The Evolving M&A and Acquisition Target Landscape in India
As of September 2025, India’s regulatory environment has become more structured and, in many cases, more efficient. We’ve seen significant updates under the Companies Act, 2013, Competition Act, 2002, SEBI Takeover Code, and foreign exchange guidelines. Businesses must now align their strategic goals with this modernised compliance framework.
Finding the Ideal Acquisition Target: Beyond Financials
An acquisition target is a company another business wants to acquire. Finding the right one means balancing strategy, finance, operations, and law. It requires looking beyond revenue and profit margins.
- Cultural Fit: Integration depends heavily on workforce compatibility. A strong cultural fit enables smoother transitions and reduces operational risk.
- Strategic Alignment: Does the target strengthen market entry, product expansion, or innovation? For instance, an IT firm may identify a startup with advanced AI as the perfect acquisition target.
- Market Position: Assess the company’s competitive standing. A loyal customer base and strong reputation provide a foundation for future growth.
- Financial Health: Use valuation methods for M&A in India like DCF, EBITDA multiples, or comparables to ensure fair value.
- Strategic Alignment: Does the target strengthen your market entry, product expansion, or innovation goals? For example, an IT firm might identify a startup with cutting-edge AI as the ideal acquisition target to integrate innovative technologies.
- Market Position: Assess the company’s competitive standing. A target with a loyal customer base and a strong reputation is more than just an asset it’s a foundation for future growth.
- Financial Health: Use transparent valuation methods for M&A in India like Discounted Cash Flow (DCF), EBITDA multiples, or comparable transactions to determine a fair value.
- Cultural Fit: Post-merger integration depends heavily on workforce compatibility. A strong cultural fit ensures a smoother transition and prevents operational disruptions.
Key Legal Frameworks for M&A in India
Identifying and acquiring a company requires strict compliance with several laws regulating mergers and acquisitions in India.
- Companies Act, 2013 (Sections 230–232): This act governs schemes of arrangement, including mergers, demergers, and amalgamations that require approval from the National Company Law Tribunal (NCLT). Recent amendments have also made reverse mergers simpler, especially for startups.
- Competition Act, 2002: For M&A deals that cross prescribed thresholds, a company must obtain clearance from the Competition Commission of India (CCI). The CCI Fast-Track Approvals mechanism introduced an online system that has significantly reduced the review time from 210 to just 150 days, making the process much more agile.
- SEBI Takeover Code (2011, with 2023–25 updates): This code regulates the acquisition of listed companies. An acquirer must make an open offer if their stake reaches 25% or more, giving existing shareholders a fair exit option.
- FEMA and RBI Guidelines: In cross-border mergers and acquisitions, FEMA and RBI approvals ensure compliance with foreign investment caps. Recent amendments in 2025 have streamlined capital flows for cross-border deals, particularly for IT and pharma.
- Income Tax Act, 1961: Tax implications on capital gains, Minimum Alternate Tax (MAT), and GST on share or asset transfers remain a crucial part of financial due diligence.
- ESG in M&A: A major new development in 2025 is the mandatory inclusion of ESG (Environmental, Social, and Governance) disclosures in M&A transactions above a certain threshold, as mandated by the Ministry of Corporate Affairs (MCA). This makes sustainability a key factor in deal valuation and approval. Deals with strong ESG credentials often command a premium of 10-15%.
Industry and Geo-Focused Insights
A one-size-fits-all approach does not work in India’s diverse market. Different industries and regions require customised strategies.
- Healthcare M&A in India: You must secure regulatory clearances from authorities like the National Pharmaceutical Pricing Authority (NPPA) and the Drugs Controller General of India (DCGI).
- IT & Tech Acquisition: The sector is a hotspot for M&A. Firms are increasingly using AI-driven due diligence tools to assess intellectual property and data assets, reducing the manual review time by up to 50%.
- Manufacturing M&A: The Union Budget 2025 has provided incentives under the Production Linked Incentive (PLI) schemes for companies that consolidate, making them attractive acquisition opportunities.
Regionally, India’s M&A activity is concentrated in key hubs:
- Mumbai & Navi Mumbai: This is the financial hub with a high concentration of top M&A law firms in India.
- Delhi NCR: Proximity to regulators like SEBI and the MCA makes it central for complex, compliance-heavy transactions.
- Bangalore: The preferred location for tech acquisition and startup takeovers.
- Kolkata: A hub for manufacturing and logistics acquisitions.
Navigating Challenges with an Expert M&A Advisory
Even with a strong strategy, companies face challenges like hidden liabilities, regulatory delays, and cultural conflicts. Mitigating these risks requires robust M&A due diligence, supported by expert legal and financial advisors.
- Hidden Liabilities: A thorough due diligence process helps uncover undisclosed debts or pending litigations. For example, a recent NCLAT ruling in 2025 clarified the importance of protecting minority shareholders in an IT sector merger, making transparency in valuation central to deal success.
- Cross-Border Tax Complications: Navigating double taxation and other foreign tax liabilities requires a dedicated expert. The recent Reliance Retail vs Future Group case further clarified the enforceability of arbitration awards in cross-border disputes, strengthening investor protection.
How LawCrust Can Help You Find the Right Acquisition Target
At LawCrust, we combine legal, financial, and strategic expertise to help businesses identify the ideal acquisition target and navigate the entire merger and acquisition process in India.
Our team provides:
- Comprehensive M&A due diligence process that uses technology to ensure accuracy and speed.
- Assistance with regulatory approvals from NCLT, SEBI, RBI, and CCI.
- customised M&A advisory services for corporates, SMEs, and startups.
- Expertise in cross-border mergers and acquisitions.
- Litigation support for M&A disputes and shareholder conflicts.
From Mumbai to Bangalore, our dedicated team ensures seamless support for our clients. Whether you are planning a tech acquisition, a healthcare deal, or a reverse merger, LawCrust provides strategic solutions for sustainable growth.
FAQs on Acquisition Targets in 2025
Q1. What is the first step in finding the right acquisition target?
The first step is to define your M&A strategy, clarifying your market entry goals, diversification needs, or technology integration before you begin financial and legal due diligence.
Q2. What role does the Competition Commission of India (CCI) play?
The CCI’s approval is mandatory if the deal size crosses specific thresholds. In 2025, they have implemented a fast-track clearance for certain categories, significantly speeding up the process.
Q3. How does ESG affect acquisitions in India?
From April 2025, ESG compliance is mandatory for high-value M&A transactions. This means that a company without proper ESG alignment may face higher scrutiny or even deal rejection.
Q4. What are the common risks of cross-border M&A for Indian companies?
Common risks include currency fluctuations, FEMA compliance, double taxation issues, and adhering to data protection laws of the target’s country.
Q5. Do SMEs need an acquisition lawyer for small deals?
Yes. Even a small business M&A deal can involve hidden liabilities, complex regulatory filings, and shareholder obligations that require the expertise of an M&A legal counsel to avoid future issues.
Conclusion
Finding the right acquisition target in 2025 requires a careful blend of business valuation, cultural analysis, and robust legal due diligence. With updated Indian regulations, faster clearances, and increased scrutiny on ESG and shareholder rights, businesses must approach acquisitions strategically. At LawCrust, we guide you through every step of the merger and acquisition process, from identifying the right target to securing approvals and ensuring smooth post-deal integration.
About LawCrust Legal Consultation
LawCrust Legal Consulting, a subsidiary of LawCrust Global Consulting Ltd., is a trusted legal partner for NRIs and Indians across the globe. Backed by a team of over 70 expert lawyers and more than 25 empanelled law firms, we offer a wide range of Premium Legal Services both in India and internationally. Our expertise spans across legal finance, litigation management, matrimonial disputes, property matters, estate planning, heirship certificates, RERA, and builder-related legal issues.
In addition to personal legal matters, LawCrust also provides expert support in complex corporate areas such as foreign direct investment (FDI), foreign institutional investment (FII), mergers & acquisitions, and fundraising. We also assist clients with OCI and immigration matters, startup solutions, and hybrid consulting solutions. Consistently ranked among the top legal consulting firms in India, LawCrust proudly delivers customised legal solutions across the UK, USA, Canada, Europe, Australia, APAC, and EMEA, offering culturally informed and cross-border expertise to meet the unique needs of the global Indian community.