Mergers & Acquisitions

A comprehensive legal due diligence covers: corporate records (incorporation documents, board minutes, shareholder registers), material contracts (customer, vendor, employment), intellectual property (trademark, patent registrations and any infringement disputes), regulatory compliance (licenses, ROC filings, SEBI/RBI compliance if applicable), litigation (all pending and threatened litigation), real property (title, encumbrances), employment (contracts, PF/ESIC compliance, POSH), and financial (FEMA compliance, tax assessments). The scope is customised based on the target's business, size, and sector.

A slump sale is the transfer of an entire business undertaking as a going concern for a lump sum consideration — without values being assigned to individual assets and liabilities. Under the Income Tax Act, capital gains in a slump sale are computed based on the net worth of the undertaking. An asset purchase, by contrast, involves the transfer of specified assets with individual values assigned to each. A slump sale provides the acquirer with continuity of the business (employees, contracts, licences may transfer automatically), while an asset purchase provides more control over what is acquired but requires re-execution of contracts and re-application for licences.