India Inc's M&A Surge Fuels Rapid Growth

India Inc is embracing mergers and acquisitions (M&A) as a primary strategy for accelerated growth, market access, and capability building. Annual deal volumes have more than doubled since fiscal 2017, with companies exhibiting stronger financial health and reduced leverage.

Companies are strategically acquiring scale, entering new markets, and obtaining capabilities that are time-consuming to develop organically. Sectors such as pharmaceuticals, healthcare, technology, and consumer businesses are prominent in these acquisitions, aiming to bridge gaps in technology, talent, and intellectual property.

Debt funding for M&A has decreased, with companies increasingly relying on equity. A review of debt-funded deals indicated that approximately two-thirds met expectations, leading to scale expansion and improved margins. Integration challenges and regulatory delays were cited as reasons for weaker outcomes in about one-third of cases.

Despite some challenges, most acquirers have maintained or improved their credit strength post-acquisition. Sustained success hinges on disciplined capital allocation, strong execution, and continuous investment in core capabilities.