M&A: A growth step

Highlighting the difference between the technical jargons: mergers and acquisitions, he said, "Mergers are merging of two companies and legal entities whereas acquisition is to acquire a particular company and then merge it into one or let the acquired company function independently. It is a billion dollar market worldwide."

"In a M&A, an acquirer needs to focus on how is the synergy between the two companies, the economy for scale, the new technology in proposed company, how will it improve market reach and how it can help backward integration," added Kumar.

According to Kumar, a seller should consider selling the company if it is continuously making loses year-after-year and is looking for an exit, inability to fight competition and legacy issues. Various factors like internal restructuring, financial mismanagement and profitability of the company one intends to acquire.

Kumar further explained the method in which M&A happen. Firstly, the target company one needs to acquire or merged with should be identinfied, then a discussion should take place between the two parties and when they boardly agree a MoU (Memorandum of Understanding) should be made, and finally, a term sheet be prepared.