Kotak Investment Banking Expects Overall M&A Volumes To Grow 10–15% In 2026
Kotak Investment Banking forecasts 10-15% growth in M&A volumes for 2026, building on India's strong 2025 performance with $121 billion in deal value and 14% year-on-year growth. Cross-border transactions dominate at 70% of volumes, while corporate buyers with low leverage ratios and strong balance sheets are positioned to drive consolidation. Financial services, technology, and healthcare sectors are expected to lead activity.
*this image is generated using AI for illustrative purposes only.
Kotak Investment Banking projects a robust 10-15% growth in overall mergers and acquisitions volumes for 2026, driven by multiple structural and cyclical factors that continue to support India's position as a key global M&A market. The optimistic outlook comes as India's M&A market demonstrated strong resilience in 2025, registering significant growth despite global headwinds.
Strong Market Performance in 2025
India's M&A market delivered impressive results in 2025, with deal values reaching $121 billion, representing a 14% year-on-year increase. This growth occurred against a challenging global backdrop where worldwide M&A volumes declined by nearly 15% compared to the previous year. According to Sourav Mallik, Managing Director and Deputy CEO of Kotak Investment Banking, India continues to remain among the top 10 M&A markets globally, underlining the country's growing relevance in cross-border transactions and strategic consolidation.
| Market Performance: | 2025 Results |
|---|---|
| Total Deal Value: | $121 billion |
| Year-on-Year Growth: | +14% |
| Global M&A Volume Change: | -15% |
| India's Global Ranking: | Top 10 markets |
Sector-Wise Activity and Trends
Financial services, technology, consumer, and healthcare sectors are expected to be the most active in 2026. In 2025, financial services, technology, and industrials accounted for nearly 65% of total M&A deal value, driven by strong credit growth expectations, robust inbound capital flows, and sustained demand for technology assets. A notable trend was the increasing prominence of listed-company M&A, with listed targets accounting for nearly 30% of deal value, up from 20% the previous year. Nine of the top 15 transactions by value involved listed companies, reflecting greater comfort with public-market acquisitions.
Cross-Border Transaction Dominance
Cross-border transactions continued to dominate India's M&A landscape, representing almost 70% of total deal volumes. The composition showed inbound deals at 47%, while outbound transactions rose to 23%, marking a structural increase compared to previous years. This trend underscores India's growing role as both a destination for global capital and a source of outbound strategic investments.
| Transaction Type: | Share of Total Volume |
|---|---|
| Cross-Border Deals: | 70% |
| Inbound Transactions: | 47% |
| Outbound Transactions: | 23% |
Corporate Balance Sheet Strength
Indian corporates are well-positioned to accelerate consolidation activities, supported by strong balance sheets and favorable financial metrics. Corporate leverage remains low at around 0.5x on average, with interest coverage close to 5x, providing significant headroom for acquisitions, spin-offs, and carve-outs. Corporate and strategic buyers remained the primary drivers of deal activity, with ten of the top 15 transactions by value led by strategic or corporate acquirers, highlighting India Inc.'s balance-sheet strength and long-term confidence.
Investment Activity and Market Dynamics
Minority investments staged a strong comeback, contributing 36% of overall deal value, with nearly half of that activity concentrated in digital and enterprise technology sectors, supported by strong AI-led growth tailwinds. Financial sponsors are expected to remain a key pillar of activity, backed by ample dry powder and improved valuation comfort. Secondary market valuations have moderated back to five-year historical averages, with sponsors raising India-focused capital and showing increased comfort in owning controlling stakes in listed companies. A notable structural shift includes the emergence of family offices and high-net-worth individuals as a distinct and growing investor category in M&A transactions.
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