LITERATURE REVIEW

Because mergers and acquisitions (also known as "M&A") are transactions between business
organizations that are of the utmost sincerity and high-value in nature, it is necessary to do
due diligence regarding all of the regulatory compliances in various industries and cross-
border transactions. In order to fully realize and comprehend the discussion as well as the
additional points, the pertinent literature has been extended upon below. This literature covers
the subject of due diligence in a wide variety of industries as well as international
transactions.

In the context of mergers and acquisitions (M&A), the term "transactional due diligence"
refers to an examination conducted by an investor to get insight into the nature of the target
company's operations in order to make an informed decision about whether or not to pursue
the business combination. In addition, the phrase "Anglo-Saxon" refers to the practice of
doing extensive checks on both the legal and financial aspects of a potential investment.
(2010) According to Arthur H. Rosenbloom

The following types of topics can be divided up into the literature review for the M&A due
diligence in India:

a. Thorough investigation of a number of processes and things

In light of the fact that transactional documents are involved, it is necessary to conduct due
diligence on a number of different aspects, including regulatory, ethical, financial, risk
management, and intellectual property, and there is a body of published research on these
topics, which will be discussed in this section.

b. Requirements of due diligence that vary depending on the sector

It is vital to have a look at the literature that is accessible whereby the due diligence for
sectors such as the banking sector, the healthcare sector, the pharmaceutical sector, the
information technology sector, and so on are discussed. This is because the needs for due
diligence vary from sector to sector.

c. Due diligence in cross-border transactions

Due to the fact that the number of transactions of this kind has been steadily growing ever
since the beginning of globalization, it is necessary to engage in a great deal of careful
consideration and thorough research. The purpose of this section is to do a literature review
on previous works that have dealt with transactions of this kind.

1. Due diligence of various process and items

As far as the legal due diligence is concerned, it is the most crucial item. Legal due
diligence's crucial function in reducing dangers and protecting the interests of the acquiring
and target businesses. In the paper, Kumar discusses the essential legal considerations that
must be made during due diligence, including contracts, intellectual property, litigation, and
regulatory compliance. It shows how crucial it is to have an experienced legal team with an
extensive knowledge of Indian law participate in the process of due diligence (Spedding, L.
S., 2008). Similarly, the role of assessing regulatory compliance, licenses, permits, and
approvals during M&A is also significant (Tarek, A., 2023).

There are a few important places in which potential warning signs could appear, and the
corporation that is looking to purchase another business must keep these fields in mind. Non-
compliances, liabilities, violations, and legal action are all included in this category. The first
important area to focus on is compliance issues, which have been ignored. The determination
of a company's conformance is a laborious process, but this is often one of the primary
focuses of attention within the scope of legal due diligence. The phrase "compliances" refers
to all of the relevant and necessary provisions of a variety of statutes, regulations, and
conventions that the organization is required to adhere to. Compliances with the Companies
Act of 2013 [the company's charter papers, such as the MOA or AOA, the keeping of the
conference minutes record, minutes of board sessions, the preservation of statutory records
and share certificates can all be used to evaluate compliance with this Act] are required in the
majority of business contexts in India (Singha, P., 2023).

Further, the commercial viability and health of the target company is the primary focus of
financial due diligence, an essential part of the merger and acquisition process. The research
gives an in-depth look into financial due diligence in the context of India's mergers and
acquisitions industry (Shenai, N., 2021).

Further, tax due diligence is of vital importance in light of India's complex tax legislation. It
explains why it is crucial in M&A deals to investigate the tax obligations and plans of the
target company in detail (Singh, S., & Singh, V., 2019).
Intellectual Property Due Diligence is emphasized as an important part of the Indian M&A
landscape. In order to safeguard intellectual property during M&A, it goes into the
assessment of patents, trademarks, copyrights, and trade secrets (Dongre, G., 2022).

According to a newly released analysis, 43% of M&A transactions experienced setbacks like
delays, terminations, or renegotiations of the acquisition price due to significant cultural
differences between the parties. In terms of potential cost and actual dollars, the amount of
time, money, and other resources lost on these deals is astonishing. Appropriate cultural due
diligence is one of the finest instruments for managing risk surrounding these potentially
deal-damaging concerns. (Denison and Ko, 2016).

An ad hoc approach has been taken to doing cultural due diligence ever since the beginning
of recorded history. There is typically a concern that the cultures of the two organizations
would not be compatible with one another, and this is the primary factor that leads to the
announcement of agreements that are later abandoned. There are four primary approaches to
cultural due diligence, which are as follows: The first step is to include cultural
considerations in the early stages of merger negotiations. The second step is to recruit and
train members of the due diligence crew with a focus on cultural factors. The third step is to
include cultural parameters in data collecting for due diligence. And the final step is to use
formal tools to determine whether or not a company's culture is a good match (Mitchell L.
Marks, 1999).

2. Sector based requirement of due diligence

The prevalence of reverse mergers in the banking industry highlights the importance of
industry-specific due diligence. Due diligence in bank mergers and acquisitions in India is
discussed, along with the crucial financial, regulatory, and operational issues that demand it
(Jayadev, M., & Sensarma, R., 2007). Additionally, healthcare M&A due diligence has its
own set of difficulties. Compliance with regulations, patient privacy, and evaluating clinical
quality in India's healthcare system are all topics covered (Sharma, A., Dadwal, S. S., &
Singh, P. K., 2007).

This article sheds light on due diligence procedures in the Indian IT industry during M&A
deals. Technology assets, market positioning, strategic fit, intellectual property, workforce
quality, and post-acquisition integration problems are all highlighted as being of paramount
importance.
Aligning technology assets and intellectual property with business goals is crucial in the
highly competitive and continually expanding IT industry. It stresses the importance of a
thorough legal analysis to protect intellectual property and guarantee adherence to applicable
regulations. Given the importance placed on talent in the IT industry, this further highlights
the significance of assessing the skills of the personnel and possible retention methods
(Mane, P., 2022). Challenges such as ensuring cultural compatibility, harmonizing technology
stacks, and implementing efficient project management are all highlighted in the article as
obstacles that must be overcome during post-acquisition integration. These guidelines are
crucial for Indian M&A professionals working in the IT industry, as they outline how to
achieve their goals while reducing losses (Kumar, B. R., Kumar, & Amboy., 2019).

This article is helpful since it sheds light on the nuances and important factors of real estate
M&A deals in India. In a country with complex land laws, nuanced regulatory requirements,
and widely variable regional practices, real estate due diligence is essential. Because of the
frequent occurrence of errors and disputes over property titles, the essay stresses the
importance of doing thorough due diligence. Because of the possible impact on value and
potential of real estate assets, it stresses the importance of conducting a complete evaluation
of land use legislation and compliance (Aiza, N. M., 1999).

It is crucial to evaluate the environmental impact and compliance with rules in real estate
transactions due to the importance of environmental compliance and potential penalties. It
also stresses the value of assessing the potential for growth of real estate assets. This article
provides useful insights and suggestions for professionals working in real estate M&A in
India, emphasizing the importance of a well-structured due diligence process. Because of
this, real estate assets can be safely integrated into the portfolio of the purchasing firm,
increasing the likelihood of a successful and profitable merger or acquisition (Mydhili, V., &
Dadhabai, S., 2017).

3. Due diligence in cross-border transactions

Prior to the beginning of a merger or an acquisition, due diligence should be utilized as a

technique to evaluate the viability of revenues, expenses, and margins emerging out of such
transactions. This evaluation should stand in addition to an assessment of the target
company's future performance (Tiwari, A., 2022).

4. Case laws showing importance of due diligence in M&A

This assertion is supported by a number of decisions that have been made in common law
jurisdictions both in the United States and elsewhere. For instance, the Supreme Court
decided that prior to actually investing, the shareholder firm must show caution and care in
doing proper due diligence on the target company (Nirma Industries vs. SEBI).

The court ruled that "due diligence" must involve conducting exhaustive research. This is an
activity that a responsible human must engage in when managing the relationships in his life
(Chander Bansal vs. Rajinder Singh).
 BIBLIOGRAPHY

1. Rosenbloom, Arthur H., ed. Due diligence for global deal making: the definitive guide to
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