Buy-Side & Sell-Side M&A Advisory India: Who Needs It and Who Does Not
Whether Buy-Side & Sell-Side M&A Advisory India applies to a given business is the first thing worth settling, and it is where most of the early questions land. The questions below are the ones raised most often in practice; the full scope of the service is on the Buy-Side & Sell-Side M&A Advisory India page.
Does every M&A transaction in India require CCI (Competition Commission of India) approval?
No. CCI notification is required when the transaction meets the asset or turnover thresholds prescribed under the Competition Act 2002 and the Combination Regulations, assessed at both the party and the group level (subject to the de minimis exemption for smaller targets), or — since 10 September 2024 — when the deal value exceeds the prescribed deal-value threshold and the target has substantial business operations in India, in which case the de minimis exemption does not help. The thresholds are revised periodically, so confirm current values before relying on them. Many mid-market and smaller transactions fall below these thresholds and require no CCI filing at all. Where thresholds are met, a Green Channel route allows deemed approval for combinations unlikely to raise competition concerns, which is considerably faster than the standard review process.
In practice: We assess CCI applicability at the term sheet stage, not after signing — closing a notifiable transaction without the required CCI filing, or before CCI approval, exposes the parties to a gun-jumping penalty under Section 43A of the Competition Act and does not remove the obligation to notify.
What is a working capital adjustment and why does almost every deal have one?
Most SPAs price the business assuming a 'normal' level of working capital at closing. If actual working capital at closing is higher or lower than the agreed target, the purchase price is adjusted up or down through a completion accounts mechanism, settled after closing within a period negotiated in the SPA. This protects the buyer from a seller who might otherwise strip cash or delay payables before closing to inflate the effective price, and protects the seller from being penalised for a temporarily low working capital position.
In practice: The definition of 'working capital' and the accounting policies used to calculate it at closing must be spelled out in granular detail in the SPA — ambiguity here is a frequent source of post-closing disputes.
Do I need a separate valuation report, or does M&A advisory include valuation?
Preliminary valuation framing to set realistic negotiation expectations is part of the M&A advisory mandate. However, a formal valuation report for a specific statutory purpose — an income-tax fair market value under Rule 11UA (or its equivalent under the Income-tax Rules, 2026 from tax year 2026-27), a FEMA pricing valuation under the Non-Debt Instruments Rules on a cross-border transaction, or an independent fairness opinion where governance requires one — is typically scoped and delivered as part of PNPC's dedicated Business & Share Valuation service, working alongside the M&A team, because certain regulatory valuations require a specific certifying capacity (Registered Valuer, Merchant Banker, or Chartered Accountant as prescribed under the applicable rule).
In practice: We flag at mandate start exactly which valuation deliverables are included in the advisory fee and which require the separate, statutorily-compliant valuation report — this avoids a surprise scope gap discovered mid-transaction.
How does an M&A transaction affect the target company's carried-forward tax losses?
Under Section 79 of the Income-tax Act, 1961 (equivalent provisions carry forward into the Income-tax Act, 2025, effective 1 April 2026, under its renumbered sections — we confirm the applicable section reference against the return year at engagement time), a closely-held company's carried-forward business losses lapse unless persons who beneficially held at least 51% of voting power on the last day of the year the loss was incurred continue to hold at least 51% of voting power on the last day of the year the loss is sought to be set off. Specific exceptions apply, including relief for eligible startups under certain conditions, NCLT resolution-plan changes under Companies Act Sections 241/242, and amalgamations/demergers meeting Section 72A conditions. This is a critical diligence item in a share purchase — a target with substantial carried-forward losses may lose their tax shield value entirely on a change of control, which materially affects the economics of the deal.
In practice: We flag this explicitly during buy-side diligence whenever the target has meaningful carried-forward losses — it is a common area where an unsophisticated buyer assumes tax shield value will transfer with the acquisition, and is surprised post-closing to find it has lapsed.
What is escrow in an M&A transaction, and how is the escrow amount and release period decided?
An escrow arrangement holds back a portion of the purchase price with a neutral third party (typically a bank or escrow agent) for a defined period post-closing, to secure the buyer's indemnity claims against the seller without needing to sue for recovery from a seller who may have distributed the proceeds. The escrow amount (usually expressed as a percentage of deal value) and release period (often longer for tax indemnities, given assessment reopening timelines) are negotiated based on the risk profile identified in due diligence — a clean target with strong warranties may warrant a smaller escrow than one with identified contingent exposure.
In practice: Tax indemnity escrow periods deserve particular attention — Indian tax assessments can be reopened for several years under the Income-tax Act, and an escrow period shorter than the relevant limitation period leaves the buyer exposed after the escrow has already been released to the seller.
What is the role of a fairness opinion, and is it mandatory?
A fairness opinion is an independent assessment — typically from a merchant banker, investment bank, or qualified valuer — stating whether the financial terms of a transaction are fair to a specific party (often minority shareholders) from a financial point of view. It is not universally mandatory for private M&A, but is required in specific regulated scenarios — for example, in a scheme of merger involving a listed company, or where SEBI regulations mandate an independent valuation report for related-party or minority shareholder protection. For private, unlisted transactions, it is often obtained voluntarily by a board seeking to demonstrate discharge of fiduciary duty, particularly where family or minority shareholders are involved.
In practice: Even where not legally mandatory, we recommend an independent fairness opinion whenever a board includes directors with a potential conflict of interest in the transaction — it is inexpensive insurance against a later claim that the board breached its fiduciary duty in approving the deal.
What is transaction readiness, and should a seller do this before actively going to market?
Transaction readiness is a pre-emptive internal review — essentially a self-conducted due diligence — that identifies and fixes the issues a buyer's diligence team would otherwise find: unassigned IP, missing statutory filings, unresolved related-party arrangements, or ambiguous contracts lacking change-of-control clarity. Sellers who invest in this before going to market close faster, retain more negotiating leverage, and avoid the confidence-eroding experience of a buyer discovering a problem mid-process that could have been fixed in advance.
In practice: This is a distinct, separately scoped PNPC service — Transaction Readiness Reviews — that we recommend to sell-side clients well before going to market, so there is time to fix what it finds.
Can a foreign (UAE) company acquire an Indian company in a restricted sector?
It depends on the sector's FDI classification under India's Foreign Direct Investment Policy. Most sectors permit 100% FDI under the automatic route, requiring only post-facto RBI reporting. Certain sectors (defence, telecom beyond specified limits, media, multi-brand retail, and others) require prior government approval or carry sectoral caps. Separately, under Press Note 3 (2020), as revised by Press Note 2 (2026) and the corresponding FEMA (Non-Debt Instruments) amendment, investment by an entity of a country sharing a land border with India, or where the beneficial owner is situated in or is a citizen of such a country, generally requires government approval. Beneficial ownership is now tested by reference to the anti-money-laundering (PMLA) rules, and a foreign investor with non-controlling land-border beneficial ownership of up to 10% can use the automatic route, subject to sectoral caps and reporting to DPIIT. This does not apply to UAE-based investors as such, but is relevant where a UAE entity's ultimate beneficial ownership traces back to such a jurisdiction — confirm the current conditions before structuring.
In practice: We trace beneficial ownership up the UAE acquirer's structure early in any cross-border mandate — an otherwise straightforward automatic-route acquisition can be reclassified to government-route approval if land-border beneficial ownership exceeds the permitted non-controlling threshold or carries control, and this needs to be known before term sheet, not discovered at the RBI filing stage.
How does GST apply to a business transfer or slump sale?
The transfer of a business as a going concern is treated as a supply of services under GST law, but is generally exempt from GST under Notification No. 12/2017-Central Tax (Rate), which exempts services by way of transfer of a going concern, as a whole or an independent part thereof. For this exemption to apply, the transfer must genuinely constitute a going concern — all the assets and liabilities necessary to continue the business must transfer together with business continuity, not a selective cherry-picking of assets, which would be treated as a taxable supply of individual goods/services instead.
In practice: We review the structure of every slump sale specifically against the 'going concern' test before relying on the GST exemption — a transaction structured loosely, with key assets or contracts carved out, can inadvertently fail the exemption test and trigger an unplanned GST liability.
Where this sits in the wider engagement
Buy-Side & Sell-Side M&A Advisory India rarely arrives on its own. The statutory basis and the current requirements are set out on the Buy-Side & Sell-Side M&A Advisory India service page, and the related services are grouped under Corporate Finance.
What PNPC does
PNPC Global has practised since 1986 across India and the UAE. On Buy-Side & Sell-Side M&A Advisory India we take the work end to end — reviewing the facts, preparing and filing what is required, and dealing with the authority through to closure.