DEAL STRUCTURING AND FINANCIAL STRATEGIES · One-liners

1 Sales?

Chief Revenue Officer

2 Manufacturing / Operations?

COO

3 Service?

Service Head

4 Facilities Management?

Admin Head

5 Human Resources?

CHRO

6 Legal?

General Counsel

7 Finance?

CFO

8 Information Technology?

CIO

9 Cash — Key Feature / Trade-Off?

Key Feature: Simple, immediate; Trade-Off: Creates immediate seller tax liability

10 Common Equity — Key Feature / Trade-Off?

Key Feature: Defers seller tax; Trade-Off: Possible EPS dilution for acquirer

11 Preferred Equity — Key Feature / Trade-Off?

Key Feature: Senior to common; Trade-Off: Lower shareholder risk in liquidation

12 Convertible Preferred Stock — Key Feature / Trade-Off?

Key Feature: Hybrid; Trade-Off: Combines attributes of common + preferred

13 Debt (secured / unsecured) — Key Feature / Trade-Off?

Key Feature: Fixed claim; Trade-Off: Lower risk in liquidation than equity

14 Real Property — Key Feature / Trade-Off?

Key Feature: In-kind asset transfer; Trade-Off: Tax-advantaged through like-kind exchange

15 Mix of Cash & Stock — Key Feature / Trade-Off?

Key Feature: Flexible; Trade-Off: Meets needs of multiple constituencies

16 Balance-Sheet Adjustments — Key Feature / Trade-Off?

Key Feature: Closes gap on price; Trade-Off: Ignores off-balance-sheet value

17 Earn-Outs / Contingent Payments — Key Feature / Trade-Off?

Key Feature: Bridges valuation gap; Trade-Off: May shift risk to the seller

18 Rights, Royalties, Fees — Key Feature / Trade-Off?

Key Feature: Continuing income; Trade-Off: May create a competitor + seller tax liability

19 Collar Arrangements — Key Feature / Trade-Off?

Key Feature: Fixes share-price band; Trade-Off: Used when acquirer's share price is volatile

20 Forward Triangular Cash Merger?

target merges INTO acquirer's operating or shell sub; the subsidiary continues to exist

21 Reverse Triangular Cash Merger?

acquirer's subsidiary merges INTO the target; the target continues to exist

22 (True/False) Deal structure and financing are closely interwoven and consensus on one drives the other?

TRUE — A change in payment form (cash vs stock) changes the financing required.

23 (True/False) In a Cash for Assets Acquisition, the target's shareholders vote on the deal before they are paid?

FALSE — Shareholders do not vote; they are simply "cashed out" when substantially all assets are sold and the target dissolves.

24 (True/False) Sec. 47(vi) of the IT Act exempts capital gains on transfer of assets by the amalgamating company to an Indian amalgamated company if the scheme satisfies Sec. 2(1B)?

TRUE — The transfer is not regarded as a "transfer" for capital-gain purposes.

25 (True/False) In a Reverse Triangular Merger, the acquirer's wholly-owned subsidiary survives?

FALSE — In a Reverse Triangular, the target survives (sub merges into target); in Forward Triangular, the sub survives.

26 (True/False) A FOCC can take a term loan from an Indian scheduled commercial bank to acquire shares in an Indian company?

FALSE — FOCCs are prohibited from raising acquisition leverage from Indian banks, FIs and funds; only NCDs to FPIs are allowed.

27 (True/False) MAT Credit available to the amalgamating company can be automatically carried forward by the amalgamated company under Sec. 115JAA?

FALSE — There is no express provision for such carry-forward — a real tax cost in M&A.

28 (True/False) Sec. 72A requires the amalgamated company to continue the business of the amalgamating company for at least 5 years?

TRUE — Plus the 50%-installed-capacity-within-4-years requirement.

29 (True/False) "Boot" in a tax-free transaction is taxed as ordinary income?

TRUE — Any non-equity consideration in an otherwise tax-free deal is "boot".

30 (True/False) The MAT rate under Sec. 115JB for domestic companies (excluding those opting for new tax regime under Sec. 115BAA) for FY 2025-26 is 15% of book profits (plus surcharge & cess)?

TRUE — Verified June 2026.

31 (True/False) A specified bank under Sec. 72A includes SBI and its subsidiary banks, plus corresponding new banks under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1980?

TRUE — But does NOT include a generic private-sector bank or foreign bank.

32 (True/False) Listing requirements oblige the target's shareholders to approve a Stock-for-Assets deal only if substantially all of the target's assets are sold?

TRUE — The acquirer-side test is separately the >20% new-share-issuance threshold.

33 (True/False) Industrial Undertaking under Note 1 of Sec. 72A includes manufacture of computer software and broadband / internet services?

TRUE — The definition is deliberately broad to cover modern industries.

34 (True/False) ECB can be used by Indian companies to acquire shares of an overseas joint venture or wholly-owned subsidiary?

TRUE — Subject to RBI's ECB Master Directions.

35 (True/False) In a Taxable Cash Purchase of Target Assets, the buyer's tax basis in acquired assets does NOT step up to FMV?

FALSE — It DOES step up to FMV = Purchase Price − Assumed Liabilities, generating higher future depreciation shields.

36 (True/False) The two-stage stock transaction is also referred to as a "squeeze-out" or "freeze-out" when minority shareholders are cashed out in the back-end merger?

TRUE — A common path when full control is the goal.

37 Gain / Loss = FMV − NBV — Where Used / Where?

Where Used: Taxable Cash Purchase of Assets — seller's capital gain; Where: FMV = Fair Market Value of asset; NBV = Net Book Value

38 FMV (in cash-for-assets deal) = Purchase Price − Assumed Liabilities — Where Used / Where?

Where Used: Calculating the deemed sale value; Where: When buyer assumes some of seller's debt as part of consideration

39 MAT (Sec. 115JB) = 15% of Book Profits + Surcharge + Cess — Where Used / Where?

Where Used: Trigger test for MAT applicability; Where: "Book Profits" derived per Sec. 115JB Explanation

40 MAT Credit Sec. 115JAA = MAT Paid − Normal Tax Liability (excess) — Where Used / Where?

Where Used: Carry-forward of MAT for 15 years; Where: Set-off only in years where Normal Tax > MAT

41 NOL Carry-Forward = 20 years ; NOL Carry-Back = 2 years — Where Used / Where?

Where Used: NOL set-off planning (textbook treatment); Where: Per the chapter; India IT Act business-loss carry-forward is 8 yrs

42 Acquirer's Shareholder Vote Threshold = New Shares Issued > 20% of Outstanding Shares — Where Used / Where?

Where Used: Listing-rule test; Where: Triggered in Stock-for-Assets / Stock-for-Stock deals

43 Sec. 72A 75% Asset Test (Pre) ≥ ¾ Book Value of Fixed Assets held by amalgamating company for 2 yrs prior — Where Used / Where?

Where Used: Eligibility test for Sec. 72A; Where: Applies to the amalgamating company

44 Sec. 72A 75% Asset Test (Post) ≥ ¾ Book Value of Fixed Assets held by amalgamated company for 5 yrs post — Where Used / Where?

Where Used: Continuing eligibility test; Where: Applies to the amalgamated company

45 Sec. 72A 50% Capacity Test ≥ 50% Installed Capacity within 4 yrs — Where Used / Where?

Where Used: Production threshold for Sec. 72A; Where: Maintained till end of year 5

46 ODI Ceiling = 400% of Net Worth (last audited B/S) — Where Used / Where?

Where Used: Outbound acquisition financing; Where: Per FEM (Overseas Investment) Rules & Directions, 2022

One-linersDEAL STRUCTURING AND FINANCIAL STRATEGIES