Five tips to help you negotiate an M&A transaction like a boss

Drafting_for_Business_Deepa_Mookerjee.jpgThinking about negotiations, we may picture lawyers from opposite sides meeting in a conference room. Negotiations however, can take place over the phone or even through email. While most ‘big-ticket’ M&A transactions will comprise at least one meeting where the parties and lawyers are physically present to discuss all the major issues, minor issues can always be discussed through email or over a phone call. Remember, after having studied how to conduct an effective due diligence exercise and draft a comprehensive report, we are now moving ahead in the timeline of an M&A transaction. Actually, as you will see below, it often happens at the same time as the due-diligence.

Consider this scenario. Care Insurance Limited, a foreign insurance company, is investing in 26% of the equity share capital of Happy Life Insurance Limited, an Indian insurance company, and both companies have entered into a memorandum of understanding (a preliminary document about which we have already learnt), quite a few issues remain open. Care Insurance has two options. It can (a) wait to see the results of the due diligence exercise and then commence negotiations; or (b) if it is reasonably sure about its intention to invest, it can commence negotiations while the due diligence exercise is going on and then decide on any issues that may arise from the due diligence. More often that not, parties chose the second option unless they expect to see major red flags after the due diligence.

M&A negotiations can start in one of two ways — either one of the parties will circulate a first draft of the definitive documentation that can then be negotiated at a meeting or the parties will circulate a list of major negotiation points, which once decided, will then be inserted into definitive documentation. The choice of process is entirely up to the parties.

NegotiationInProgressRemember that a negotiation process is very sensitive and delicate as parties (sometimes with completely opposing positions), need to arrive at a mutually acceptable solution. Your job as a lawyer is to facilitate the closing of a deal. Here are five points you should keep in mind while preparing for a negotiation. Some of these may seem pretty obvious but after several negotiations, you will realise that even the smallest issue can make a difference.

1. Think about what to negotiate

Always sit with your clients to prepare a comprehensive list of issues that you would like to negotiate, before any meeting with the opposing counsel. Unless your clients would like to keep their position confidential till time the negotiation commences, it is best to set out their positions on these issues and circulate it to the other side. At times, the opposing counsel will also set out their responses to the issues you have circulated. The result is that before the negotiation commences, you will have a document that lists the major negotiating points and the views of both sides on each. This will help structure the discussion as the parties will be focused on the issues at hand. It will also give each side some time to consider the other party’s position before the negotiation commences, often aiding in a smoother negotiating process.

2. Be on the same page as your client

It is best to have a few meetings with your client (whether over the phone or in person) before your meeting with the opposing counsel. You should know how your client would like to see each individual issue resolved. Make sure that you have discussed possible outcomes with your clients and that you have taken them through both the best and the worst-case scenarios. Think about how the issues might relate to each other—for instance, is there some issue your client might be willing to concede in order to succeed in another aspect of the case? Finally, and importantly, make sure that you have determined—in consultation with your client—your ‘bottom line’, that is the point beyond which you cannot concede in a negotiation. If for example, Happy Life believes that Care Insurance must at least invest Rupees One Hundred crore for purchasing 26% shares in the company, then Rupees One Hundred crore is the bottom line. You cannot go below this number in your negotiations.

3. Know the transaction

APCCLP_CompanyLaw-BannerKnow the contours of the transaction and the several issues that can arise. Be aware of the law and the manner in which it relates to the transaction. This will ensure that you never agree to anything that is illegal (due to your ignorance of the law) which you will have to go back on later. For instance, you should be aware that the maximum permissible limit of foreign investment in any insurance company is 26%. Also, be aware of the manner in which the Foreign Investment Promotion Board allows a company to make this investment. Is investment allowed by way of preference shares or only equity shares? How can a foreign partner exit the company? Is there any guidance on the number of directors that can be appointed by a foreign partner? You should have answers to all these questions before you start negotiations.

4. Keep copies of all supporting documents ready

Make sure that you have enough copies of all supporting documentation (emails, preliminary documents, term sheet, reports and the like) that you might need before you enter into a negotiation. Keep additional copies in case anyone needs it. It is always best to have more copies so the negotiation does not need to be halted for something as trivial as taking printouts or photocopies. Also, make sure you have enough stationery – pens, papers, and notepads — for all participants in the negotiation.

5. Plan the conference

Make sure you have a comfortable environment for the negotiation. It should take place in a private room, such as a conference or meeting room. If possible, you can provide a smaller, private room for the other side to go to if they need to discuss anything in private during the course of the negotiation. This is typically called a break out room.

Ensure that facilities such as printers and photocopying machines are available through the duration of the conference. Finally, keep in mind that refreshments such as water, juice, lunch, and dinner should be provided to all the parties with minimal fuss so that they can be focused on the discussion rather than deal with ancillary issues.

Remember planning the meeting is as important as your conduct in negotiations. Good planning leads to an effective negotiation while incomplete planning will result in a bumpy negotiation process.

In my next post, I will discuss the manner in which you should conduct yourself at negotiations and the steps you should take to conclude your negotiation successfully.

(Deepa Mookerjee is part of the faculty on


Indian courts use law journals for four main reasons but doubts persist about their utility

AshwitaAmbastHow is Indian legal scholarship used by Indian courts? We have already touched upon the use of peer review in Indian journals. Now, let us look at the judiciary and legal scholarship. The jurisprudence of courts of law in India is littered with references to scholarship from India as well as from abroad. Here are some of the reasons the judiciary has used law journals.

To establish a nascent position of law

First, law reviews are used to establish a new position of law that is still nascent. A good example of the use of foreign scholarship is R. Rajagopal v. State of Tamil Nadu. This case famously referred to the article, “The Right to Privacy” by Louis Brandeis and Samuel Warren in order to establish the recognition and establishment of the right to privacy as a distinct entitlement to be provided to citizens by the state. In Official Liquidator v. United Commercial Bank, the Kerala High Court had to determine the priority of the rights of workers against those of secured creditors in the course of the winding up of a company. The court referred to academic writing in the Journal of the Indian Law Institute to buttress its characterisation of the right of workmen in this context as a social welfare effort of the state.

For clarity in the position of law

Second, the judiciary may use articles to arrive at an unambiguous position of law where clarity is lacking. In Gramaphone India v. Birendra Bahadur Pandey, the question before the Supreme Court was about the definition of the term “import” under Section 53 of the Copyright Act, 1957, in reference to whether certain materials that were illegal in India   could be brought through India into Nepal. Here, the Court referred to an article by Johan H.E. Fried (Nepal’s representative at several relevant UN Conferences) in the Indian Journal of International Law on the interpretation of the 1965 Convention on Transit Trade of Land-Locked States.

To identify problems with the current position of law

Third, academic articles are used to understand different aspects of problems associated with the existing position of law that the judiciary ,ust account for. For instance, in 2009, in the seminal death penalty decision of Bacchan Singh v. State of Punjab, two judges of the Supreme Court referred to an article by A.R. Blackshield in the Journal of the Indian Law Institute to note the problem of subjectivity in death penalty decision-making contributing to arbitrariness. On a similar note, the Court referred to a piece by Arvind Datar in the National Law School of India Review to point out some errors in the manner in which Indian courts have been treating the idea of res extra commercium.

To justify the use of an established position


Finally, extracts from scholarships are frequently used to justify a judicial approach predicated on an established position of law. In Ediga Anamma v. State of Andhra Pradesh, Justice Krishna Iyer, referring to a piece in the Yale Law Journal, lyrically stated that “(a)s a judge, I am bound to the law as I find it to be and not as I fervently wish it to be”. Accordingly, he held that despite personal predilections, individual judges are bound by the fact that the death sentence was constitutional.

While it is apparent that the Indian judiciary finds legal scholarship useful, there is less clarity on other, more nuanced questions.

Is this utility sustained and has it changed over time? Scholarship in the United States has closely scrutinised how different courts have used journal articles. For instance, in 2012, Brent Evan Newton of the Georgetown University Law Center conducted an extensive study of the characteristics of articles that were most frequently cited by judges. The general prognosis is overwhelmingly weak and describes a decline in the utility of scholarship for courts. In fact, several prominent members of the American judiciary have displayed open scepticism regarding the value of American legal scholarship. Chief Justice Roberts of the Supreme Court of the United States famously stated that “law review articles are not particularly helpful for practitioners or judges”, a thought echoed at various points by other judges of the Court including Justice Breyer (“there is evidence that law review articles have left terra firma to soar into outer space”) and Justice Scalia.

Another area that is ambiguous in India is whether there is a balanced reference to indigenous scholarship and articles from abroad. Prima facie, it appears that courts rely more heavily on international scholarship. If this is the case, why is it so, and what does it portend about the state of Indian scholarship?

Ashwita Ambast is a graduate of the National Law School of India University and the Yale Law School and has worked with the National Law School of India Review, the Yale Journal of International Law and the Yale Human Rights and Development Law Journal.


Eight clauses that you will come across in business contracts

The skills required to draft and review contracts well are best acquired through practice. While many become experienced negotiators of contracts, many lawyers continue to struggle with them. To make things a little easier, here is a brief look at eight clauses that you will encounter commonly in the business world.

Parties to the contract

KareenaRaveenaEvery party to the contract is named in this clause. It is vital to the validity of the contract itself since any ambiguity in identifying the parties can render a contract null and void. If you are drafting the contract, make sure that you clearly state the names of all the parties and then, refer to them throughout the contract using the same nomenclature. Remember, consistency is key to good drafting.


The clause containing the definitions of the important terms and concepts referred to in the contract is important because the contractual relationship will flow from the meanings of these words. Remember to be as precise as you can because it will affect the operation of the entire contractual relationship.


Amitabh_KhamoshThis clause is included in contracts to maintain the confidentiality of vital information for businesses such as ‘trade secrets’ or other types of information that is explicitly marked as ‘confidential’.

Sometimes, when negotiating a contract, parties share confidential information with each other even before the contract comes into effect. To protect the interests of the parties in case the negotiations do not culminate in a contract, such a clause is often drafted as part of a stand-alone agreement called a ‘non-disclosure agreement’. It is a contract that survives even if the actual business contract does not come into effect.

Intellectual property rights

Very often, in the course of employment or business, individuals and enterprises create and use intellectual property. Intellectual property is a precious source of income and it is very important to clearly identify in a contract, its ownership, usage, and the rights of the parties in relation to the intellectual property. While the creator of some intellectual property usually has all rights in it, those rights belong to the employer or the person who has commissioned the work when it is created for an employer or if the work has been commissioned. Parties can also agree to share the ownership or profits from its exploitation.

Non-compete and non-poaching clauses

Apart from protecting trade secrets and intellectual property, businesses must also guard against the transfer of vital information to their rivals through employees who are offered greater incentives to do so. In a non-compete clause, an employee (usually) agrees to not to enter into, start, or join a profession or trade in competition with the employer. A non-poaching clause is relevant in agreements between businesses. In it, organisations mutually agree to not hire employees from each other. Both non-compete and non-poaching clauses can be limited to a certain period of time.

Indemnity, warranty, and guarantee


Indemnification is important for protecting an organisation from errors committed by those outside it. Warranties and guarantees are important to establish a reliable framework of trust between partners in a business for the successful execution of a business contract. These clauses can often lead to separate indemnity, warranty, guarantee, and in some cases, full-fledged insurance agreements that are distinct from the original business contract.

Termination of the contract

Every contract must indicate a manner of ending. Some contractual relationships may not specify a termination date, such as employment contracts where employment ends on superannuation. Other contracts, such as those for the performance of a service or the use of a product, must clearly specify the duration of the contract and how to terminate it so that parties can either renegotiate terms afresh or renew the contract if required.


Jurisdiction plays a crucial role in any contract. It acquires importance when the contractual relationship deteriorates and requires judicial intervention. A contract can state the law it is to be governed by, that is, the law applicable to the subject matter of the contract. It can also state which court(s) will exercise jurisdiction in case parties choose to take judicial recourse such as the courts of a particular city, or which mechanism will be used to redress disputes, such as arbitration tribunal.

(Suhasini Rao is part of the faculty on

Law Schools

India’s student-run law reviews face major questions

AshwitaAmbastIt is remarkable that the guardians of the most powerful academic gateways in legal scholarship in the United States are law students. Several of the most influential American journals such as the Harvard Law Review and the Yale Law Journal are produced by top universities and are entirely student-run (and proudly so) and feature no element of peer-review  that is, some form of evaluation by someone knowledgeable in the field. The absence of peer reviewing appears to be unique to legal academia, and unsurprisingly, this fact has drawn considerable flak.

The most classic critique of American journals was penned by Professor Fred Rodell as early as 1936. In his article “Goodbye to Law Reviews”, he strongly questions the academic contribution made by the ‘Harvard Law Review-style’ article as well as the poor, fluffy quality of writing he claims it encourages. Other critics point out inter alia that student editors are unable to fully evaluate technical analyses, particularly the kind found in articles that lie at the intersection of law and other disciplines. Student editors are frequently accused of being distracted by (arguably irrelevant) details such as the position and reputation of the author, conformity with a popular style of writing, and the volume of footnotes. It is true that peer review is not free of its flaws. The objectivity and independence of peer reviewers are frequently called into question as well. But the outrage and criticism against student-run journals is far more pronounced and on the face of it, valid.

What about the reviews being produced by Indian law universities? On surveying the information available about a series of law reviews published by Indian universities, some relevant observations can be made.

Image on the left is from Janet Lindenmuth's photostream on Flickr (CC BY 2.0). Image on the top-right is from Kristopher Nelson's photostream on Flickr (CC BY 2.0)
Image on the left is from Janet Lindenmuth’s photostream on Flickr (CC BY 2.0). Image on the top-right is from Kristopher Nelson’s photostream on Flickr (CC BY 2.0).

First, like the U.S., the kind of journals Indian law universities publish are generally of two kinds. The first is the flagship journal with diverse content, such as the Amity Law Review, the NUJS Law Review, and the NLUD Student Law Review. Also, in addition to the flagship reviews, Indian law universities are witnessing the proliferation of more streamlined journals that publish articles in more niche areas. There exist journals on subjects as specific as corporate crimes, telecommunications and broadcasting law, and law and technology. It appears that both these types of journals, flagship journals as well as niche ones, are a mix of peer-reviewed and student-run.

Second, there are a handful of journals that either state that they have an ‘advisory board’ or that they are jointly run by students and professors. What role do the advisors and professors play in the running of the journals, specifically in selecting the articles and controlling their quality? Does the final say lie with the student editors? On these fronts, many contemporary Indian journals beg clarity.

Finally, there are a handful of journals that indicate in clear terms that they are peer reviewed. However, the universe of peer reviewing is complex; the term ‘peer-reviewed’ itself begs further detail. Despite liberally using serious qualifying terms such as ‘rigorous’ and ‘international’, most journals seem to be unclear about what exactly their review process is.

The overarching conclusion from the three observations outlined above is that Indian law school scholarship has not completely dodged the attendant disadvantages of student run reviews entirely. Much writing is published sans peer review. In cases where peer review is employed, the process is varied and in most cases begs detail and transparency. While this observation may appear banal, it seems fair to expect that journals be more upfront with their potential contributors about the future of their articles. Who is reading them? Who decides their fate? Where are the red lines coming from?

Legal Research AdvertisementThese observations are preliminary and can potentially be fixed. But there is a larger, more ambitious and more pressing inquiry to be made. The flaws of the existing model of legal scholarship in America (of which the student-run or peer-review debate is just a part) are making journals less relevant to the Bar and even to academia. Apparently, about 43% of law reviews have never been cited in another article or judicial decision. Are Indian law reviews, both peer reviewed and student-run, facing similar challenges of redundancy? How useful are Indian law reviews to the judiciary when decisions are being delivered? What role do university published law reviews play in the work of the Bar? Does the academy believe that these publications are fecund ground for debate? These are some of the questions that this article series seeks to answer in its next editions.

Ashwita Ambast is a graduate of the National Law School of India University and the Yale Law School and has worked with the National Law School of India Review, the Yale Journal of International Law and the Yale Human Rights and Development Law Journal.


Six tips for an effective due diligence process

Drafting_for_Business_Deepa_Mookerjee.jpgEven though Ray Limited has agreed in principle to acquire 30% shares in Whirl Limited and has signed a memorandum of understanding to this effect; it does not have enough information about that company. For instance, it does not know whether and to extent the company is in debt, how its business is doing, and who its main customers are. Obviously, just as you will not buy a car or a home theatre without a thorough investigation of its benefits, Ray Limited will never purchase shares in Whirl Limited without having complete knowledge about that company. Ray Limited will only invest in Whirl Limited once it carries out a thorough investigation of Whirl Limited. Such an investigation, called a ‘due diligence’ process, helps an investor carry out a cost-benefit analysis of whether the investment is beneficial. During this process, an investor investigates the financial, commercial, and litigation-related details and contractual and other information about the target company.

Such investigations can be of different types. They include:

Commercial due diligence: This consists of a review of the industry, market, and business model of the target company;

– Reputational due diligence: This includes a review of the credit worthiness and reputation of the target company;

Financial due diligence: This includes a review of the tax, financial position, policies, and internal controls of a target company; and

Legal due diligence: This is usually very broad in nature, and consists of a review of all relevant documentation and material contracts. This due diligence process, which is the focus of this post, aims to understand the business and identify potential legal issues that can impede the transaction or affect the transaction value.

Requisition list

As a lawyer carrying out a legal due diligence, the first step is to send to the target company, a questionnaire or list of the documents you require. This list is typically called a requisition list or a due diligence checklist. It helps the other side of the transaction organise documents in the manner you want and ensure that all the documents you require are provided to you. In the absence of such a list, confusion is likely to arise about the nature of documentation required.

APCCLP_CompanyLaw-BannerThis information is provided by the target company in a data room, set up for the purpose of the diligence. Such a data room is either a physical data room or an online data room, which is becoming more prevalent these days. Depending upon the nature of the deal and the extent of confidentiality required for the documents, the target company can grant limited access to the advisors of the acquirers or permit them to examine the records, contracts, and information about the company in person (in a physical data room) or download or edit them (in an online data room).

You will always have to comply with the directions of the target company in relation to handling sensitive information. For instance, you may be asked to not make copies of any documents. You will have to strictly comply with that direction.

While carrying out this investigation, bear in the mind the following:

1. Remember, what you are doing can make or break a deal.

You are the one who has access to all the company’s records and therefore, you have a responsibility to provide a complete and true picture of the company you are investigating. Your client will depend on your report to make a final decision. Never cut corners while investigating. Ensure that all the information is made available to you. If you face a problem accessing any information about the target company (which you feel is vital), let your client know that your investigation will be incomplete unless the information is provided to you.

2. Never assume any fact.

Always ask for documents or written evidence to confirm any statement made by the company. For instance, if a company says it has paid off a loan of Rupees 10 crore in the last two months, ask for written evidence (such as a letter or undertaking from the bank) stating that the loan has in fact ben repaid. If you don’t get what you have asked for in the beginning – ask again.

3. Never forget the nature of the transaction.

The type of documents you will ask for depends on the type of transaction. For instance, if you are only going to buy a specific part of the business, ask only for the documents relevant to that part. If you are acquiring the whole company – you need documents pertaining to the whole company.

4. Always be polite and courteous to those who are providing you the documents.

A Business Men Climbing a Pile of Papers
It can often seem like this but make sure you retain your cool during a due diligence process.

Remember, the documents will often be provided to you by employees or company secretaries who have little or no background to the deal and may not know the reason why the document may be important to your investigation. Patience is key to a successful due diligence investigation.

5. Where you can, make copies of documents.

Always keep copies of all documents you have looked at (if you are permitted to photocopy documents). If not, make detailed notes of every document. This will be helpful while preparing the report as you can look at your notes to refresh your memory. Remember, once the target company has provided some information, it is unlikely to provide it again. So, your notes will form the basis of the report and your conclusions regarding the deal.

6. Be efficient.

Almost all due diligence investigations are carried out within a limited time period. Parties are eager to close the deal and there is immense pressure on lawyers to carry out a diligence efficiently and effectively. While actions such as sending a requisition list will help save time, never hurry up the investigation and ignore documents just to complete the process on time. If necessary, ask your client for more time after providing a detailed explanation about why you need more time.

After this process is complete, as a lawyer you will be asked to prepare a due diligence report setting out details about the investigation and your conclusion about the legal issues in the deal. I will discuss the important points to keep in mind while drafting the due diligence report in my next blog.

(Deepa Mookerjee is part of the faculty on