Why Mid-Market Deals Are Driving India's Next M&A Wave

India's mergers & acquisitions market is entering an interesting phase. While select billion-dollar transactions make the headlines, the next wave of consolidation is likely to be driven by hundreds of mid-market deals happening across sectors.

Over the last quarter, deal volumes have remained strong while average deal size has reduced, given the paucity of blockbuster deals. Only two billion-dollar deals were recorded in Q1 FY27 totalling $4.1 billion, whereas Q4 FY26 saw over seven billion-dollar deals. So, there is more deal activity now, but in terms of volume.

As global and Indian markets navigate the unstable geopolitics, structural shifts, supply chain disruptions, energy crisis and many other challenges, a pause to the momentum of large-scale cross-border deals was expected. Further, subdued capital markets have made big exits comparatively difficult.

However, mid-market deals are being fuelled by their own logical drivers, and in some cases, the factors limiting the bigger deals are igniting the mid-market deal activity. As some large initial public offerings get delayed, businesses are looking for alternative ways to fund growth and operations while they wait for a more favourable public-market window. This is creating demand for smaller private credit and pre-IPO rounds. As a recent example, Veritas Finance is exploring a private transaction as its IPO plans were delayed.

Domestic Consolidation

India continues to be at the cusp of a "decadal opportunity", driven by the focus on high-end domestic manufacturing and the desire to be more self-reliant across energy, defence, space, semiconductor, high-end electronics, deep tech, digital, AI transformation and more.

This is driving consolidation and acquisitions to build competitive advantage, opening new sectors for investment and creating a growing need for Joint Ventures (JVs) and strategic partnerships. Entrepreneurs in Tier 2 and Tier 3 cities are also double-clicking on this trend with prudence and a relatively more flexible approach.

At the same time, sectors such as healthcare, manufacturing, logistics, specialty chemicals and consumer products remain highly fragmented with many specialised region-focused players. This creates opportunities for investors to acquire a mid-market company as platforms for consolidation and scale.

Deals such as Bharat Forge's stake acquisition in Fortuna Engineering, MakeMyTrip's partnership with Flamingo Travels and Growel Formulations' investment in Provet Pharma demonstrates how investors are doing targeted acquisitions to consolidate fragmented sectors and build scale.

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PE Platform Play

PE firms have also reoriented their business model to look at non-traditional themes and value chains while being flexible with the ticket sizes, contributing to the increased deal volumes. Recent deals such as Bain Capital's investment in Dhoot Transmissions, Carlyle's investments in Highway Industries and Roop Automotives, as well as Motilal Oswal's Private Equity (PE) stake acquisition in Megafine highlights how PE firms can provide established businesses with fresh capital and a new platform for growth.

Growing Interest From International Investors

India's mid-market ecosystem is also attracting a growing pool of international strategic investors looking to deepen their presence and build scale in the country. Recent examples include Hyperion's acquisition of Electronica Tungsten and Circor's (KKR portfolio company) acquisition of Indian Swelore Engineering.

Investor Exits For Non-Core Businesses

The other side of this trend is the exit of international companies from India where a business no longer forms the core of their global strategy. Such exits can create attractive opportunities for domestic and financial investors to acquire established businesses with strong local franchises and unlock their next phase of growth. A recent example is Amplifon's sale of its India business to 360 ONE-backed HearZap, which illustrates how global players are actively reshaping their India portfolios in line with their broader strategic priorities.

Mid-market companies often integrate faster and create value sooner than large transformative transactions, where buyers can target specific capabilities, markets or customer segments. This makes the value creation opportunity easier to define and faster to execute. Recent examples include Lumina Datamatics' acquisition of TNQ Service, Parexel's acquisition of Vitrana and ChrysCapital's investment in Nash Industries, where buyers targeted specific technology and manufacturing capabilities which made the value-creation opportunity more focused and quicker to execute.

Future of M&A Is About Value Creation

Investors should evaluate market momentum through deal quality and strategic intent rather than transaction value alone. Therefore, the important question is not how large a transaction is, but the rationale of acquisition and how effectively the business can create value after integration.

The success stories of the next decade may not come from the largest transactions, but from disciplined, strategic relevant acquisitions that are integrated well and scaled successfully. Ultimately, India's next M&A wave could be defined less by the size of its biggest deals and more by the cumulative value created through hundreds of well-executed mid-market transactions.

The article has been authored by Rohit Berry, president, strategy, risk & transactions at Deloitte South Asia.

Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.

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