India’s M&A market may not make a resounding comeback in 2026, even as global M&A activity turned more buoyant in a late-year rally. But there are nuances at play that will have ramifications across the ecosystem.
After the bull run of 2021-22, there was a sharp correction and a prolonged slowdown, with deal volumes remaining flat through 2025. After more than 240 mergers and acquisitions in 2022, the number fell by nearly 50% in 2023 and then to 71 in 2024 and 72 in 2025.
Earlier, money was sloshing around in startup land, fuelling aggressive expansion and a record run of M&A deals. What appeared to be a structural boom in a frothy, if not outright bubbly, market has since cooled into a low-volume, high-caution phase. But reading this slowdown purely as a collapse would be misleading.
Once companies are listed, equity becomes a usable currency, creating a natural push for acquisitions. Unicommerce, Capillary Technologies, Nazara Technologies, Groww are among the listed companies that actively pursued acquisitions in 2024 & 2025.
Against this backdrop, one is no longer asking whether M&A activity will rebound, but how dealmakers will approach the next phase. Which sectors will consolidate first? What types of assets will command a premium in a capital-disciplined market? How will founders, incumbents and funds rethink acquisition when chasing scale is no longer the objective?
The answers are surfacing in the emerging patterns and the bets dealmakers are lining up.
The analysts Inc42 spoke with do not expect 2026 to usher in a volume-driven recovery in M&A activity. Instead, the year is likely to be defined by fewer, more focussed transactions, where strategic clarity will matter more than scale and disciplined execution will outweigh speed.
Strong M&A traction is particularly evident across consumer brands and healthcare, driven by clear demand from large strategic buyers and financial sponsors. It has created a window for mid and late stage funds, as well as those nearing the end of their lifecycle, to exit their portfolio companies through M&A. HUL’s acquisition of Minimalist, for example, reflects a strategic move to bolster its premium personal care portfolio while tapping into a fast-growing, digital-first consumer brand.
As Mohit Khullar, managing director and leader of Alvarez & Marsal Corporate Finance practice in India, emphasises, across sectors, a company’s M&A appeal will increasingly hinge on “profitability-anchored growth”.
This approach places a premium on consistent revenues and EBITDA-level profitability, alongside an easily integrable tech stack, strong customer relationships, defensible client IP and the ability to retain talent. Disciplined working capital management and the ability to integrate acquisitions cleanly into existing P&Ls are equally critical. Companies meeting these benchmarks are far more likely to attract buyer interest.
M&A structures are poised for change. Cash has long dominated transactions, but in the past decade, there has been a rise in all-stock and hybrid/cash-equity deals. Equity can play a larger role as an acquisition currency, particularly for listed companies that can deploy stock. Stock-for-stock mergers also align long-term interests but will dilute equity.
Sanjay Khan Nagra, a partner at Khaitan & Co., identifies two key drivers of this shift. As Indian corporate houses expand and cross-border stock-based acquisitions become more liberalised, traditional deal structures are becoming more flexible. Depending on corporate objectives, transactions may feature a mix of cash and equity or be entirely stock-based.
Historically, Indian companies were constrained by limited cash availability. But recent changes under FEMA have widened the scope for stock-led acquisitions, giving buyers far greater room to manoeuvre.
Cash-rich late stage startups, profitable incumbents and a handful of PE-backed platforms are emerging as the most active buyers. For everyone else, M&A is no longer an aspiration but a hard-edged decision, tested against runway, integration risk and the likelihood of durable value creation.
Abhishek Agarwal, founder and managing partner at Rockstud Capital, a SEBI-registered portfolio manager, shared an interesting case. Everest Fleet, India’s largest fleet operator with more than 18K cabs and nearly $50 Mn+ funding from Uber, was considered a potential buyer of BluSmart’s EV assets after the e-mobility startup collapsed. However, it stayed away from the deal, as the economics of high-cost EV fleets proved unviable in the country’s price-sensitive market.
The geopolitical landscape also matters, pushing global tech giants to secure deeper local alignment. Recent policy measures such as tighter controls on messaging platforms like WhatsApp to address cybersecurity risks, signal this broader shift.
As a result, global players may increasingly turn to local businesses for partnerships or acquisitions. Even then, they remain selective, focussing on SaaS players, and IT services. However, homegrown players continue to dominate the M&A space in India, backed by strong balance sheets and clear goals.
Analysts point to five key sectors where M&A momentum is likely to build, driven less by short-term opportunity and more by longer-term strategic rationale. The first is SaaS, vertical SaaS to be precise, where increasing specialisation is creating interesting acquisition targets. Segments such as healthtech and retail SaaS, as well as BFSI-focused platforms, have gained prominence. But overall, SaaS remains one of the top themes in the M&A space.
The second is technology services, spanning AI engineering, cloud and allied capabilities. AI is being increasingly treated as a horizontal strategy rather than a standalone vertical platform. From retail and financial services to healthcare, buyers are pursuing ‘AI-first’ acquisitions across sectors, either through outright takeovers or through strategic equity hire/acqui-hire.
The third is direct-to-consumer (D2C) brands, where consolidation will be driven by the need for scale, distribution efficiency and operating leverage.
The fourth comprises fintech adjacencies, including KYC (identity validation), regulatory tech and embedded finance. In fact, these infrastructure plays have held up better as M&A targets than consumer-facing fintechs, often plagued by regulatory headwinds and market turbulence.
The fifth sector is traditional healthcare, spanning hospitals, diagnostics, and medical devices, where steady demand, regulatory clarity and fragmentation continue to push consolidation. In these segments, scale, operating efficiency and geographic expansion remain the primary drivers of M&A interest.
Other sectors such as edtech, media and gaming are expected to remain opportunistic. Consolidation will also play out in fragmented markets, where similarly sized players are coming together to build scale, a pattern already visible in the B2B ecosystem.
Over the years, regulatory changes have been a key catalyst for M&A, with rising compliance costs pushing smaller or less-prepared players towards consolidation. But that trigger has been less pronounced in recent years. Many large companies with strong fundamentals now remain in a wait-and-watch mode, even as the IPO window remains favourable.
From an investor’s perspective, exit decisions hinge on value maximisation and timing, ideally ensuring a clean transfer with minimal post-exit obligations. In practice, these choices are rarely so straightforward. The pressure is most evident late in a fund’s life, when high-valuation portfolio companies miss IPO expectations and are forced to consider M&A at lower-than-anticipated prices.
The outcomes are messy — from complex liquidation preferences to uneven shareholder returns. Investors will face difficult trade-offs: Modest, low, or even negative returns from rushed exits versus continued support in the hope of value recovery.
Nevertheless, good companies with IPO potential will always find takers. Lightspeed’s Bhargava makes the point well. Strategic buyers pay up when they see real synergies. Public markets offer the biggest payouts — that’s why firms list when possible. But if valuations pull back or IPO conditions tighten, that balance may shift, and more businesses will turn to M&A.