Library topic
Buying a business
How buyers screen targets, agree terms, run diligence and close an acquisition in India, from the first conversation to the signed agreement.
3 pieces
- Foreign investment in an Indian company: FEMA basicsGuide · 8 minWhen a foreign buyer or investor acquires shares in an Indian company, FEMA, 1999 and the rules under it decide whether the investment is allowed automatically or needs government approval, the minimum or maximum price, and what must be reported to the RBI. These rules shape structure and timing from the term sheet onwards.
- Management buyouts and family successionArticle · 7 minSuccession in an Indian family business decides three things: who owns it, who controls it and who runs it. The routes run from handing over within the family to a management buyout, and a Surat textile family shows how each plays out.
Terms to know
The words you will hear on this part of a deal.
- Strategic buyer
- A buyer in the same or a related business, who may pay for synergies a financial investor cannot capture.
- LOI (letter of intent)
- A short letter recording the main terms agreed in principle before diligence and the definitive agreements.
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- Exclusivity
- A period in which the seller agrees not to negotiate with other buyers, so the chosen buyer can do diligence.
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- Conditions precedent
- Things that must happen before closing, such as approvals, consents from lenders or landlords, or fixing a diligence finding.
- Representations and warranties
- Statements of fact the seller makes about the business in the agreement. If one is untrue, the buyer may claim.
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- CCI approval
- Approval from the Competition Commission of India, needed for combinations above the notified size thresholds. Most mid sized deals fall below them.
Next step
Working through this on a live deal? Talk it over with an adviser.
A thirty minute confidential call with an adviser. You leave with the steps, the documents you will need and where the risks usually sit.