NBFC Advisor
NBFC Advisor

Acquisition of NBFC in India

NBFC takeover process
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Are you looking to expand your financial portfolio by acquiring a Non-Banking Financial Company (NBFC)? Our expert team can guide you through the intricate process of an NBFC takeover, ensuring a smooth and compliant transaction.

What is an NBFC Takeover?

An NBFC takeover involves one company acquiring another NBFC. This can be done either:

 

  • Friendly: With mutual consent between the companies.
  • Hostile: Where the target company is unwilling to be acquired.

Why Consider an NBFC Takeover?

Pros of NBFC Takeover:

 

  • Increased Profitability: Enhance the target company's profitability through better management and resource allocation.
  • Reduced Competition: Strengthen your market position by eliminating a competitor.
  • Increased Revenue: Expand into new markets and customer bases.
  • Expanded Distribution Network: Improve reach and operational efficiency.
  • Economies of Scale: Reduce costs per unit through increased production levels.

Cons of NBFC Takeover:

 

  • Goodwill Valuation Issues: The price paid for goodwill is often less than its actual value.
  • Management Conflicts: Integration of new management can lead to disputes.
  • Cultural Clashes: Differences in corporate cultures can hinder smooth operations.
  • Employee Morale: Uncertainty about job security and future prospects may affect employees.
  • Hidden Liabilities: Unforeseen liabilities may surface post-acquisition.

Our NBFC Takeover Services

We provide comprehensive support throughout the NBFC takeover process, including:

Regulatory Compliance:

 

  • RBI Approval: We handle the application process for RBI approval, ensuring all requirements are met.
  • Public Notice: We manage the issuance of required public notices in national and local newspapers.

Step-by-Step Guidance:

 

  1. Memorandum of Understanding (MOU): Drafting and signing the MOU outlining the responsibilities and initial agreement.
  2. Board Meetings: Convening board meetings to discuss and approve the takeover.
  3. RBI Application: Submitting a detailed application to the RBI, including all necessary documentation.
  4. Public Notice: Issuing public notices to invite objections.
  5. Share Transfer Agreement: Finalizing the acquisition with a signed share transfer agreement.
  6. NOC from Creditors: Obtaining necessary no-objection certificates from creditors.
  7. Asset Transfer: Conducting the transfer of assets post-approval.
  8. Valuation: Performing valuation using the Discounted Cash Flow (DCF) Method and obtaining certification from a Chartered Accountant.
  9. Final Application to RBI: Submitting final details and any changes in management post-takeover.

Required Documentation for RBI Approval:

 

  • Information on proposed directors and shareholders.
  • Sources of funds for acquiring shares.
  • Declarations regarding non-association with deposit-accepting entities and non-conviction under relevant laws.
  • Bankers’ reports on proposed directors and shareholders.

Contact Us

Ready to navigate the NBFC takeover process with expert guidance? Contact us today to learn more about how we can assist you in achieving a seamless and compliant NBFC acquisition.

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