Owing to market dynamics and in an attempt to clear certain regulatory cobwebs, the Securities and Exchange Board of India recently issued a circular which applies to all mergers, demergers, amalgamations and arrangements filed with a stock exchange after 17 November 2020. While the circular will undoubtedly ensure higher levels of transparency and disclosure with respect to proposed schemes, it has introduced additional responsibilities for listed companies' audit and independent directors' committees.
In the realm of M&A and private equity (PE), pricing a deal is not an exact science. Despite in-depth financial, business and legal due diligence, the buyer can never be certain that they are not overvaluing or undervaluing the target. Add a pandemic to the mix, and this uncertainty as to valuations is further magnified. This article takes a closer look at various post-closing adjustment mechanisms used in PE and M&A deals involving Indian private companies.
The year 2020 has had an adverse effect on economies worldwide. Companies face varied and unique challenges and the actions undertaken to combat these will determine the continued viability of their business. In the coming months, various M&A practices are expected to emerge based on market demand and the extent of the pandemic's impact on each sector and jurisdiction. As there is no rule book for avoiding distressed deals, parties must be creative and flexible.
In light of the disruption caused by the COVID-19 pandemic, India has adopted a similar approach to the United States and Europe and restricted foreign direct investment from certain jurisdictions. By way of a notification issued by the Department of Economic Affairs, the government has introduced measures to curb opportunistic takeovers (direct or indirect) of Indian companies by persons or entities of any country which shares a land border with India.