Last Updated on February 20, 2026
Mergers, Acquisitions, and Takeovers are terms commonly used in corporate transactions, but they connote entirely different strategic decisions, entail legally distinct results, and have different regulatory processes under Indian law.
Choosing the wrong strategy or misunderstanding its implications can expose you to non-compliance, disputes between shareholders, valuation problems, or regulatory scrutiny. This article defines the differences among takeovers, acquisitions, and mergers in India in order to help companies pick the most appropriate pathway for growth, consolidation or exit.
Why the Distinction Matters? (Takeover vs Acquisition vs Merger)
India does not treat all types of combinations equally when it comes to corporate combinations from a legal and regulatory point of view. Each combination has a different impact with respect to the following:
- Whether shareholder approval is required
- Regulators: SEBI, MCA, CCI, NCLT
- Disclosure and compliance requirements
- Control, management, and ownership impact
- Tax and competition law impacts
Being aware of these distinctions early on could drastically reduce the risk of non-compliance during your transaction and improve your chances of successfully completing your transaction in a timely manner.
What is a Takeover?
When an organization acquires considerable powers over the direction of another organization usually through purchasing large proportions of its stock or buying voting shares, this is referred to as a ‘takeover’.
Characteristics of Takeovers:
- Usually applies to listed companies
- Control may be acquired with or without full ownership
- Minority shareholders are legally protected
- Governed primarily by SEBI Takeover Regulations
In order for a company to take over another company from the perspective of India, simply having purchased a sufficient portion of the stock to achieve control will not suffice; other requirements exist before obtaining ownership/control can occur, such as the right to appoint majority directors and Control over management or policy decisions
Business Intent:
Often, a company would want control over a target company to continue functioning as independent entities, in order to gain access to better long-term prospects via increased earnings and/or sales without necessarily assuming total responsibility for them.
What is an Acquisition?
The term “acquisition” has a wider definition, defining that one company buys shares, assets and/or business operations of another company, totalling between 25% to 100%.
Characteristics of an Acquisition:
- Acquisitions can occur either with publicly listed entities or privately held companies; acquisitions do not require a change of control (new owners/management).
- Acquisitions can be structured as:
- Share purchase;
- Asset sale;
- Company transfer; and
Unlike takeover situations, acquisitions will not trigger public filers’ obligations, unless a company acquires in excess of the regulatory required thresholds.
Business Intent:
For many, acquisitions are typically utilized as a way to achieve:
- Expand into New Markets
- Acquisition of technology and intellectual property (IP), and/or
- Acquisition of employees for future business growth, without any operational involvement.
In the majority of private acquisitions, the acquisition process shall be solely governed by contract and confidentiality, and generally, such private acquisitions would be subject primarily to the Companies Act and any specific legislation governing an industry or sector.
What is a Merger?
An approved legal process at a court or tribunal regarding the merger of two or more corporations into one new, legally recognised corporation.
Characteristics of a merger:
- One Corporation remains after a merger.
- Obtaining all necessary approvals;
- Required by companies’ shareholders;
- Required by creditors;
- Approved by the National Companies Law Tribunal (NCLT);
- Regulated by the Companies Act of 2013;
- Transfer of assets & liabilities from one Company to another by law.
- Mergers are much more than just transactions; they’re actually a restructuring of a business entity.
Business Intent:
The primary purposes of mergers include:
- Corporate re-organization;
- Synergy-oriented consolidation activities;
- Tax / Operational savings;
- Long-term integration of separate and distinct businesses.
What Sets Them Apart? (Takeover vs Acquisition vs Merger)
| Aspect | Takeover | Acquisition | Merger |
| Primary Objective | Gain control | Purchase stake/assets | Combine entities |
| Applicability | Mostly listed companies | Listed & unlisted | All companies |
| Change in Control | Yes | Optional | Yes |
| Regulatory Intensity | High | Medium | High |
| Minority Protection | Mandatory | Limited | Via approvals |
| Legal Outcome | Target continues | Target continues | Single entity |
Regulatory Impact
Most businesses think that they are doing an “acquisition”, but they are in reality completing a “takeover” and triggering obligations to SEBI that they didn’t consider.
Many businesses try to create a merger by buying assets from different companies, only to find that they created a taxable event or caused their operations to become fragmented.
Choosing a structure for the transaction has direct ramifications on:
- Costs of Compliance
- Length of the Deal
- Regulatory Requirements
- Long-term management structures
For this reason, it is critical to decide on a structure prior to commencing negotiations and not after the agreements are executed.
How Kanakkupillai Can Assist You?
Kanakkupillai offers a variety of services to assist businesses with deciding on, structuring, and implementing corporate combinations with regulatory certainty, as well as a business focus.
We will provide assistance with:
- Determining if your transaction is a takeover, acquisition, or merger.
- Evaluating and identifying possible regulatory triggers associated with the transaction in accordance with the SEBI, Companies Act, and/or Competition Act.
- Structuring a transaction in a manner that reduces your exposure to compliance risks.
- Assisting with third-party approvals and filings, as well as post-transaction compliance.
Regardless of the business objective, our team at Kanakkupillai will assist you in structuring the transaction to achieve your objective and comply with your legal obligations.
Conclusion
The objective of all these business transactions is to grow their businesses; however, they cannot be used interchangeably, as each one has its own distinct legal, regulatory, and strategic outcomes under Indian law. The correct structure will help them to protect the value of the shareholders, reduce the risk of regulatory exposure, increase the level of certainty with regard to transactions and allow for long-term scalability
On the other hand, having the wrong structure can ultimately delay or derail your transaction. Therefore, any company who is contemplating either expanding or restructuring will need to be aware of these differences to make an informed decision. This is what will add up to a successful transaction.
Frequently Asked Questions (FAQs)
1. What is the difference between a merger, an acquisition, and a takeover?
A merger combines companies into one entity, an acquisition involves buying shares or assets, and a takeover focuses on gaining control—often in a listed company.
2. What is the difference between acquisition and merger?
An acquisition purchases a company or its assets while both entities continue to exist, whereas a merger legally combines them into a single entity.
3. What is the difference between a merger and a takeover offer?
A merger requires mutual approval and tribunal sanction, while a takeover offer is a regulated public bid to acquire control of a listed company.
4. How is M&A different from a takeover?
M&A is a broad term covering mergers and acquisitions, while a takeover specifically refers to acquiring control, typically governed by SEBI regulations.
