The term Merchant Banking has its origin in the trading methods of countries in the late eighteenth and early nineteenth century when trade-taking place was financed by bill of exchange drawn by merchanting houses



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18MB0408T - Unit II
Restructuring of Capital



An SME needs to convert itself to a public limited company, if already not a public limited company.



SME is also required to restructure capital so as to comply with regulations and requirements of raising equity capital through IPO.



Valuation of SME needs to be carried out to arrive at the financial strength of the company as well as to decide size and pricing of its IPO.




  1. Due Diligence as part of IPO

Due diligence is required to be conducted on various approvals and regulations that a corporate is required to comply. The risk factors associated with the company and the external environment have to be very clearly understood. The applicability of certain regulations needs to be clearly mentioned. The litigations have to be listed out and their relative magnitude be analyzed by the corporate but left to the judgment of the legal people.








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