India M&A Glossary for Business Sellers

Transfer of an entire business undertaking as a going concern for a lump-sum consideration, without itemized asset/liability…

A deferred, milestone-linked portion of the sale price that a seller receives only if the business hits agreed post-closing…

A portion of sale proceeds withheld with a neutral escrow agent for a fixed period against potential indemnity claims — a direct…

A pre-agreed target working capital level built into the price, with a rupee-for-rupee adjustment if actual closing working…

A valuation fixed to a historical balance sheet date with no post-closing true-up, giving the seller certainty on proceeds in…

A restriction on the seller starting or joining a competing business post-sale — sellers should ensure any non-compete fee is…

A buyer-side insurance policy covering warranty breaches, allowing the seller to limit or eliminate personal post-closing…

Sale price paid in tranches over time rather than fully at closing — sellers must weigh counterparty credit risk on the unpaid…

A contractual right allowing a majority shareholder or the acquiring buyer to compel minority shareholders to sell on the same…

A minority shareholder's contractual right to participate in a sale on the same terms if a majority shareholder sells its stake,…

A due diligence report commissioned by the seller before going to market, shared with prospective buyers to streamline and speed…

A structure where existing promoters or key managers reinvest a portion of their sale proceeds into equity of the…

A post-closing purchase price adjustment mechanism where final accounts are prepared as of the actual closing date and reconciled…

Adjustments to reported EBITDA that strip out non-recurring, personal, or non-business expenses — sellers should document these…

An independent forensic earnings validation — sellers increasingly commission their own vendor QoE to pre-empt buyer pushback and…

Reduction of enterprise value by outstanding debt and debt-like items to arrive at the seller's actual equity proceeds — sellers…

Adjustment of profits for below- or above-market promoter compensation — sellers drawing artificially low salaries should…

Re-pricing of transactions with promoter-affiliated entities to arm's-length terms — sellers should resolve or disclose RPTs…

The sustainable earnings base buyers apply their multiple to — sellers should build a documented track record that supports the…

The additional value a buyer pays over minority-comp valuation to secure full control — sellers should demand this premium rather…

A valuation discount for illiquid private shares versus listed comparables — sellers should push back on excessive DLOM claims by…

The reconciliation from headline enterprise value to the actual equity cheque paid to sellers, adjusting for net debt, minority…

A valuation method benchmarking a target against the trading multiples of similar publicly listed companies, adjusted for scale…

A valuation method benchmarking a target against actual acquisition multiples paid in comparable past M&A transactions in the…

A valuation markdown applied when a disproportionate share of a target's revenue depends on one or few customers, reflecting…

Thresholds limiting a seller's indemnity exposure — a low cap and high basket materially protect the promoter's post-sale…

Core title/authority warranties typically uncapped and perpetual — sellers should ensure only genuinely fundamental items get…

A schedule listing exceptions to warranties — comprehensive, well-evidenced disclosure is the seller's primary defense against…

A buyer's right to renegotiate or exit if a significant negative event hits the target pre-closing — sellers should narrow MAC…

Pre-closing obligations that must be satisfied before the deal completes — sellers should minimize CP count and set tight…

A specific ring-fenced holdback against a known, unresolved liability — sellers should ensure the amount held back is…

An income-tax NOC confirming no pending dues that could void the transfer against the tax department — sellers should obtain this…

A summarized diligence output flagging only critical issues — sellers can commission their own pre-sale red flag review to fix…

The risk that a buyer inherits a target's pre-existing statutory, tax, labour, or environmental liabilities by operation of law,…

A standalone indemnity clause covering a named, identified risk (such as a pending lawsuit), separate from and not subject to the…

A third-party contractual right requiring a customer, lender, landlord, or licensor's consent before a target's ownership change,…

A clause determining whether a buyer can still claim for a breach of warranty even if the buyer knew about the underlying issue…

A restriction preventing the seller from soliciting or hiring away the target's key employees or customers for a defined period…

Capital gains on a slump sale are taxed against the undertaking's "net worth," not fair value, under Section 50B — one of the…

RBI/FEMA rules setting a fair-value floor for share transfers to non-residents — sellers benefit from this floor as a valuation…

The mandatory RBI filing for resident-to-non-resident share transfers — sellers should ensure timely filing to avoid compounding…

A slump sale or going-concern transfer is exempt from GST under specific notification conditions — sellers should structure…

State-specific stamp duty on the BTA, calculated on consideration or asset value — typically borne substantially by the buyer,…

Shares held over 24 months qualify for lower long-term capital gains tax versus higher short-term rates — sellers should time…

A tribunal-sanctioned merger, demerger, or capital reduction — sellers of multi-division groups can use this route to cleanly…

Non-compete consideration is taxed as business income under Section 28(va), not capital gains — sellers should evaluate the…

A provision taxing the excess of share issue price over fair market value, in the hands of an unlisted company, as income —…

A target's Udyam (MSME) registration status affects buyer diligence around delayed-payment protections owed to the target's own…

Selling a distressed business through the Insolvency and Bankruptcy Code's resolution process, where prospective buyers…

The buyer's statutory obligation to deduct tax at source on specified payments to a seller — including immovable property…