Impact of Covid-19 on Mergers and Acquisitions in India

The Covid-19 pandemic has not only impacted the health sector but, the economy at large also.
This article is an attempt to assess such impact from the perspective of mergers & acquisitions
(hereinafter “M&A”) undertaken by Indian companies. M&A being an important decision for a
company strategically, it involves the consolidation of companies or entities’ assets by way of
various types of financial transactions, including but not limited to, tender offers, purchase of
assets, and management acquisitions. Due to the lockdown implemented by the government in
light of the global pandemic, it became too difficult for two entities planning to merge or one
planning to acquire another. Importantly, correct valuations or accurate financial calculations
become crucial as they impact a company in future in case of M&A. Because of the subsequently
imposed lockdowns by the government knowing the demand of a company’s products or services
became difficult to predict, consequently the decisions for mergers and acquisitions also got
impacted. Looking at M&A from contractual viewpoints, it is pivotal to pay heed towards the
covenants and clauses incorporated in a mergers and acquisitions agreement. Such clauses and
covenants become the driving forces for the transactions and so is the case with mergers and
acquisitions. In this article, the author will touch some significant clauses like Material Adverse
Effect, Force Majeure, Representations and Warranties, other significant covenants which are
mentioned in an M&A agreement. Further, the impact of these clauses in light of the pandemic
and subsequent lockdown imposed by the government will be analysed. Lastly, it will be examined
and suggested that what is the way forward for the M&A transactions in India in view of the
ongoing pandemic.