Accelerating M&A Activity: Focus on Value Over Volume in Corporate Transactions
India’s mergers and acquisitions (M&A) landscape is poised for continued growth in 2026, following a robust performance in 2025. Domestic consolidation reached an impressive $104 billion this year, marking the highest level in two years. Additionally, inbound deals surged to $30 billion, driven by investments from banks in East Asia and West Asia in Indian financial institutions. Outbound transactions also saw a significant increase, totaling $22 billion, the highest in a decade, largely due to Tata Motors’ overseas acquisitions. Experts predict that strong corporate confidence and healthy balance sheets will fuel further M&A activity across various sectors in the coming year.
Strong Domestic Consolidation and Inbound Investments
The Indian market has witnessed a remarkable surge in domestic consolidation, with companies actively pursuing strategic growth opportunities. This trend is expected to continue as firms explore both local and international avenues for expansion. Amit Thawani, the head of investment banking at Nomura in India, emphasized that while conglomerates have historically dominated the M&A landscape, mid-cap companies are increasingly entering the fray. This shift indicates a broader participation in the M&A arena, reflecting the evolving dynamics of the market.
Inbound M&A activity remains robust, particularly in sectors such as financial services, consumer goods, and infrastructure. Rahul Mody, co-head of investment banking at Ambit, noted that these sectors continue to attract foreign investors due to their long-term potential. However, the nature of inbound M&A is shifting from a focus on volume to one centered on value. Sumeet Abrol, a partner at Grant Thornton Bharat, highlighted that while deal volumes have decreased over the past three years, the value of transactions has increased significantly, indicating that foreign investors are becoming more discerning and willing to invest larger sums in fewer deals.
Optimism for Continued Growth in 2026
The outlook for M&A activity in 2026 is optimistic, driven by several factors. Rising disposable incomes and consumption growth are expected to create a favorable environment for dealmaking. Additionally, the Indian government has implemented measures to facilitate M&A transactions, such as allowing banks to finance these deals and increasing foreign direct investment limits in the insurance sector. These initiatives are designed to enhance the attractiveness of the Indian market for foreign investors.
One notable upcoming deal is the proposed $2.3 billion acquisition of Encora by Indian IT firm Coforge. This transaction will be one of the first to take place under revised foreign exchange regulations that permit indirect foreign ownership. Such developments signal a commitment to fostering a conducive environment for M&A activity, further bolstering investor confidence.
Sectoral Trends and Future Prospects
As the M&A landscape evolves, various sectors are expected to play a significant role in driving future activity. Financial services, technology, and healthcare have traditionally been at the forefront, but a wider array of industries is anticipated to participate in the coming year. S Sundareswaran, Morgan Stanley’s India head of M&A, noted that the expansion of inbound M&A will extend beyond financial services and industrials, despite some foreign players occasionally exiting the market.
The shift towards a value-driven model in inbound M&A reflects a more selective approach by foreign investors. This trend is likely to continue as companies align their investments with policy-driven sectors that promise long-term growth. Bharat Anand, a senior partner at Khaitan & Co, pointed out that expectations of lower interest rates from the US Federal Reserve could further support M&A activity, as reduced borrowing costs typically encourage more transactions.
Observer Voice is the one stop site for National, International news, Sports, Editor’s Choice, Art/culture contents, Quotes and much more. We also cover historical contents. Historical contents includes World History, Indian History, and what happened today. The website also covers Entertainment across the India and World.
