What are Mergers & Acquisitions (M&A)?

Mergers and acquisitions (M&A) refer to transactions between two companies

combining in some form. Although mergers and acquisitions (M&A) are used
interchangeably, they come with different legal meanings. In a merger, two
companies of similar size combine to form a new single entity.

On the other hand, an acquisition is when a larger company acquires a

smaller company, thereby absorbing the business of the smaller company.
M&A deals can be friendly or hostile, depending on the approval of the target
company’s board.

Reasons for Mergers and Acquisitions (M&A) Activity

1. Unlocking synergies
2. Higher growth
. Stronger market powe
4. Diversification
5. Tax benefits+
Method of payment
4. Stock
5. Cash
Mergers and Acquisitions (M&A) – Valuation
Thus, valuation is an important part of mergers and acquisitions (M&A), as it guides the buyer
and seller to reach the final transaction price. Below are three major valuation methods that are
used to value the target:

Discounted cash flow (DCF) method:

Comparable company analysis:

Comparable transaction analysis: 

 GoI merges three Insurance PSUs
The GoI will merge 3 public Sector Insurance Companies as announced in budget 2019-20. The merger
includes United India Insurance Limited, National Insurance Co Limited and Oriental Insurance
Company Limited.

 The Budget 2019-2020 did not make provision of funds for insurers and the Department of
Financial Services. Therefore, the government institutions in the financial sector are forced to
seek supplementary demands to fulfil their purposes. The Budget allocated Rs 12,000 crore for
this.