Mergers & Acquisitions
Overview
What is Mergers & Acquisitions?
Mergers and acquisitions are often used interchangeably. However, there are minute differences between the two. When an organisation manages to take over another firm and goes onto be the owner, then the purchase is termed as an acquisition. From the legal perspective, the target company will no more exist and the acquirer will go onto absorbing the entity while the absorbers shares will continue to be traded and the ceasing companys shares will no more exist to be traded.
Bitter deals in which the target businesses would not like to be acquired but still go onto be acquired as termed as acquisitions. Hence, purchase deals are categorised under mergers or acquisitions based on the deals being forced or willful.
What are the advantages of Mergers & Acquisitions?
The term mergers and acquisitions often refer to the one company taking over another. In the case of acquisitions, one organisation will go onto make an outright purchase of another company. The firm that is acquired will not go on to change its structure or legal name. The only thing that changes is the ownership rights will no more belie with the parent company.
The merger of the two organisations will give birth to a new organisation which may be given a new legal or continue to function under the name of any one of the companies that underwent the merger. The significance of the mergers and acquisitions is that they may result in sizeable revenues being generated.
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Our FAQ
Answers To Your Questions
Liquidation is important for the following reasons- * Once the liquidation process is over, the directors and other company officials are free from all creditor liabilities. * If the company directors pass a voluntary declaration, the company can avoid legal actions from a tribunal or a court. * The cost involved in the liquidation process is comparatively lower than other modes of closure * The creditors are benefited as they will be eligible for default payment from the sale of assets
Some of the most prominent causes for a company to go into liquidation are- * Insolvency * Bankruptcy * Unwillingness to continue with business operations
The liquidation strategy refers to liquidating the assets of a company before winding up operations. By initiating the liquidation process, the company may sell its assets to meet obligations and repay liabilities. As a part of the liquidation strategy, a liquidator is appointed to oversee the process of selling the company assets. The remaining balance, if any, after repayment to the creditors, gets distributed among the shareholders of the company
The liquidation marks the end of business operations by a company and this may lead to the unavoidable loss of jobs for the employees. However, the company administration may look to restructure the organization and save some (or all) of the jobs in the process. But, the employees will have the right to claim dues owed to them by the company.
If the employer goes into liquidation, there will be no business continuity and the employees will be without a job. However, the employees will have the right to claim dues (salary, allowances, etc) owed to them by the company. If there are no funds with the insolvent company to pay the employees, they can approach the National Insurance Fund (NIF) for payments due.
In general, the liquidation process of a company in India can take up to 2 years to complete, since the date of application, in case of compulsory liquidation. It may take less time for a voluntary liquidation process to complete. The duration may vary from company to company, depending on the complexity of the process involved.
After a company is liquidated, the liquidator can sell its assets to repay all pending liabilities. The remaining balance, if any, after repayment to the creditors, gets distributed among the shareholders of the company.
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