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Route Selection
The choice between a slump sale, an itemised asset sale, a demerger and a share sale, decided against tax, stamp duty, consents and the commercial goal of the parties.
A slump sale transfers a whole undertaking as a going concern for a single lump sum, without putting a price on each asset inside it. We structure the transfer, draft the business transfer agreement and move the contracts, the consents and the people, so a living business changes hands intact.
The first decision is whether a slump sale is even the right route, against an itemised sale, a demerger or a share sale. Once the route is set, the work is moving a whole business without dropping a contract, a consent or an employee on the way.
The choice between a slump sale, an itemised asset sale, a demerger and a share sale, decided against tax, stamp duty, consents and the commercial goal of the parties.
The agreement that transfers the undertaking as a going concern, defining what is in and out of the business, the consideration, the conditions and the warranties.
The transfer of employees with continuity of service, the treatment of accrued benefits, and the communication and consent process the transfer requires.
Assignment and novation of customer, supplier and lease contracts, and the third party and regulatory consents without which the business cannot move.
The capital gains computation on a slump sale under the net worth method, and the position on indirect tax where the transfer is of a business as a going concern.
Conditions precedent, the completion mechanics, the apportionments and the operational handover that lets the buyer run the business from day one.
A business transfer is a logistics exercise wrapped in a legal one. Each stage clears the path for the next, so that on completion the business simply continues under a new owner.
Decide whether a slump sale is the right structure against the tax, stamp duty and consent profile.
Draft the business transfer agreement, defining the undertaking, the price and the terms.
Identify and obtain the contract, lease, employee and regulatory consents the transfer needs.
Satisfy the conditions, complete the transfer and pay the lump sum consideration.
Hand the business over operationally so it runs without interruption under the new owner.
The value in a business is in its continuity. A slump sale that breaks a key contract, loses a licence or unsettles the workforce delivers assets, not a business. We treat the consents and the people as the heart of the deal, because they are what make the lump sum worth paying.
Short, direct, on the record.
A slump sale is the transfer of a whole business or undertaking as a going concern for a single lump sum, without assigning separate values to the individual assets and liabilities inside it. It is defined in Section 2(42C) of the Income Tax Act. The buyer acquires the business as a living concern, with its contracts, employees, licences and goodwill, rather than buying a list of assets. The single price and the going concern character are what distinguish a slump sale from an itemised asset sale.
In an itemised asset sale, the parties price each asset separately and the buyer can pick and choose. In a slump sale, the whole undertaking moves for one lump sum as a going concern. In a share sale, the company itself does not change. Only its ownership does, so all its assets, liabilities and history stay with it. The right route depends on the tax position, the stamp duty cost, the consents required and whether the buyer wants the company history or only the business. We choose against those factors rather than by habit.
Capital gains on a slump sale are computed under Section 50B of the Income Tax Act. The gain is the difference between the lump sum consideration and the net worth of the undertaking, where net worth is computed in the manner the section prescribes and is treated as the cost of the undertaking. Whether the gain is long term or short term depends on how long the undertaking was held. The computation is settled during structuring, because it affects the price the seller is willing to accept.
Employees engaged in the business being transferred usually move to the buyer with continuity of service, so that their past service counts and their accrued benefits are preserved or settled. The transfer is handled through proper communication and, where required, consent, and the agreement allocates responsibility for past and future liabilities. Treating the workforce correctly is not only a legal requirement. It is also what keeps the business running, since the people are often the largest part of what the buyer is paying for.
The transfer of a business as a going concern is treated as exempt from goods and services tax, subject to the conditions for that treatment being satisfied. The key is that what is transferred is a business capable of being carried on by the buyer, not merely a collection of assets. We structure and document the transfer so that the going concern character is clear, which supports the exempt treatment and avoids an unexpected indirect tax cost on the consideration.
AIF formation across Category I, II and III under SEBI
Ring fenced vehicles for acquisitions, infrastructure and finance
Equity and contractual joint ventures with governance built to last
The cleanest outcomes are built into the structure at the start, not negotiated out of disputes later.