M&A and Private Equity

Why Do M&A and Private Equity Deals Matter in India in 2026?

M&A can be used to acquire other companies, assets, technology, customers, brands or capabilities for your business. Private equity transactions generally involve the injection of professional capital into a business entity with negotiated economic, governance and exit rights.

While both private equity and M&A can involve share purchases, their commercial goals are often quite different. For example, an acquisition is designed to effect a transfer of control of a business. A private equity investor may take a minority position in a company and negotiate extensive rights with respect to information, governance, transfer and exit.

Transactions in India may be subject to the Companies Act, 2013, the Competition Act, 2002, SEBI regulations (for listed companies) and FEMA regulations (if there is investment by / receipt by non-residents). Statutory merger / amalgamation is covered under Sections 230–232 of the Companies Act. This is why Corporate Law Firm starts with transaction structure first and documentation next.

Quick Facts About M&A and Private Equity

• Compromises, arrangements, mergers and amalgamations are regulated by sections 230–232 of the Companies Act, 2013.
• Section 234 specifically regulates mergers and amalgamations with foreign companies.
• Some acquisitions, mergers and amalgamations may qualify as combinations under the Competition Act and may need to be assessed by CCI prior to consummation.
• India’s merger control regime now has a Deal Value Threshold (as introduced through the Competition (Amendment) Act, 2023 and notified on 9 September 20 24.)
• Acquisitions of listed companies may be subject to the SEBI Takeover Regulations.
• If acquisition of voting rights is 25% or more, an open offer obligation may be triggered under the Takeover Regulations, subject to the provisions of the regulations and any applicable exemptions.
• Foreign investment may introduce FEMA pricing, eligibility and reporting requirements to an M&A or PE transaction.

What Is the Difference Between M&A and Private Equity?

M&A typically refers to the process related to the takeover, sale, merger or combination of whole companies or significant interests therein. Private equity is normally capital invested into a company by a fund manager under negotiated financial and governance terms with an exit strategy in mind.

But lines can blur.

A PE fund might take control of a company. The financing for an Acquisition can come from institutional investors. Shareholders may sell part of their shares whilst the company issues new equity.

BK Singh Advocate will look at the deal itself, instead of getting distracted with terms like “investment”, “Acquisition” or “strategic alliance”.

What Are The Deal Structures For M&A In India?

An acquisition can be structured as a share purchase, selected asset or business purchase, subscription of fresh securities, merger / amalgamation or some combination of the above steps.

The structure determines many issues.

Purchase of Shares

The acquirer buys shares from the shareholders of the company. This gives the acquirer an equity stake in the company.

If control of the company changes hands, generally the acquirer will take over the past dealings of the business. Legal due diligence is critical here.

Purchase of Assets or Business

As opposed to buying the company, a transaction could involve buying selected assets or a specific business activity of the company.

Contracts, employees, licences, intellectual property and liabilities will all need to be reviewed based on the transaction.

Merger / Amalgamation

A merger can be effected via the statutory merger route under the Companies Act. Section 232 refers specifically to mergers and amalgamations in relation to schemes under Section 230.

BK Singh Corporate Lawyer can help you decide if you need an acquisition agreement or if the commercial goal is better suited to a statutory restructuring.

How Does Private Equity Investment Work?

A PE investor will usually invest after analysing the financial status of the company, its management, the market opportunity, legal risks and exit potential.

The legal arrangement can be much more complex than an issuance of shares.

Investors can negotiate for board seats, information rights, reserved matters, anti-dilution protections, transfer restrictions and exit rights. Founders can negotiate for operational autonomy and restrictions on investor veto powers.

These issues are a balancing act.

Corporate Law Firm and BK Singh Advocate can identify these rights prior to signing any investment documents.

Why Is Legal Due Diligence Important?

Due diligence assists the buyer/investor to see beyond the financial portrayal of the target company. Even if the target business is profitable, legal issues may lurk behind the scenes. The company's corporate records may be incomplete. Key contracts with customers may have change-of-control provisions. Intellectual property may have been assigned to founders, not the company. There may be pending litigation. Employment arrangements may have created liabilities. Transfers of regulatory licences may be restricted or prohibited on changes to ownership.

Typical legal due diligence topics include:

• the company's incorporation and statutory records;
• the capitalization and outstanding securities;
• material commercial contracts;
• financing arrangements and related security;
• pending litigation and disputes;
• intellectual property and its ownership;
• employment agreements;
• regulatory licences and approvals;
• related party transactions;
• real property and other significant assets;
• data privacy and confidentiality agreements;
• existing shareholder agreements;
• tax documents requiring expert due diligence; and
• broader compliance issues related to the business.
• It is not meant to just produce a lengthy report.
• Effective due diligence will affect the transaction.

BK Singh Advocate can guide you as to what issues should be addressed in the contracts, what issues need more clarification, or perhaps even a restructuring of the deal itself.

What Documents Are Used in M&A and PE Deals?

Documentation will vary depending on whether the transaction is a full takeover, minority investment, new subscription or secondary sale, asset acquisition or statutory merger.

Typical transaction documents include:

• confidentiality/non-disclosure agreement;
• term sheet;
• letter of intent;
• share purchase agreement;
• share subscription agreement;
• shareholders' agreement;
• asset/business transfer agreement;
• disclosure letter;
• escrow documents;
• employment / management agreements;
• intellectual-property assignments;
• corporate resolutions/approvals; and
• closing certificates.

Corporate Law Firm will customize the document package to fit the actual transaction instead of using the same precedent for every transaction.

What Is a Share Purchase Agreement?

A Share Purchase Agreement ("SPA") sets out the terms on which shares are purchased from the sellers.

It's not all about price.

An SPA makes provision for conditions precedent, mechanics of closing, representations and warranties, indemnities, limitations of liability, restrictive covenants, termination and post closing arrangements.

Negotiations can focus on who assumes the risk of past issues.

The seller may want to strictly limit their liability. The buyer may want protection if something is discovered after completion.

BK Singh Advocate can review if the SPA properly reflects the commercial bargain reached on risk.

What Is a Shareholders' Agreement in a PE Deal?

A Shareholders’ Agreement manages the ongoing relationship between shareholders following an investment.

In PE deals, it can end up being one of the most commercially important agreements.

Typical issues covered include: composition of the board of directors, investors’ consent rights, reserved matters, information rights, future funding, transfer restrictions, founder obligations and exit.

Just because you take a minority investment doesn’t mean you have to agree to a weak contractual position.

An investor may take a minority equity position but negotiate strong consent rights. As founders you’ll want to know what those are before agreeing to the investment.

Corporate Law Firm can assist both companies and parties to a transaction to understand these governance implications.

When Does Competition Commission Approval Matter?

India's merger- control regime covers transactions that qualify as combinations under the Competition Act and meet applicable thresholds and exemptions.

According to CCI, "combinations" may be mergers, amalgamations or the acquisition of control, shares, voting rights or assets. If the statutory thresholds are met, then transactions that are required to be notified generally must be notified prior to completion.

Changes have been made to the framework.

On 9 September 20 24, India's Competition (Amendment) Act, 20 23, which introduced a Deal Value Threshold, came into force along with the Competition Commission of India (Combinations) Regulations, 20 24.

For example, this makes a competition analysis necessary even if parties think they only need to worry about traditional asset or turnover thresholds.

Corporate Law Firm can help you determine if specialist competition-law analysis needs to be included in your transaction planning.

How Do SEBI Takeover Rules Affect Listed-Company Acquisitions?

Purchase of shares or control of a listed Indian company may invoke SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Per Regulation 3, any acquirer of 25% or more voting rights in a target company along with persons acting in concert cannot exceed that percentage without making the specified public announcement of an open offer, subject to the provisions and exemptions in the Regulations.

Similarly, acquisition of control also triggers takeover-regulation requirements by itself.

These are a few reasons why acquiring a listed company should not be treated as you would an ordinary purchase of shares in a private company.

BK Singh Advocate can handle the transaction documents for the overall deal while you consider the securities-law implications with the appropriate regulators.

How Does FEMA Affect Foreign PE and M&A Investment?

If a foreign investor subscribes to or acquires equity instruments of an Indian company, India's foreign- investment and FEMA regulations may apply to the transaction.

The issues of sectoral eligibility, route of investment, pricing, consideration, instrument and reporting may arise.

The RBI's foreign- investment reporting system comprises of FC- GPR reporting for eligible issues of equity instruments to persons resident outside India and FC-TRS reporting for certain transfers.

It is therefore necessary to review all cross-border transactions prior to signing as well as prior to closing.

Corporate Law Firm can review both the corporate documents as well as foreign investment implications of the proposed transaction.

What Are the Main Risks in M&A and Private Equity Deals?

Transaction risk is almost never the result of any single provision.

Issues may flow from poor due diligence; ambiguous valuation adjustments; undisclosed liabilities; cloudy intellectual-property ownership; regulatory approvals; excessive investor rights or poorly negotiated exit provisions.

Additional common issues include:

• misrepresentations;
• pending litigation;
• hidden debt or liens;
• change of control provisions;
• missing corporate approvals;
• failure to comply with regulations;
• disagreements among founders;
• customer concentration;
• employment liabilities;
• unclear indemnification;
• restrictive exit clauses; and
• disputes regarding management.
• Agreements cannot eliminate commercial risk.

Well drafted agreements can only allocate among the parties identified legal risks as clearly as the law and the parties’ bargaining power will allow.

When Should You Consult an M&A or Private Equity Lawyer?

Ideally, lawyers get involved before commercial terms are “hardened-off.”

Buyers want legal advice before they purchase shares or assets. Founders want advice before they sign away control to investors and accept exit terms. Investors conduct diligence before they write a check.

If you wait until the SPA or Investment Agreement is “drafted”, there is less flexibility to correct structural issues.

BK Singh Advocate can opine on term sheets, transaction structure and available corporate documents before the definitive agreements are drafted.

How Can Corporate Law Firm Help With M&A and Private Equity?

Corporate Law Firm can help promoters, companies, investors and other parties involved in M&A and private equity transactions with their corporate paperwork. This can range from discussions on structuring the transaction, legal due diligence, review of term sheets, drafting / negotiating acquisition and investment agreements, shareholder agreements and closing documents. If the investment is from a foreign source then FEMA and FDI related requirements would need to be reviewed. Transactions involving listed companies would require SEBI compliance. Transactions that qualify as combinations would require a competition-law analysis. BK Singh Advocate looks at each transaction on its terms instead of presuming that all investments need the same set of documents.

Frequently Asked Questions

Final Thoughts

M&A and Private Equity Transactions involve commercial savvy and legally disciplined documentation.

Areas like valuation get more attention because its a number everyone can see. But rights related to governance, legacy liabilities, regulatory approvals, warranties, indemnities and exit restrictions can often make or break whether the deal functions as expected.

India also has a regulatory regime in which Companies Act, Competition Act, SEBI and FEMA considerations may apply depending on the target company, investor and deal structure.

Corporate Law Firm can help your business or investment with the corporate and commercial documentation for your M&A or private equity transaction. BK Singh Advocate can evaluate your proposed structure, highlight key legal concerns and assist with preparing appropriate documentation customised to the real deal.

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