The entire pretext of Due-Diligence has become an essential requisite before any Merger or Acquisition takes place. Due diligence can also be stated to be a small part of Corporate Social Responsibility which inhibits a sense of mitigation of potential risks and background checks before two companies form a conglomerate or one acquires the other.

Every future prospect of a company needs to be analyzed in order to prevent future risks and losses that may as well accrue in the absence of proper check and balance. India has significantly contributed and is soon getting in parlance with the global stage if it comes to various M&A transactions taking place. After 2015, numerous companies have conglomerated for mutual benefits and profits. The Companies Act is the primary legislation with regards to legality revolving companies in India. The statute is both substantive and procedural in nature.

The legality in India revolving around companies primarily is taken care with the help of adjudication by the respective courts and the statute. The due-diligence procedure imagines the future of the companies coming together and there have been numerous cases that pertain to successful as well as failed M&A Transactions.

The internal as well as external check is done whereby the health of the company is analysed and how it would bear proper and successful fruits of profits in the future. Typical mergers include two companies who amicably profit one another for instance Flipkart and E-bay in 2017. Two business relations ready to shake hands in the commercial sense beforehand talk about the essential information and insider view for the operations of the business hence, it becomes integral for them to know the intricacies of the relationship that they are entering into.

Whenever we come across M&A transactions, Due Diligence might as well be the most basic aspect of it that is heard over and over again. The very phrase 'Prevention is better than cure' can perfectly suffice the tenets of Due Diligence in the normative context. Legal and monetary implications are best discussed and put into picture with the help of Due Diligence. Some pitfalls of it are that it is inclusive of costs, is a laborious task since research takes time and perfectly balanced check establishes a sense of non-value addition to the entire process. In this manuscript, We would be discussing the importance of Due-Diligence and would also discuss cases of M&A failures that accrued because of inability to conduct Due-Diligence.

Introduction
There are variable forms of Due- Diligence like Operational Diligence, Legal Diligence, Financial and Accounting Diligence, Tax Diligence, Reputational Diligence, Market and Commercial Due Diligence, Technical Due Diligence, Intellectual Property Due Diligence etc. The Daimler Benz and Chrysler Group merger is a classic example of an unsuccessful merger that happened because of lack of due diligence being conducted properly, the reason of which was overestimation of value of merging company.

It was contested that Daimler failed in doing proper due diligence before merging with Chrysler. In another case of Nirma Industries and Anr vs Securities and Exchange Board of India, Nirma went on with the merger irrespective of being aware about the legal proceedings against the target company. There have been plethora of successful mergers and acquisitions, the reason of which stems from the fact that there was proper conduction of due-diligence process. In order to protect future prospects of profitability and successful legal and commercial relationships, Due-Diligence procedures need to be paid special emphasis to. [1]

The Zee Entertainment and Sony India merger is another example of a successful merger in the country which in the furtherance of it lead to a multibillion dollar merger. It poses to be a successful transaction mergers that is going to fuel and boost both the conglomerates in the pretext of profitability. The very quintessential merger that accrued was between Flipkart and Walmart, This lead to the entry of Walmart in Indian business and the expansion of Flipkart's business.

Another classic example of a symbiotic merger that transcended mutual benefit. The very dark side of failed transactions also revolves around the mergers taking into consideration the profits that may as well be yielded but not the measures that need to be taken to do so, leading to very less successful M&As that were well thought of. [2] In the case of Inter Globe Finance Ltd and Ors, before Securities and Exchange Board of India, IGPL did not do proper due diligence of the shares and it was held that material present on record did not signify any form of disproportionate gain or losses that accrued.[3]

Conclusion
Indian Companies have looked forward to the foreign M&A transactions and have garnered inspiration from the same as they are conclusive of amasses of profitability. The Western countries comprise of significant number of instances where the importance of Due-Diligence has been proven to be a pivotal pillar of successful M &A transactions. Variability in geographical locations may as well persist, but the fact highlighting the importance of Due-Diligence is the same in the context of India or for that matter other countries.

Growth is the plinth of businesses and commercial transactions everywhere it quite sometimes also lets the access to cultural probabilities of business expansion and to uncover hidden liabilities which are not visible on the face of it, or it might as well be assessing true value of any form of business coming together. Facebook acquiring Instagram in 2012 was very non-profitable at its premise but lead to the understanding of future prospects of coming together of the two. [4]

Conclusively, well thought about plans gel well with time and bloom with regards to monetary and other regards hence, it is very important to preach Due-Diligence before Mergers & Acquisitions especially taking into account the cases of both losses and profits that have accrued throughout the years and that are still happening.

End Notes:

• LiveLaw https://www.livelaw.in/lawschool/articles/due-diligence-in-ma-importance-and-implications-252306 (16-01-25)
• Aron Almeida 5 Biggest Mergers and Acquisitions in India Trade Brains 2021
• Inter Globe Finance Limited and Others 2021 SCC OnLine SEBI 152
• LexisNexis Due Diligence in Mergers & Acquisitions https://www.lexisnexis.com/blogs/amppage/28/due-diligence-mergers-aquisitions? (16.01.25)

Written By: Devika Raj