India M&A Report 2019

In this report, Bain, in collaboration with CII, has analysed India M&A activity from 2015 to mid-2019, focusing on trends and perspectives specific to the Indian landscape.

Written in collaboration with

Written in collaboration with

We begin by looking at Indian deal activity over the last four and a half years in Section 1. It is encouraging to see a steady pipeline of deals from 2015 to 2018, notwithstanding the decline in activity observed in the first half of 2019. In particular, 2018 was a blockbuster year for M&A. About 70% of the growth in M&A activity in 2018 was led by distressed deals, enabled through the corporate insolvency resolution process under the Insolvency and Bankruptcy Code (IBC).

Our evaluation of large deals over this period and our work on several of these suggest there are five distinct deal archetypes in Indian M&A. Each of these archetypes has a different value-creation thesis and a different set of trip wires and risks that executives must address through the deal cycle. We offer perspectives from our experience on de-risking value creation and maximising the chances of success in each of these archetypes.

The five archetypes are:

  1. Distressed asset acquisitions: The IBC, though still a work in progress, has been a crucial driving force as a mechanism for price discovery and recovery of distressed assets in this time frame.
  2. Scope deals: Scope acquisitions to accelerate top-line growth through new and attractive market segments or new capabilities have increased in salience. This is in line with a trend we are observing globally as companies look to new sources of growth.
  3. Acquisitions of carve-outs: Divestment of noncore assets or businesses is a significant driver of deal volume, particularly in capital-intensive industries. Acquiring these carved-out assets or businesses has the dual complexity of separation from the parent and integration with the acquirer.
  4. Acquiring larger targets, mergers at scale: Acquisitions of a similarly sized or larger-sized target are becoming more frequent. These present a unique set of challenges, particularly in post-close integration.
  5. India entry via M&A: India entry via M&A has grown over this time frame. Acquirers are looking to participate in the India growth story or to acquire India-based capabilities or both.

Each of these archetypes has a unique path to value creation and a unique set of challenges and risks. Section 2 dives into these and outlines key takeaways for dealmakers navigating each of these (or a combination of) archetypes.

Bain has worked with numerous clients across the deal cycle to understand what drives successful M&A. Section 3 captures implications from those experiences, focusing on three parts of the deal cycle—diligence, operating model design, and post-close integration.

As you read, you will see that the report spends a lot of time on how executives need to rethink M&A playbooks to increase their odds of success. At the same time, we have uncovered a fundamental truth about M&A: If you want to be successful at M&A, develop a repeatable model. Section 4 speaks about how companies, which do frequent and material transactions (termed as mountain climbers), generate superior returns. We also illustrate what they do differently to drive success.

Dinkar Ayilavarapu is a partner and Vikram Chandrashekhar is a principal in Bain & Company’s New Delhi Office. They are members of the firm’s Mergers & Acquisitions practice.


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