Corporate Restructuring is the type of corporate action taken involving significant modification to a company’s debt operations or structure to limit financial harm and improve the business. The process is of extreme importance to eliminate any financial crisis and enhance the company’s performance. Mergers and Acquisitions is an organizational and economic restructuring. Let’s understand the M&A process a little better.
Mergers and Acquisitions (M & A) is a generic term used to describe the consolidation of companies and assets through various financial transactions. It includes mergers, acquisitions, consolidations, tender offers, purchase of assets, and management acquisitions.
Mergers and Acquisitions involve complex transactions between two or more entities. The broad area often requires specialized skills to navigate. WE employ a team of people skilled in expertly navigating the M&A world.
Mergers and acquisitions are made to reach economies of scale. Merging with competition can expand the geographic reach the two companies have. Additionally, the future expansion plans of the business are achieved through business restructuring.
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Why does a Business need Corporate Restructuring services?
The process of Corporate Restructuring is multi-faceted. It involves analyzing companies that can help you grow your business, nuanced agreements, and transactions between the two. It is easy to be overcome by the complexity of the processes involved in the process of restructuring.
Fortunately for you, BSP Freedo will help you through the process. It will guide you through the many steps and keep you away from the anxiety that often shrouds such transactions. BSP Freedo help by taking from you the burden of conducting Due Diligence, another service that it offers. It ensure you only transact with the best in the industry and make the best decisions to restructure your business.
Legal Conditions behind Corporate Restructuring
Corporate Restructuring is a complex process. It is regulated by-laws to ensure seamless agreements. WE at BSP Freedo list the rules that are applicable for the procedure.
- Company law: The law governs mergers and acquisitions transactions.
- Securities Law: Companies that are listed in recognized stock exchanges must register with the Securities Exchange Board. Securities law governs mergers and acquisitions within the code laid down by the Exchange board.
- Income Tax Law: applicable when assets come to the sale. Capital gains, tax payable on the transfer of support are all governed by this law. Transfer of shares is also managed by Income Tax law.
- Competition Law: The authority will ensure the merger and acquisition between the two entities does not shift the balance of market power. The M & A should not be detrimental to other companies competing in the market.
- Foreign Exchange Law: If the transaction is between companies registered in two countries, this law comes into play.
How do BSP Freedo (WE) help provide Corporate Restructuring service?
A typical merger and acquisition have a long list of tasks, and WE help you through them all. Some of the processes through which WE guide you are listed down below:
This usually is the first step of any restructuring. It is the letter of intent. A term sheet is a non-binding document that the two entities involved intend to carry out the merger and acquisition transaction.
The parties have to negotiate a purchase price – the payment mode and the price mechanism. WE help negotiate and broker a deal between you and your partner. There are usually two pricing mechanisms for a business restructure, they are:
- Lock Box Method
- Completion Accounts Method
The buyer is tasked with ensuring the seller’s assurances. This is something that should be made clear in the initial period. WE help to assess and guarantee a mutually profitable deal regarding the consultation of warranties. If there is any misrepresentation or breaches, WE inform you and help you take the necessary action.
This is a clause present in any merger transaction which prohibits the seller from seeking further bids of acquisition or merger. If a seller continues to seek bids despite starting a negotiation with you, it could result in losses. WE help by negotiating from both sides and ensuring such the clause is not breached by the seller.
This is another service WE offer, where an investigation is conducted on the target. WE will provide a thorough analysis report to you regarding the seller’s company and business.