India Investment Forum 2026: To Acquire or Get Acquired: The Consolidation Wave

India crossed USD113 billion in mergers and acquisitions last year, marking a 40 percent year-over-year increase while witnessing a 10 percent dip in the private equity space, setting the stage for a debate on whether the market is witnessing stress or has entered a mature phase.

Speaking at the panel discussion ‘To Acquire or Get Acquired: The Consolidation Wave’, Amit Baid, Head of Tax at BTG Advaya, said the current scenario did not represent any sort of stress but the evolution of the India startup space.

“We are witnessing that every evolution has its share of stress and this particular stress has accelerated the evolution. India has moved from the phase of only creating startups to now focusing on what all can be acquired that has the potential to make profits,’ Baid said. He added that the market now focuses on acquiring entities with good governance, profitability, and sustainable growth. The speaker also mentioned how companies are now looking at acquiring businesses as a positive exit option instead of failures.

Baid further mentioned that earlier it was all about becoming a unicorn or listing on the stock exchanges, but now even founders see potential in getting acquired by bigger firms as it offers access to a bigger platform with an enhanced portfolio of products and better reach.

The founder of Khimani & Associates, Priyanka Khimani, added that the consolidation trend saw a substantial rise in the entertainment sector this past year. It was seen across multiple areas, including sports, gaming, creator economy, and celebrity-backed consumer products. She mentioned how founders are becoming more realistic about their expectations from building a business these days.

Speaking about a founder’s approach to deal-making, Khimani shared that communication gaps represent the biggest challenge during acquisitions. Founders are so fixated on big secondary exits that they overlook the need to stay invested in the game. According to her, founders must evaluate how they want to exit before finalizing a deal. They need to ask themselves whether it is due to liquidity needs, ambition, or founder fatigue.

On the other hand, speaking about M&A, Baid stated that tax did not play a significant role in any failed deals. He listed the three most common reasons why any transaction could see a delay, fall apart, or fail to materialize in the first place. These include tax exposure discovered during due diligence, unexpected tax challenges relating to liabilities, treaties, or temporary differences, and unclear apportionment of risks.

“The biggest reason for deal failure is due to mispricing of risks, and due diligence’s primary objective must be to identify and price these risks correctly. Founders need to look out for opinions instead of lengthy letters from consultants about the risks involved. Founders should also look out for insurance coverage, to the extent possible, for uncertain tax outcomes,” he added.

While responding to whether founders should continue fundraising on their own or get acquired to build something bigger, Khimani said it primarily depended on the position of the business. She added that most early-stage companies opted for strategic acquisitions as it gave them access to a ready-made ecosystem, infrastructure, and expertise that would have taken them years to build. On the other hand, she mentioned that founders operating in a highly competitive environment preferred external capital to build their ecosystems faster, while those with less competition could afford to be patient with their capital. 

Speaking about examples from the hospitality space, Khimani contrasted between founders who do not like to raise funds unless required and those who prefer to take capital whenever there is an opportunity to scale rapidly. She added that such founders often run the risk of not taking enough money to fund their growth plans if they decide to go the acquisition route.

While answering what precautions founders must take when joining bigger platforms, Khimani said they must understand the liquidation preferences when it comes to reserved matters. She further mentioned that investors bet on people and founders, and the latter must retain their decision-making power instead of diminishing the value of their talent. 

On the topic of valuation, Baid said it was primarily about building the right structures while adhering to legal requirements. He advised that founders must look to set up holding company structures from the word go. According to him, founders should also give importance to the jurisdiction where the value is created, avoid overly complicated structures, set up good governance practices from the start, and update them as the business grows.

Khimani further added that valuing something in the entertainment space depends on the kind of talent associated with it. She said a brand backed by a superstar with massive commercial credibility carries a much higher valuation, while on the flip side, any negative news about a celebrity impacts the value of a brand.

The conversation turned to whether the timing of the market or fundamentals defined a good exit while strategically getting acquired.

Commenting on it, Khimani said she has seen founders chasing any good market window during their exit, especially in media and entertainment.

To conclude the session, Amit Baid stated that while timing mattered, it could not override fundamentals. “Market timing is very important, but market timing without fundamentals will not work. The most important thing is to ensure that there is an inherent goodness in the business, and even while focusing on timing, people who understand the market well will always take a close look at the fundamentals.”