As traditional deal metrics compress and valuation gaps widen, Indian M&A practitioners are deploying structures that would have seemed exotic five years ago.
What the Data Shows
CXO India Insights reviewed 89 M&A transactions in the Indian market with disclosed deal values above ₹100 crore, all completed in the first nine months of 2025. The structural complexity of these deals has risen meaningfully against the prior two years, a sign of a tougher environment in which buyers and sellers struggle to agree on upfront valuations.
Earnouts on the Rise
Earnouts — where part of the deal consideration is contingent on post-acquisition performance — appeared in 34% of the transactions we reviewed, up from 19% in 2023. The increase reflects two forces: valuation uncertainty, and a more sophisticated acquirer base willing to share upside with sellers if the business delivers on its projections.
Yet earnout structures in India remain poorly drafted more often than not. CXO India has observed several post-deal disputes in which the earnout metrics were ambiguous enough to support radically different interpretations, triggering litigation that eroded the very goodwill the deal was meant to create.
New Structures Gaining Ground
Beyond earnouts, two other structures are becoming more prevalent:
- Structured equity arrangements, where the seller retains a minority stake with specific exit mechanisms, are increasingly common in PE-led transactions as sellers seek continued upside participation.
- Vendor financing, where the seller effectively provides bridge finance to the buyer as part of the deal consideration, has also grown — particularly in mid-market deals, where bank financing has turned more cautious.
The Board's Mandate
Each of these structures adds complexity that demands sophisticated legal and financial advisory. Boards governing M&A processes need to ensure their advisers are genuinely equipped to navigate it.
