In India many companies form Mergers and Acquisitions. We have heard of these terms and also seen many examples. But for the common man, it is hard to understand the meaning of two companies coming together in Merger or acquisitions and the differences between the same. As an investor it is very important to understand its effects on the company or whether to invest in the newly formed company or not. For companies that have been incurring losses, a financial bank can help in asset reconstruction and evaluation of the company’s status with experts. How does Asset Reconstruction actually help to form Mergers and Acquisitions running parallel to the M & A Advisory firms? How does an M & A Advisory firm help a company merge with or acquire another? All these questions have simple answers for the layman.
Asset Reconstruction Company is often the Non Banking Financial companies that help in the process of corporate debt reconstructing for companies that suffer huge losses. On the verge of shutting down, a company may be willing to survive as a part of some Merger and acquisition companies, and employ a financial institution like JM Financials to use their experience and expertise to revaluate and reconstruct the assets and debts of the company as well as invite merger or acquisitions from willing companies. It is then that the financial institution acts upon and takes help from an M & A advisory firm. The work of the M & A advisory firm is to suggest as to whether the company should go for mergers or acquisition wherein it will lose its identity. In simple words, Merger means the partnership of two companies while Acquisition leads to acquiring of a company by another. This is a concept not clear to many but one that must be understood. Corporate debt reconstruction refers to a non statutory mechanism under which financial institutions and client companies come together to reconstruct the debts of the company facing financial difficulties due to many influenced, direct, indirect, internal and external factors. Asset Reconstruction, on the other hand, refers to handling of distressed assets in an attempt to recover their values. Asset Reconstruction Company takes in to consideration the equity research reports, stock research and fundamental analysis of the company over a period of time to help companies survive and be a part of Merger and acquisition companies.
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