By- Yukta Garg (B.B.A. LLB from Vivekananda Institute of Professional Studies)


The terms merger, amalgamations, and acquisitions are used interchangeably which means to consolidate the companies, their assets or liabilities through various financial transactions.

eStartIndia is the best online legal services platform for services relating to Intellectual Property Rights in India, offering a variety of IPR registration services.

Differentiating the two terms, Mergers is the combination of two companies to form the new entity in order to expand its operations, while Acquisitions is one company taken over by the other which has the majority of stakes.

Types of Merger and Amalgamation-

  1. Horizontal merger: in this, Two companies merge that are in direct competition and share the same product lines and markets. For eg. Merger of TATA Oil Mills with Hindustan Unilever Ltd.

  2. Vertical merger: It is a merger of A customer and company or a supplier and company in the same industry but at different stages of production. For eg, Think of a cone supplier merging with an ice cream maker.

  3. Co-generic Mergers- It is a merger between Two businesses that serve the same consumer base in different ways in which the acquired company is an extension of the product line, parties, assets, and liabilities of the company. For eg, a TV manufacturer and a cable company.

  4. Conglomerate merger- It is a merger between two companies that have no common business areas neither horizontally nor vertically but Each company has certain implications on the other company.

Reasons for Merger and Acquisition-  

The Following are the Reasons for Merger and Acquisition-

  • increase market share.

  • Economies of scale.

  • Accelerated Growth rate.

  • Synergies for a low cost.

  • Increased Market Power.

  • Risk diversification.

  • considerations of taxation.

  • Improved market reach and industry visibility.


 The following are the IP Issues in merger and acquisition-

IP due diligence- IP due diligence is an audit that is conducted to assess the quantity and the quality of intellectual property assets owned by, or licensed to, a company, business or individual. It includes an assessment of how intellectual property is actually captured and protected by the relevant business.

Ip due diligence creates an issue due to a poor structure or a wrongly applied business strategy.  Due diligence procedure should identify potential risks that can be posed, what can harm the inherent interests of the parties to the contract.

Non-disclosure agreement- to protect the interests of the parties, it is important to enter into a non-disclosure agreement in case something goes wrong. The thing which is to be protected is the secrets of the parties that can’t be disclosed to any outsider.

It includes the following aspects-

  • the information must not be readily accessible for people.

  • it should be secret.

  • the owner should protect information from leakage.

IP documentation The IP documents should very well include the following points which are drafted in a proper manner-

  • Definitions of Transferred IP.

  • Licenses and Assignment.

  • Transition Licenses.

  • Transition Service Agreements.

  • Representations and Warranties.

  • Allocation of IP Risk.

  • Indemnification.

  • Integration of Acquired IP with the Existing IP Portfolio.

  • Further Assurances.

Data Protection and privacy issues

The seller should conform to the acquirer that he has proper policies, practices, privacy issues and security for data protection. He should also include in the acquisition agreement specific representations and warranties relating to the seller’s compliance with data protection and privacy laws. He should also confirm that the seller has internal plans and procedures with regard to a security breach.

IP valuation

IP has to be measured in its most effective way as it is an intangible asset and a variety of factors has to be seen for its valuation such as new technologies, market share, profits earned, industry type, barriers to entry in that industry, expansion, legal protection, data breach, consumers type, etc.

Transfer of Technology

High standards of technology have to be maintained because of a new occurrence in technology with the efflux of time. New technology will help to reduce the costs and create other valuable benefits also.

The transfer of technology has to be done in the most effective manner as it deals with-

  •  know-how, know- what or know-who.

  •  negotiation terms of the acquisition.

  • Identification of attractive technologies.

  • Assessment and consideration of the terms of the acquisition.

Suggestions for Protection of Intellectual Property

  • Arbitration clause – The parties may decide to submit their disputes to the arbitration process so as to avoid the court delays and for a speedy and effective remedy.

  • Third parties rights – the parties may include clauses to protect the interest of the third parties with whom they already have legal relationships. For example – A condition that the acquirer shall not refuse to provide technology to the parties that are already mentioned by the acquired.

  • Cultural Assessment to identify their difference and accept and appreciate it without any discrimination. Also, encourage free and healthy communication.

  • New Strategic plan- Develop a new strategic plan including the goals, objectives, identify their problems and solutions for it. One should use appropriate teams to merge departments and make decisions regarding issues.

  • Future expense – The parties may decide as to who will bear the expenses that might occur in the future course of events like the expenses of filing, registration, renewals, and maintenance of copyrights and other IPRs, etc.

  • Periodic assessment- Set up periodic re-evaluation over the years to be addressed by the newly merged company, its employees and their working.

  • Parties may change their mind – There can be a right to exit on notice at one’s own will can be included in the agreement to provide safeguards for a right to terminate the contract in case of breach by the other. It can also involve compensation paid to the innocent party.


Now we know the Types of Merger and Amalgamation, the Reasons for Merger and Acquisition, the issues and how to overcome these issues. eStartIndia is the one-stop destination for all such needs relation to IPs. It is the best online legal services platform for services relating to Intellectual Property Rights in India, offering a variety of IPR registration services.


eStartIndia Team

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