India’s mergers and acquisitions (M&A) landscape remains strong despite the downturn in public markets.
In the first two months of CY2025, 554 deals worth $17.75 billion were announced, compared to 528 deals worth $12.51 billion in the same period last year. Industry leaders report that private equity firms and strategic buyers are seizing lucrative opportunities.
Long-Term Projects: Manish Mehta, Managing Director and Co-CIO at Samara Capital, emphasized that short-term market gyrations typically don’t impact M&As due to their long-term nature. He acknowledged, however, that sustained market weakness might make some sellers hesitant.
Opportunities Abound: Mehta believes private equity funds and sellers with time pressures will continue to drive deal activity, viewing bear markets as great opportunities for buyers who can look beyond short-term uncertainties.
Market Corrections Opening New Avenues: Gopal Jain, Managing Partner at Gaja Capital, highlighted that the market correction is creating new deal-making opportunities. Public markets have declined 16% from their December 2024 peak, causing traditional M&A activity to soften while private equity buyouts gain traction. Jain noted that private equity buyouts now represent 30% of over $50 billion deal value over four years, driven by stronger Insolvency and Bankruptcy Code (IBC) enforcement and generational succession challenges.
Sector-Specific Strength: Despite broader market corrections, sectors like IT services, data engineering, analytics, machine learning, and generative AI continue to attract heavy investor interest. Amar Shirsat, Co-Founder and CTO of Growthpal, noted no significant impact on these sectors.
Valuation Challenges: Valuations remain a key challenge, especially for venture-backed firms. Buyers are favoring bootstrapped companies, with business process outsourcing (BPO) and knowledge process outsourcing (KPO) firms pivoting towards IT services and AI acquisitions.
Global Investor Positioning: Singapore’s sovereign wealth fund, GIC, is positioning itself for long-term gains. Pankaj Sood, Head of Direct Investments, India & Africa, Private Equity and Head of India Office at GIC, stated that the fund’s portfolio is resilient across market conditions, providing opportunities to invest at more attractive valuations during public market downturns.
M&A Landscape Outlook: Despite broader market corrections, India’s M&A landscape remains robust, with promising opportunities for both buyers and sellers.