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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An Asset Reconstruction Company is a company which is registered under Section 3 of the Secularization and Reconstruction of Financial assets and Enforcement of Security Interest Act, 2002. These companies come under the jurisdiction of the Reserve Bank Of India as a Non-Banking Financial Company.
Most of the businesses in India are unsuccessful and close down due to the inability of the owners to deal with the financial pressures of the business. In these unsuccessful businesses, there is generally poor management or even sometimes mismanagement of the capital. Some of the other causes include pressure from banks, legal action and penalties. It is at this point that these businesses should take the help of asset reconstruction companies. One such prominent and highly skilled company is that of JM Financial. They offer their services in asset management and in alternative asset management. They help in the generation and development of both the existing assets and also further assets and convert them into profits for the company. These asset management companies in India lik JM Financial direct and oversee several forms of strategies which they device so as to enhance and develop a company’s assets and resources and to restore it to their former glory. The main goal of the asset reconstruction company, India is to oversee, strategies, enhance and develop assets of the company or business an do make them profitable in the long run. However, one of the demerits which these asset reconstruction companies face is the loss of income as they deal mostly with companies who are themselves facing losses in the business. But if they are able to reconstruct the company and restore them to their former glory, then they get to have a part of the profits. However, in order to be successful all the details and data of the stocks, bonds, profits and losses as well as management issues and the history of the country over the years are taken into consideration too before strategies and plans are worked upon. |
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