"While standard parameters plays a crucial role, funding/borrowing for takeover should be organized in such a way that best suits the facts and circumstances of the specific case and should also meet the immediate needs

While discussing mode of acquisition, certainly there would be a planning for organizing the necessary funding for takeover of an enterprise. Funding of a merger or takeover with the help of loan from financial institutions, banks, etc. has its own merits and demerits. If borrowing from domestic Banks or Financial Institutions has been identified as a choice, all the financial and managerial information must be given to the Banks and Financial Institutions for the purpose of getting necessary finance. Justice P N Bhagawati Committee on Takeovers, in its report of 2002 has recommended that Banks and Financial Institutions are to be encouraged to consider for financing of takeovers. The advantage of funding through this route is that the period of such funds is definite. But the flaw is that the interest burden is quite high and the merged or target Company must generate adequate returns to make timely repayments of interest and installments. There is a risk of acquirer becoming defaulter and it may become case of non-performing assets triggering insolvency proceedings as per Insolvency and Bankruptcy Code, 2016.