INDIA Law and Practice Contributed by: Raj Ramachandran, Varun Sriram, Krutamana Pisipati, Aadhitya Logeshen and Abheejit V, JSA
When there are several investors on the cap table, pre- ferred options are to list the company or to carry out a full company sale. In cases where there are fewer investors or the promoter is a key stakeholder and also fully involved in operations, a controlling stake sale or a strategic buyout is also common. There are also instances of mergers between two tech companies. The most prominent in recent years has been Altimetrik’s acquisition of SLK Software in Octo- ber 2025. 4.3 Liquidity Event: Form of Consideration Cash is typically the primary form of consideration in India and is fully settled upon the closing of the transaction, unless a valuation gap is not mutually agreed upon during negotiations. In these instances, the transaction is sometimes structured with multiple tranches of closing, with an earn-out component. In certain other cases, a full stake sale is also structured with a rollover equity investment in the acquirer entity. 4.4 Liquidity Event: Certain Transaction Terms Founders who are involved in day-to-day operations and management are expected to stand behind the representations and warranties for specified periods, depending on the nature of the representations and warranties. VC investors typically provide representa- tions only regarding the title to the securities they hold. There is a longer time period offered for indemnity pertaining to fundamental warranties as compared to business warranties. Business warranties are often provided for the time period prescribed under law. These time periods vary depending on diligence find- ings and the nature of the outstanding or likely claims that may arise in the future. These factors also deter- mine the necessity of an escrow holdback. However, escrows are uncommon unless significant potential claims are identified during diligence. In case of a transaction involving both Indian and foreign parties, escrow mechanisms are subject to the Indian Foreign Exchange Management Act, 1999 and the underly- ing rules and regulations (see 6.3 Consideration and Minimum Price ). Representations and warranties insurance is not uncommon in India. This type of insurance is typically
used for larger deals due to the high cost and effort required to obtain it. They are also considered in deals involving treaty-based withholding taxes. However, where transactions are of smaller value, there are no tax-based risks, or due diligence findings are compre- hensive and clear, R&W insurance may not be used. Procuring R&W insurance is also a time-consuming process that deal-makers are mindful of.
5. Spin-Offs 5.1 Trends: Spin-Offs Spin-Offs
Spin-offs are common, and an undertaking often decides to spin off for business reasons involving operational efficiency, unlocking value, independent focus, and targeted fundraising options for a specific business vertical. Companies are increasingly using spin-offs to isolate data-intensive/AI-related divisions ahead of the enforcement of DPDP-related laws in India (see 7.1 Regulations Applicable to a Technol- ogy Company and 9.2 Data Privacy ). Mergers The fast‑track merger process under Section 233 of the Companies Act, 2013, which now, following the Companies (Compromises, Arrangements and Amal- gamations) Amendment Rules, 2025 (notified on 4 September 2025), extends beyond previously limited categories (holding‑company/wholly‑owned subsidi- ary, start-ups, small companies) to include: • two or more unlisted companies (other than Sec- tion 8 companies) subject to prescribed thresholds; • a holding company and one or more of its unlisted subsidiaries (whether wholly owned or not), pro- vided the transferor is unlisted; • two or more subsidiaries of a common holding company (provided the transferor is unlisted); and • a foreign holding company merging into its Indian wholly‑owned subsidiary (reverse‑flip). While this route is available, the companies eligible for it may still opt for the regular merger route – ie, before the National Company Law Tribunal (NCLT). This deci- sion may sometimes be driven based on whether the
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