Outbound M&A push to continue into 2026, driven by balance sheet strength, mid-market deals

Outbound M&A deals jump in 2025

After a busy year that saw Tata Motors acquire Italy’s Iveco for $4.36 billion and Tega Industries’ $1.5 billion acquisition of Molycop, outbound mergers and acquisitions by Indian companies are expected to remain strong in 2026, supported by strong balance sheets, improving financing sophistication and a continued strategic push for global scale, technology access and market entry.

As per data from LSEG, a financial markets data provider, India Inc’s outbound M&A activity saw a sharp rise to $16.84 billion in 2025 from $7.77 billion in 2024, marking the highest outbound M&A deal activity in the last 10 years.

Investment bankers, however, caution that while deal momentum is likely to continue, the nature of transactions may tilt towards well-structured mid-market acquisitions, with mega deals remaining sensitive to valuation resets, geopolitics and currency movements.

“Indian outbound M&A momentum is likely to sustain into 2026,” said Sonia Dasgupta, MD & CEO, Investment Banking, JM Financial Limited, pointing to “stronger corporate balance sheets compared to previous cycles, sophisticated financing options and active participation from financial sponsors,” along with strategic drivers, such as global scale, technology access and market entry.

That said, Dasgupta flagged several swing factors which could influence deal flow.

“Indian acquirers remain valuation-disciplined. If US and European valuations correct further or earnings expectations soften, Indian buyers will likely capitalise—similar to post-downturn patterns,” she said, adding that the increasing use of earn-outs and deferred consideration is helping mitigate seller expectation risks.

Geopolitics and regulations

“India–US trade relations are a critical near-term gating factor. Uncertainty around tariffs, visa regimes, and regulatory alignment may delay decisions,” Dasgupta said, adding that currency stability and the absence of new sanctions would be essential for financing certainty and deal execution. “If these factors align, deal flow could accelerate; if not, mega deals are likely to be constrained while mid-market, well-structured deals are likely to continue.”

Preet Singh, Managing Director at investment bank Lincoln International, echoed the view that the outbound M&A momentum is carrying into the new year.

“This momentum seems to be carrying forward to 2026 also, as more and more mid-market companies are gaining confidence as they see their peers conclude strategic buys and get rewarded by public and private market investors in the process,” he said.

However, Singh cautioned that downside risks remain. “Any sharp correction in domestic market valuations is something that may impact appetites,” he said, adding that geopolitical developments and “significant currency devaluation” could also influence outbound transaction activity by affecting short-term decision-making and deal economics.

What drove the pickup in 2025

The sustained outlook for 2026 builds on the pickup in outbound M&A activity by Indian companies in 2025, as corporates increasingly turned to overseas acquisitions to accelerate strategic transformation rather than incremental expansion.

“Indian companies are increasingly using outbound M&A to move up the value chain—acquiring IP, R&D capabilities, established brands, and distribution networks that would take years to build organically,” Dasgupta said. While domestic equity valuations have helped enable deals, she stressed that they are “only a secondary trigger.” “The primary driver is the realisation that global scale, technology depth, and brand ownership cannot be built fast enough, organically,” she said.

Supply-chain considerations have also played a growing role. “Supply chain de-risking has also emerged as an important driver. Global customers are seeking diversified sourcing beyond China, and Indian firms are acquiring manufacturing or logistics assets overseas to embed themselves deeper into global supply chains and become more reliable partners,” Dasgupta said.

Balance-sheet strength has been critical in converting ambition into action. “After a decade of deleveraging, many groups now have the financial capacity—and governance credibility—to buy growth overseas rather than wait for it domestically,” she said, adding that outbound M&A reflects “the maturing ambition of Indian corporates—from being cost-competitive players to becoming globally integrated businesses.”

Singh said the current market cycle has been especially transformative for family-owned and promoter-led businesses.

“Family-run businesses in India have had strong appetites but did not necessarily have the financial support to buy large businesses overseas,” he said. “The current uptick in public markets, and the resultant exuberance in private equity flow has played a critical role in Indian companies emerging as strong buyers globally.”

Sectors, deal types and financing evolution

In terms of deal mix, strategic market-access and capability acquisitions dominated 2025.

“The most active deal types today are strategic market-access and capability acquisitions, driven by companies looking to acquire established brands, distribution networks, and technology platforms to accelerate global expansion and competitive positioning,” Dasgupta said. She pointed to automotive, technology, life sciences and pharmaceuticals as the most active sectors.

Singh noted that traditional sectors, such as chemicals and diversified industrials, have also become more active.

“Scale seems to be an important factor in buying businesses overseas: with scale comes strong technology and even more importantly, market access,” he said, adding that reduced competition from leveraged buyout funds has made it easier for cash-rich Indian companies to win assets.

Financing structures have matured alongside deal ambition.

“Indian corporates are anchoring large outbound transactions on internal accruals and equity,” Dasgupta said, while offshore debt continues to play a key role through bridge loans, ECBs and syndicated facilities. She also highlighted “the increasing use of primary equity infusions” and structured instruments such as earn-outs to manage leverage and valuation risk.