India M&A Glossary for Business Buyers

Transfer of an entire business undertaking as a going concern for a lump-sum consideration, without itemized asset/liability…

A deferred, performance-linked payment where part of the purchase price is released only if the target hits agreed post-closing…

A portion of purchase consideration held with an independent escrow agent for a fixed period to cover potential indemnity claims…

A pre-agreed "normal" working capital target built into the purchase price, with a rupee-for-rupee post-closing adjustment if…

A valuation fixed to a historical balance sheet date with no post-closing adjustment, backed by leakage covenants restricting…

A contractual restriction preventing the seller/promoter from operating a competing business within a defined geography and time…

A third-party insurance policy that shifts the risk of a seller's warranty breach from the seller's personal indemnity obligation…

Purchase price paid in tranches over time rather than fully at closing, used as structural leverage independent of performance…

A contractual right allowing a majority shareholder or the acquiring buyer to compel minority shareholders to sell on the same…

A minority shareholder's contractual right to participate in a sale on the same terms if a majority shareholder sells its stake,…

A due diligence report commissioned by the seller before going to market, shared with prospective buyers to streamline and speed…

A structure where existing promoters or key managers reinvest a portion of their sale proceeds into equity of the…

A post-closing purchase price adjustment mechanism where final accounts are prepared as of the actual closing date and reconciled…

Adjustments to reported EBITDA that strip out non-recurring, personal, or non-business expenses to reveal the target's true…

An independent forensic financial review validating the sustainability and accuracy of a target's reported earnings before final…

A rupee-for-rupee reduction of enterprise value for the target's outstanding debt and debt-like items, to arrive at the actual…

Adjusting reported profits for below-market or above-market promoter compensation to reflect the true cost of a professional…

Re-pricing of revenue/cost items transacted with promoter-affiliated entities at market rates, to normalize the target's true…

The sustainable, forward-looking earnings base a buyer is willing to apply its multiple to, after stripping out cyclicality,…

The additional percentage over a minority/market valuation a buyer pays to acquire a controlling stake with full decision-making…

A valuation discount applied to closely-held, private company shares to reflect the absence of a ready market compared to listed…

The reconciliation from headline enterprise value to the actual equity cheque paid to sellers, adjusting for net debt, minority…

A valuation method benchmarking a target against the trading multiples of similar publicly listed companies, adjusted for scale…

A valuation method benchmarking a target against actual acquisition multiples paid in comparable past M&A transactions in the…

A valuation markdown applied when a disproportionate share of a target's revenue depends on one or few customers, reflecting…

Contractual thresholds defining the minimum claim size before a seller must pay (basket/deductible) and the maximum total…

Core warranties — title, capacity, authority, no encumbrance — that are typically uncapped and survive indefinitely, unlike…

A schedule attached to the SPA/BTA listing specific exceptions to the seller's warranties, limiting warranty claims to matters…

A contractual right allowing the buyer to renegotiate price or walk away if a significant negative event impacts the target…

Specific pre-closing obligations — regulatory approvals, third-party consents, key employee retention — that must be satisfied…

A specific escrow carve-out, distinct from the general indemnity escrow, ring-fenced against a known, quantifiable but unresolved…

A no-objection certificate from the Income Tax Department confirming the seller has no pending dues that could otherwise render…

A summarized diligence output flagging only critical, deal-breaking issues, as opposed to a full-form report, used to fast-track…

The risk that a buyer inherits a target's pre-existing statutory, tax, labour, or environmental liabilities by operation of law,…

A standalone indemnity clause covering a named, identified risk (such as a pending lawsuit), separate from and not subject to the…

A third-party contractual right requiring a customer, lender, landlord, or licensor's consent before a target's ownership change,…

A clause determining whether a buyer can still claim for a breach of warranty even if the buyer knew about the underlying issue…

A restriction preventing the seller from soliciting or hiring away the target's key employees or customers for a defined period…

The Income Tax Act provision taxing gains on a slump sale as capital gains computed on the undertaking's "net worth," rather than…

RBI/FEMA rules mandating that share transfers involving non-residents occur at a fair value determined per prescribed…

The mandatory RBI filing required within 60 days of a share transfer between a resident and non-resident, without which the…

Transfer of a business as a going concern, including via slump sale, is treated as a supply of service but exempted from GST…

State-specific stamp duty payable on the BTA/conveyance instrument, calculated as a percentage of consideration or asset value,…

Unlisted Indian company shares held over 24 months qualify as long-term capital assets, taxed at a lower rate than short-term…

A court-sanctioned merger, demerger, or capital reduction scheme via the National Company Law Tribunal, used to transfer a…

Consideration paid specifically for a non-compete undertaking is taxable as "profits and gains of business" under Section 28(va),…

A provision taxing the excess of share issue price over fair market value, in the hands of an unlisted company, as income —…

A target's Udyam (MSME) registration status affects buyer diligence around delayed-payment protections owed to the target's own…

Acquiring a distressed target through the Insolvency and Bankruptcy Code's resolution process, where prospective buyers…

The buyer's statutory obligation to deduct tax at source on specified payments to a seller — including immovable property…