For much of corporate India’s recent history, mergers and acquisitions (M&As) have been viewed as an occasional growth lever, deployed selectively when opportunities aligned. That is changing. Increasingly, M&As are being used as a core strategic tool to pursue scale, capabilities and market leadership in an environment where speed can be as important as strategy.
Annual M&A volumes have more than doubled since 2016-17, reflecting a growing conviction among corporate leaders that these can speed up growth, provide entry to new markets and acquire capabilities that would take years to build organically. In many cases, an acquisition is a competitive necessity more than an option.
What makes the current cycle interesting is the strength of the financial foundation underpinning it. Corporate balance sheets today are considerably healthier than they were a decade ago. Over the years, India Inc has navigated a succession of disruptions, from economic shocks and supply-chain disruptions to geopolitical uncertainty. Yet, rather than getting weakened, many companies have become more resilient.
Revenue growth and profitability have held up through periods of volatility and balance sheets have strengthened materially. The median net debt-to-operating profits ratio for corporates rated by Crisil Ratings declined to about 1.3 times in 2025-26 from 2.4 times in 2016-17. This improvement has created financial flexibility, enabling companies to pursue strategic acquisitions.
At the same time, the approach to organic expansion has become more measured. In an environment shaped by geopolitical complexity and uncertain demand conditions, managements are becoming selective about where and how they allocate capital. This discipline is a sign of maturity.
As a result, Indian companies are increasingly using M&As to complement organic growth strategies. Healthy capacity utilization levels and lower leverage have preserved balance-sheet headroom, allowing businesses to act decisively when opportunities arise.
The motivations vary across sectors. In pharmaceuticals, healthcare, enterprise technology, artificial intelligence and consumer businesses, acquisitions are often about gaining access to technology, talent and intellectual property. In cement and metals, the rationale differs. Acquisitions offer a faster path to capacity expansion, compressing project timelines from several years to as little as one to three years.
Yet, while the strategic logic of a buy-out may be compelling, execution ultimately determines outcomes. A Crisil Ratings analysis of 100 large debt-funded transactions offers an important lesson. Roughly two-thirds of the deals broadly met expectations. Successful acquisitions delivered meaningful scale expansion within one-two years, broadened geographic reach or improved profitability as synergies began to materialize.
The remaining one-third tell a different story. Integration challenges accounted for about half of the underperforming deals, while regulatory delays and cross-border execution complexities were also significant contributors. These experiences reinforce a fundamental reality: announcing an acquisition is often the easiest part of the process.
Too often, organizations assume that a strong strategic rationale alone guarantees success. In reality, value creation depends on what happens after the transaction closes. Disciplined integration, effective change management, timely synergy capture and rigorous oversight of leverage are what separate successful acquirers from those that fall short.
This is especially important from a credit perspective. Encouragingly, acquisitions have generally translated into stable or positive credit outcomes. Around three-fourths of ratings were reaffirmed or upgraded following acquisitions, while a majority of these acquirers reduced leverage on or ahead of plan within two years.
The benefits of greater scale, improved diversification and operational synergies often offset the temporary increase in debt associated with their acquisitions.
Where outcomes have been weaker, the key factors were elevated leverage, industry cycles turning unfavourable, growth taking longer to materialize and regulatory hurdles delaying execution. These are risks that can be managed with planning and strong governance.
India’s corporate leaders face an important balancing act. M&As will continue to play a critical role in accelerating growth, building competitive advantage and responding to rapidly evolving markets. However, acquisitions cannot become a substitute for investing in core capabilities.
For success, companies should not just pursue inorganic growth, but also strengthen innovation, technology, talent and operational excellence. They must view acquisitions not as an end but as one component of a broader value-creation strategy.
The M&A opportunity for India Inc is significant. But long-term success will depend on how effectively acquisition deals are executed. Disciplined capital allocation, strong integration capabilities and sustained investment in organic strengths will remain the true determinants of durable value creation.
The author is managing director, Crisil Ratings.