Internal accruals accumulate to reserves prompts management to venture more avenues through acquisitions or mergers but during and after the process, funds available internally are inadequate. Suggest available avenues t

Several modes are available to fund the mergers and takeovers, especially for an entity that has built-up balance sheet of robust financials. Further issue may be through equity shares either as rights, preferential or with differential rights. Cost of such funds is not fixed because more the revenue, more dividend can be given to shareholders. Funds can also be borrowed by issuing instruments such as bonds and debentures. However, bond holders and debenture holders need to be paid coupon rates that is charged to revenue account. Further, borrowings can be made from banks and financial institutions that have fixed tenure. Merit of such funds coming under project finance is evaluated by banks or financial institution before extending finance. At the same time, one should also note that adoption of such process, in some cases, is an uninvited interference to dilute the management. In addition, default in payment of interest or instalment triggers the borrower as non-performing asset, which invites a case to be taken for insolvency under Insolvency and Bankruptcy Code, 2016. The Company may borrow funds through the deposits from its directors, their relatives, business associates, shareholders and from public in the form of fixed deposits, external commercial borrowings (ECB), issue of securities, loans from Central or State financial institutions, banks, rehabilitation finance, etc..