Preferred Legal Structure for Indian Business Acquisitions
Preferred Legal Structure for Indian Business Acquisitions
Why is the Private Limited Company structure generally preferred over an LLP for business acquisitions in India?
3 Answers
The Private Limited Company structure is preferred for acquisitions in India because it offers limited liability, easier access to funding, transferable shares, and stronger credibility with investors and banks, whereas an LLP provides limited flexibility in ownership transfer and may be less attractive to external investors.
In India, the Private Limited Company (Pvt Ltd) structure is generally preferred over an LLP for acquisitions because it allows easier transfer of ownership through shares, access to equity funding, and clearer governance, whereas LLPs can be harder to exit from or bring in investors. Emotionally, it feels like choosing a Pvt Ltd gives you flexibility and growth options without getting trapped in rigid structures, making the deal smoother and giving buyers confidence that they can scale or sell later without unnecessary hurdles.
A Private Limited Company is generally preferred because it offers clear share transferability, making ownership changes simpler during acquisitions. It is also more familiar to investors, banks, and buyers, which improves credibility and valuation. In contrast, LLPs involve partner consent and structural rigidity, often slowing transactions.