We screened eighty potential acquisition targets in eighteen months. Two advanced to full due diligence. One reached final negotiations.
That ratio, eighty-to-one, is the part of the story most people skip past when they hear the outcome. The ratio is not the part where the process went wrong. The ratio is the whole point.
Why funnels in India are shaped differently
In a mature European M&A market, a target long-list of eighty might give you twelve serious conversations, six LOIs, two or three DD engagements, and one or two closes. The funnel narrows gently.
In India, the funnel narrows sharply and early — and it narrows on criteria that a European process is rarely calibrated to detect.
At the top, the 80 looked fine. Revenue profiles plausible, sector fit good, financials at least presentable. Screening done through conventional filters — size, segment, geography, stated margins — would have produced a long-list of this shape in any market.
Between 80 and 15, most of the attrition came from a single filter: governance legibility. Can we read how this company is actually run? Who really makes decisions? Are the stated numbers the numbers the accountant sees, the tax authority sees, the bank sees? Is the founder extractable, or is he the company? In roughly 80% of the 80, the answer to one of these was: no, we cannot yet tell, or no, they are not what the deck says.
This is not a criticism of Indian companies. It is a description of an M&A market that has evolved in a specific regulatory, family- ownership, and growth-stage mix. European buyers who run the European governance filter as a first pass filter out the wrong things.
Between 15 and 2, the filter was intent. Does the owner actually want to sell, and if so, to whom, at what price, and on what timeline? Indian founders often explore a conversation that looks transactional but is really a pricing discovery, a legacy conversation, or a strategic hedge. Learning to separate these three was the single highest-ROI skill of the process.
Between 2 and 1, the filter was executability. One company had excellent fundamentals and a willing owner but a group structure that would have taken nine months of legal surgery before we could sign a clean SPA. That is not a no — it is a not-now, which in M&A timelines is a no. The other target, through less pristine in some respects, was closable in a defined window with defined counterparties. That is what advanced.
Three things I would tell a European buyer
Budget for the funnel shape. If your plan assumes ten conversations for one close, double your target list and extend your timeline. A thirty-week process in Europe is a fifty-to-seventy-week process in India, and the top of the funnel is where the difference concentrates. Under-resourcing the top is how buyers end up with a shortlist of one — which is not a shortlist, it is a forced choice.
Lead with legibility, not financials. Before you spend on financial DD, spend on understanding how the company is run. Who signs cheques. Who decides hiring. Who handles the tax authority. Who the family is and what they want. These questions shape whether the financials you will later verify are the real financials, and they shape the chance of a clean post-close integration. Financial DD on an illegible company is a very expensive way to learn that information.
Develop an independent read on intent. The founder says he wants to sell. The advisor says the founder is committed. The intermediation chain in Indian M&A is long and layered, and each layer has reasons to keep deals warm. Spend early time directly with the owner, on the ground, off-deck. Two meetings of ninety minutes each, in the owner’s office, will tell you more than six months of mediated correspondence.
So what
The 80-to-1 ratio did not mean eighty-minus-one were failures. It meant the process was calibrated to find the one that actually fit. That is the whole job of an Indian M&A screen — to shape a funnel wide enough at the top that a narrow result at the bottom is still a match, and disciplined enough along the way that you stop spending on targets that cannot become deals.
If you are putting together an India M&A plan now, the question worth asking this week is not how many targets should we screen. It is what will our top-of-funnel filter actually test, and is it testing for the right things for this market.
If this resonates, let’s talk.
