The document discusses trends in mergers and acquisitions (M&A) in India. It notes that while Indian startups raised significant funding in 2021 and early 2022, funding has slowed in recent months as access to cheap capital has dried up. The document outlines M&A trends by industry from 2018-2022 and notes that technology is driving many acquisitions as large companies and unicorns acquire startups to build capacity and grow. It then covers various aspects of M&A deals including applicable laws, the role of professionals, and key valuation considerations.

1. By Chander Sawhney
F.C.A., F.C.S., Registered Valuer (IBBI)
Founder & CEO
Transique Corporate Advisors
28th May 2022
Practical Challenges
& Trends in M&A
Bangalore Valuers Association

2. Section-I
Start up & Funding
Trends

3. The Indian startup ecosystem continued to thrive in 2021 and during the first
quarter of 2022. However, a sudden decline in funding, especially for larger
deals, and the number of unicorns and ESOP buybacks in April indicated a
slowdown where home-grown startups struggled to raise capital compared to
previous months.
Indian startups have raised $2.65 billion across 121 deals in April, a 33%
decline from $4 billion in the previous month*
“Cheap Capital Dries Up…..and Cost of Capital is becoming expensive
while the macro is becoming less certain, leading to investors de-
prioritizing and paying up less for growth.” – SEQUOIA CAPITAL
Indian Startup Trends – April 2022
*data tracking platform Fintrackr

4. Survival of the fittest
Japan's SoftBank, which is India's biggest tech
investor, with more than $14 billion in
investments, has reported a record loss of
$26.2 billion at its Vision Fund investment arm.
Its founder and CEO Masayoshi Son said that
this year the firm may invest only half or a
quarter of what it did last year.
In India, shares of startups like Nykaa and
Zomato which had blockbuster listings last
year, are down -67% and -43% from their
peaks, respectively. Paytm is trading -73%
below its IPO price.
Enterprise startups are relatively in a better
position than the Startups chasing growth.

5. Global Capital Market Trends

6. Section-II
M&A Trends

7. M&A Trends
*2022 till May 25, 2022
(Venture Intelligence Data) based on calendar year

8. Screenshot 2021-09-07 at 12.55.09 PM
M&A – Trends By Industry Amount (Mn$)
INDUSTRY
2018 2019 2020 2021 2022 (5 Months)
Deal Amount Deal Amount Deal Amount Deal Amount Deal Amount
Healthcare & Life Sciences 58 7,700 61 1,597 53 2,170 87 3,686 35 4,783
IT & ITES 244 27,927 250 5,791 198 3,589 401 32,222 191 3,561
Telecom 7 12,692 9 783 8 6,888 13 586 5 3,292
BFSI 44 4,687 55 15,105 33 1,993 53 11,453 39 3,210
Manufacturing 114 24,439 77 5,283 73 4,247 88 3,087 51 3,167
Energy 43 12,306 49 12,011 44 9,333 75 9,899 31 2,088
Media & Entertainment 19 1,027 17 188 8 25 6 35 10 1,816
Education 10 97 9 364 11 55 20 2,771 9 771
Shipping & Logistics 18 916 22 964 6 689 19 2,403 6 264
Other Services 27 133 20 366 15 3,558 11 693 8 264
Engg. & Construction 21 1,188 19 1,882 9 817 23 1,952 5 197
FMCG 13 824 16 255 10 380 20 754 15 182
Advertising & Marketing 16 113 11 152 10 24 9 129 5 173
Travel & Transport 16 509 22 1,095 6 1,887 11 2,856 7 134
Hotels & Resorts 4 17 8 706 2 123 9 214 1 98
Agri-business 23 5,267 16 1,309 10 684 10 52 10 92
Food & Beverages 11 221 23 1,076 9 207 21 859 15 82
Gems & Jewelry 1 26 1 20
Mining & Minerals 1 6 1 13 3 0 1 20
Textiles & Garments 7 236 8 909 4 4 10 249 2 12
Retail 13 1,520 8 350 4 271 12 59 2 1
Sports & Fitness 3 24 1 0 2 0 1 0
Diversified 1 0 1 181 3 0
Total 714 1,01,876 703 50,381 518 36,942 901 73,958 450 24,226

9. Screenshot 2021-09-07 at 12.55.09 PM
Radically changed world, characterised by
• Uncertainty,
• Geopolitical Instability,
• Shifting consumer preferences,
• Accelerated digitisation,
• COVID ?
• Increasing Cost of Capital
There is a Heightened need for agility and adaptability to remain relevant.
Large corporates AND India’s unicorns will be serial acquirers to BUILD Capacities and GROW
As of May 2022, Indian unicorns have acquired a total of 326 startups so far, with maximum deals being finalized in
2021. Flipkart aced the (M&A) game with over 17 M&A transactions till date, closely followed by Byju’s with over 16
deals. Other leading players in terms of M&A activity include Zomato (15), Quikr (15), Mensa (14), Cure Fit (14), etc.

10. TECHNOLOGY DRIVES THE TRANSFORMATION AGENDA
Source: EY Study Report

11. TRANSFORMATION AMBITIONS DRIVE M&A POST PANDEMIC
Source: EY Study Report

12. Section-III
M&A Roadmap

13. Why M&A
Simplification of Corporate Structure
Tax Efficiency
Value Unlocking through Corporate Action
Value Creation
Consolidation of same Business
Segregation of different Businesses
Segregation of Surplus Assets
Segregation of Promoter and Company Assets
Reorganisation considering Market trends and Valuation

14. M&A
M&A (NCLT
Route) –
Merger,
Demerger
IPO
(including
Direct
Listing) –
SME / Main
Board
Shareholding
Reorganisati
on
Business/
Asset
Transfer /
Slump Sale
M&A Restructuring Modes
Voluntary
Winding up
Striking off
Companies
Acquisition
(IBC Route)

15. M&A
Companies
Act
Income Tax
Act
FEMA -
Foreign
Shareholders
Competition
Law
Applicable Laws on M&A
Accounting
Standards
Stamp Duty
Laws – State
specific
Sectoral
Regulators -
Industry
specific
SEBI Laws
and
Regulations
- Listed
Companies
GST and
Labour Laws

16. Business
Valuations,
& Financial
Modelling
Tax
Advisory &
Structuring
Deal
Structuring
Legal &
Regulatory
Advisory
Stamp Duty
Advisory
Role of Professionals in M&A Deal Journey
Legal
Documentati
on (Term
Sheet,
SHA,SPA
etc.)
Due
Diligence
NCLT
Approvals on
M&A
Regulatory
Approvals
(Stock
Exchanges,
SEBI, Income
Tax, Sectoral
Regulators)
Business,
Industry
Research and
Assessment
of recent
Deals
Pitch Book
review and
Advisory
Promoters
Background,
Management
Team, Tied-up
Capital
commitment,
Traction
Connecting
with
appropriate
Buyers/Sellers
/Investors
Deal
Negotiation
Financial Advisory Tax, Legal & Regulatory Advisory
Fund Raising
(VC/PE/HNI/
Corporates)
Purchase
Price
Allocation and
Accounting
Impact

17. Key Issues
in Merger &
Demerger through
NCLT
Stamp Duty Cost
Income Tax / Capital Gains
Registered Office / NCLT (for Scheme of Arrangements)
Board and Shareholders Approval
Lenders and Creditors Approval
Regulatory Approval
Time-period and Process
Accounting Aspects
Valuation aspects / Minority Shareholders ? / Relative or
Fundamental Valuation ? + Fairness Opinion

18. 4
6
2.
Board Approval
3.
Stock Exchanges /SEBI
Approval
1.
Valuation and Scheme
of Arrangement
2
5.
Shareholders, Lenders
and Creditors Approval
4.
NCLT Filing
8.
Post Merger PPA and
Integration
7.
NCLT Approval
6.
ROC/OL/IT Deptt./Sectoral
Regulator Approval
Merger & Demerger (NCLT /Regulatory Process)

19. Section-IV
Valuation Aspects

20. Understanding Purpose
of Valuation
Information requisition
from the Company
Financial Analysis and
Normalisation
Adjustments
Understanding Industry
Characteristics and
Trends
Forecasting and
reviewing Company
Performance
Considering and
Applying appropriate
Valuation
Methodologies
Performing Value
adjustments, Value
Conclusion,
Documentation and
Reporting
Valuation Process

21. Valuation for
Scheme of
Arrangement
In case of a merger valuation, the emphasis is on arriving at the “RELATIVE” value of the shares of the merging companies to
facilitate determination of the “swap ratio”
Under SEBI Master Circular SEBI/HO/CFD/DIL1/CIR/P/2021/0000000665 dated November 23, 2021, Valuation by IBBI
Registered Valuer mandatory other than in cases where there is no change in the shareholding pattern of the listed company.
As per SEBI Master Circular, fair value of listed companies needs to be undertaken as per preferential allotment guidelines
prescribed under the SEBI (ICDR) Regulations, 2018. w.e.f. 14/1/2022, for valuation of Frequently Traded Shares of Listed
Company has to be computed based on 90/10 trading days VWAP prior to Relevant date. The relevant date for this purpose is
defined as the date of Board Meeting in which the scheme of merger is approved.
As per Stock Exchange circulars the valuation reports on Scheme of Arrangement, the valuation reports shall display the
workings, relative fair value per share and fair exchange ratio with justification in the following format:
XYZ Ltd PQR Ltd
Valuation Approach Value per Share Weight Value per Share Weight
Asset Approach X a y d
Income Approach X b y e
Market Approach X c y f
Relative Value per Share X y
Exchange Ratio (rounded off) xx
w.e.f. 1/11/2021, as per SOP of Stock Exchanges, the period under consideration for valuation of unlisted Companies (other
than Income Approach) should not be Older than 3 months.

22. Valuation for
Mergers
Fairness Opinion
In case of M&A, focus is on comparative valuation of companies and thus apart from adhering to
the general valuation principles, the valuation needs to be fair from the point of view of
shareholders of the transferor and transferee companies.
In accordance with SEBI Master Circular and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015, the listed as well as the unlisted company getting merged shall each be required
to obtain a ‘fairness opinion’ on the valuation of assets/equity shares done by the valuers from an
independent merchant banker.
Purchase Price Allocation (PPA)
Under Ind AS 103, now all business combinations (except group consolidation) are considered in
the nature of purchase and require the acquirer to apportion the consideration paid among
tangible and intangible assets. Intangibles need to be separable and identified based on their
unique characteristics. Ind AS 38 and IVS 210 deals with Intangible Assets.
As per para 18 (measurement principle) of Ind AS 103, the acquirer shall measure the identifiable
assets acquired and the liabilities assumed at their acquisition-date fair values.
The difference amount, if any, between the consideration paid and assets acquired goes to
goodwill.

23. Valuation for
Mergers
Purchase Price Allocation (PPA) Template

24. Let’s Learn…Unlearn…Relearn and make
the most of
Professional Opportunities

25. Contact Us
Chander Sawhney
F.C.A., F.C.S., Registered Valuer (IBBI)
Founder & CEO
Transique Corporate Advisors
M: +91 9810557353
E: chander@transique.in
DLF CYBER CITY (NCR)
The Executive Centre
Suite No.10 & 50, Level 18, Building No.5, Tower A, Phase 3
Gurugram
B: +91 124 6637851
E: info@transique.in
THE CAPITAL (MUMBAI)
The Executive Centre
Level 7, Plot No C-70, G Block
Bandra Kurla Complex, Bandra East
Mumbai
M: +91 9587011010
Web: www.transiqueadvisors.com