Strategic transactions of similar importance as M&A:
None of the following activities can be called as merger and acquisition activity. However, they are highly important strategic business activities which which can give an effect which may seem as good as the effect of a merger or of an acquisition.
Following is the list of such strategic relations, associations and contracts:
Business alliance through MOU:
Two businesses can associate with each other through a memorandum of understanding. MOU is not legally enforceable but it narrates the intent of future association and paves a way for a definitive final contract.
Business alliance through Contract:
Two businesses can associate with a business contract for any purpose of executing joint projects, joint marketing, long term supply, long term seller buyer relationship, technology transfer, etc.
Joint venture is a mechanism in which two companies associate to carry out a project. The scope of work and the and the liabilities of each of the parties are very well defined beforehand. Depending upon what is the expectation of the investment for the role in the joint venture, the parties agree a proportion of ownership in the venture. Typically, there is a independent administrative mechanism, especially accounting mechanism and office set-up. This is to appropriately know & share the costs and profits. Joint ventures are typically meant to be unincorporated. The costs for expenses that cannot be attributed to any specific scope of work for a specific party are shared in a pre decided proportion.
India entry strategy:
India is an attractive destination for FDI. Also, it is a great business place for foreign companies.
Overseas Direct Investment:
It is the equity investment made by an Indian company outside India.
In the franchise agreement, a company provides all the machine tools, capital equipment, technology, training, brand, etc to the third parties to realise some fees other on fixed period basis or on volume basis.
In this mechanism, a company allows another company to use its brand, for resources in the form of intangible assets for a payment called royalty.
In this mechanism, a company sells its give fixed assets to achieve more liquidity. It leases back the same Assets on rental basis from the party to whom the sale was made on long term basis.
Special purpose vehicle (SPV):
Special purpose vehicle is a form of joint venture which is typically Incorporated for a specific purpose and is dissolved after the purpose is fulfilled. This is typically undertaken in the public private partnership projects.
Apohan has expert level understanding of all the available avenues for achieving a business objective. Apohan ensures that its client chooses a appropriate strategic path in formulation of a business alliance – equity or non-equity. Apohan manages the transaction right from the problem identification phase, to the closure of deal with perfection.