger & Acquisition:
Integration Key to Success
• RTTRE

18. NEED FOR MERGER AND ACQUISITION
IN BANKING SECTOR
•

19. Reverse merger and Reverse
acquisition
• A reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the acquiree
for accounting.• The entity whose equity interests are acquired (the legal acquiree) must be the acquirer for
accounting purposes for the transaction to be considered a reverse acquisition.
• reverse acquisition
• Definition
• One way for a company to become publicly traded, by acquiring a public company and then installing
its own management team and renaming the acquired company.
• A reverse merger refers to an arrangement where private company acquires a public company, usually a shell
company, in order to acquire the status of a public company. Also known as a reverse takeover, it is an alternative
to the traditional initial public offering (IPO) method of floating a public company. It is an easier way that allows
private companies to change their type while avoiding the complex regulations and formalities associated with an
IPO. Also, the degree of ownership and control of the private stakeholders increases in the public company. It also
leads to combining of resources thereby giving greater liquidity to the private company.
To ensure a smooth reverse merger, the public company should be a shell company, that is, the one which simply
has an organization structure but negligible business activity. It is only an organizational entity on paper with no
significant existence in the market.
Reverse merger is a speedy and cheaper way of becoming a public company within a maximum period of 30 days.
Alternatively, the IPO route takes almost a year. Moreover, public companies normally have greater valuation due
to the greater investor confidence enjoyed by them. Hence acquiring one will push the private company up the
growth ladder.
However, it faces stability risk because the owners of the shell company might sell their stakes once the new
company decides to raise the market price of its shares. This may lead to a complete operational chaos because
the management of private companies have negligible experience of running a public company.

20. Top 5 Indian Mergers and
Acquisitions
• The Reliance – BP deal
• Essay exits Vodafone
• GVK Power acquires Hancock Coal
• Adyta Birla Group to acquire Columbian Chemicals
• The Vedanta – Cairn acquisition

21. M & A sectors
Case study
• The Vedanta – Cairn
acquisition
December 2011 finally saw the
completion of the much talked
about Vedanta – Cairn deal that
was in the pipeline for more
than 16 months. Touted to be
the biggest deal for Indian
energy sector, Vedanta
acquired Cairn India for a neat
8.6 billion dollars. Although the
Home Ministry cleared the
deal, it has highlighted areas of
concern with 64 legal
proceedings against Vedanta.

22. CONCLUSION
•

23. ACKNOWLEDGEMENT
WE WOULD LIKE TO EXPRESS OUR DEEP AND
SINCERE GRATITIUDE TO PROF. AMOGH
GHOTOSKAR. FOR YOUR UNDERSTANDING,
ENCOURAGING AND PERSONAL GUIDANCE.
WE ARE GREATFUL TO YOUR DETAILED AND
CONSTRUCTIVE COMMENTS AND YOUR
IMPORTANT SUPPORT THROUGHT THIS WORK.

24. BIBLIOGRAPHY
 http://www.scribd.com/doc/58466503/21/Mergers-and-
Acquisitions-across-Indian-Sectors