Mergers and acquisitions (M&A) in India continued to reach a record high in 2022. For the fourth straight year, the deal volumes were up by 36% in 2022, Bain & Company’s latest report on Global Mergers and Acquisitions highlighted. Deal value rose by 139%.

However, globally, the deal value dropped by 36% and volume declined by 12% owing to macroeconomic conditions in the second half of the year, including a hike in interest rates by the US Federal Reserve Bank.

According to the report, deals valued over $5 billion stood at 61% of the total deals in 2022 compared to 35% of the M&A deals closed in 2019. Further, 2020 and 2021 did not see any deals of over $5 billion in value. 

The report attributes key themes around consolidation, deals driven by conglomerates looking to increase new avenues of growth, and fast-growing insurgents across sectors—like consumer tech, fintech, and edtech—buying out smaller startups. Further, the emphasis on energy transition policies has helped increase M&A activity in the renewables space.

“There are three spaces of deal activity in startups. There are standard scale deals, for example, the acquisitions made by upGrad last year to expand its business. There are also insurgents looking to enter new segments such as Razorpay’s acquisition to build an ecosystem around payments for businesses,” Vikram Chandrashekhar, Partner at Bain & Co. and co-author of the report, told YourStory.

He added, “There is also the theme where a company is trying to add new capabilities such as Gupshup’s acquisitions around AI and cloud computing to improve customer experience on the platform.”

Besides these overall themes, global companies trying to diversify their supply chain capabilities through a China plus one approach is driving M&As, especially in the active pharmaceutical ingredients, speciality chemicals, and contract manufacturing space. 

As part of the report, executives surveyed by Bain & Co. said that 2023 is likely to see continued momentum in M&A activity, with nearly 64% saying that the likelihood of closing an acquisition in 2023 is likely to go up.