India's M&A market expected to stay resilient despite market correction

Industry leaders feel that bear markets present great opportunities for buyers who look beyond short-term uncertainties

India’s mergers and acquisitions (M&A) landscape is poised to remain resilient despite the downturn in public markets, with private equity firms and strategic buyers seizing opportunities, industry leaders said.

 

In the first two months of CY2025, 554 deals worth $17.75 billion were announced as against 528 deals worth $12.51 billion in the same period last year.

 

“Typically, short-term market gyrations don’t have an impact on M&As as these are longer gestation projects,” said Manish Mehta, managing director and Co-CIO, Samara Capital.

 

He, however, acknowledged that sustained market weakness could make some sellers hesitant.

 

“We still think there will be enough opportunities as private equity funds and many sellers do have time pressures to exit. On the other hand, bear markets are great opportunities for buyers who can look beyond the short-term uncertainties and noises,” Mehta added.

 

Gopal Jain, managing partner at Gaja Capital, echoed this view, stating that the market correction is opening new avenues for deal-making. According to him, with public markets having declined 16 per cent from their December 2024 peak, traditional M&A activity has softened, but private equity buyouts are gaining traction. “This now represents 30 per cent of over $50 billion deal value over four years, driven by stronger IBC (Insolvency and Bankruptcy Code) enforcement, generational succession challenges, and a growing talent pool for PE-backed leadership,” said Jain.

 

Since September last year, the Nifty 50 index has corrected 15.4 per cent - thus impacting the valuation of assets of unlisted companies too. Several transactions are stuck as the M&A market has now turned into a buyer's market, say bankers.

 

Despite broader market corrections, deal activity remains strong in certain sectors. Amar Shirsat, co-founder and CTO of Growthpal, a deal sourcing platform, noted that IT services, including data engineering, analytics, machine learning, and generative AI, continued to attract heavy investor interest. “We are not seeing any impact of that, maybe because of the nature or the kind of sectors we operate in,” he said.

 

Valuations remain a key challenge, particularly for venture-backed firms, prompting some buyers to favour bootstrapped companies. “Bootstrap companies, there is a bidding war going on,” said Shirsat, adding that business process outsourcing (BPO) and knowledge process outsourcing (KPO) firms are facing downward valuation pressure and pivoting towards IT services and AI acquisitions.

 

Global investors like Singapore’s sovereign wealth fund, GIC, are also positioning themselves for long-term gains. “GIC’s portfolio is built in a way where it is resilient enough for us to have the ability to invest across market conditions,” said Pankaj Sood, head of direct investments, India & Africa, private equity and head of India office, GIC.

 

He added that when the public markets are impacted, buyers could have more opportunities to enter at more attractive valuations. “GIC also has private market teams on the ground in India who continue to capture good opportunities,” said Sood. 

Analysts’ View 

> With public markets declining 16% from December 2024 peak, traditional M&A activity has softened, but private equity buyouts are gaining traction

> Despite broader market corrections, deal activity remains strong in certain sectors like IT services, including data engineering, analytics, machine learning, and generative AI