Mergers and acquisitions and the Insolvency and Bankruptcy Code have only reiterated the crucial role which is played by law firms. Nitin Potdar, corporate partner and M&A expert at J Sagar and Associates, (JSA) spoke to Financial Express (FE’s) Editor Jyotsna Bhatnagar about the changing face face of the legal industry. Excerpts:
What’s the current landscape looking like for mergers and acquisitions in India?
M&A activities have been progressing at a fairly buoyant pace in 2018. We have seen some large billion-dollar deals as well as increase in small and large-sized investments made by PE funds cumulatively totalling a whopping $9 billion already. On the regulatory front, there have been significant developments which augur well not only for M&A activities but would also help improve India’s image on the ease of doing business index. The most significant step has been the establishment of 11 NCLT benches and the NCLAT. Hopefully this should lead to quicker resolution of corporate disputes and restructurings. The RBI has allowed cross-border mergers of Indian companies into foreign companies under the Companies Act, 2013. Most importantly, the IBC has seen quick legislative changes like the reduced percentage of voting. However, its success would depend upon the ability to conduct quality due diligence and the commercial viability of the assets.
What are the main challenges encountered while working on an M&A deal?
In spite of the relatively high investments by PE players, unfortunately M&A or even plain vanilla PE deals are taking time. In addition to the issue of realistic valuations, issues faced by promoter-driven companies two decades back including lack of proper governance, absence of succession plan, dearth of technology, absence of corporate legal structures including formal agreements with vendors and customers or lack of employee stock option plans continue to remain challenges even today.
