Mergers and Acquisitions (M & A). An Overview. Prepared by: YOGESH MITTAL. Yogesh_mittal2@yahoo.co.in. Subject Index. Precedents Reasons for Mergers and Acquisitions ( M & A ) Basic Terms and their distinction Considerations in events of M & A Legal aspects Finance aspects
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- As a going concern – “Slump Sale”
- Individual assets - “Itemised sale”
scheme of amalgamation, company’s final accounts.
structuring of the scheme. Court can order a meeting of
shareholders, members as it deems fit.
scheme is sanctioned by court, file it with registrar.
dissolved without winding up whereas in acquisition, the
transferor co. continues to exist.
Synergy = VAB –(VA + VB)Hence, it signify the difference between combined value and individual values of entities.
In the Financial statements post Amalgamation, line by line addition of all assets and liabilities of all entities except share capital.
Any Excess realised / loss suffered to be adjusted by reserves.
For statutory reserves open Amalgamation adjustment a/c.
Amortize goodwill arising out of such events over 5 years.
Assets and liabilities to be recorded in the books at the value at which they are taken over by the transferee co.
Any surplus over net assets to be debited to goodwill and loss suffered to be credited to capital reserve.
Reserves and surplus shall not be transferred to the purchasing co.
Treatment of statutory reserves and goodwill shall remain same as in pooling of interest method.Accounting Methods