In my last India M&A trajectory we screened 140 companies, narrowed that to 80, drilled down to a shortlist of 15 — and the two targets that ended up in full due diligence were not picked from any of those lists. They reached us through relationships, before the funnel could surface them. That gap, between the analytically strongest target and the actual best partner, is the lesson worth carrying into your next Indian deal.
A rigorous longlist is not optional. In a market the size of India it is the only way a board can be confident nothing material has been missed, and for European stakeholders that comfort has real value. A well-built funnel reduces strategic blind spots even when it does not produce the eventual winner. Skip it, and you spend the rest of the deal defending why you missed the obvious option. Local research partners earn their fee right here — their reach into fragmented sectors is hard to replicate from Rotterdam.
But analytical screening tells you about willingness to sell. Relationship-building tells you about willingness to collaborate. In Indian mid-market M&A, those are different things — and the second is the one that decides whether the deal works after closing.
Sellers and partners are not the same population
The funnel is good at signals you can quantify. Revenue concentration. Growth trend. Compliance posture. Service mix. Customer overlap. It tells you who could be acquired. It does not tell you who is willing to integrate.
A founder’s willingness to sell is shaped by exit pressure, succession, valuation. A founder’s willingness to collaborate is shaped by something else: long-term alignment, the genuine belief that joining a larger group makes both stronger, the patience to sit through the post-deal compromises rather than walk after the cheque clears. Many companies have the first. Far fewer have the second. The latter is where durable acquisition value sits — and for a mid-sized European buyer, where the operating logic of the deal stands or falls.
What a relationship reveals that a data room cannot
Once you spend time with a potential partner — months before any term sheet — three things become visible that no longer show up in slides.
How transparent the founder is when a question is uncomfortable. How governance and compliance behave under light scrutiny rather than process pressure. Whether there is real openness to the operating model the buyer needs after closing.
A second observation, specific to India: even at scale, the industry community is small. Networks overlap more than outsiders expect. People know each other. Reputations travel. Informal market conversations — speaking broadly with adjacent operators, hearing different perspectives, triangulating impressions — produce a more complete picture than formal diligence on its own. Sometimes those conversations confirm conviction. Sometimes they raise a question the data room would never have surfaced. Sometimes they reveal whether there is real fit at all.
In our case, one of the two targets that made it to full DD had signalled — long before any process became serious — interest in becoming part of a wider group, not in cashing out. That signal carried more weight than any analytical scorecard. It changed the bond. It changed the bid. It changed how integration looked on paper before integration began.
Three things I would tell a European buyer
Run the longlist anyway. The discipline is worth the cost. A 140-to-15 funnel is not a guarantee of finding your buyer, but it is a guarantee of board comfort and strategic completeness. The analytical screen is necessary. It is just not sufficient.
Build relational time into the deal calendar separately from the funnel. Spend months in the market, not weeks. Speak with people who are not on the list. Test how potential partners respond when no transaction is on the table. The answers you get without process pressure are the only ones that survive process pressure.
Weigh willingness to collaborate as heavily as analytical fit. Ask explicitly: would this founder still be building three years after closing, or counting days to the earn-out? The two questions look similar in the room. They produce very different deals.
So what
Deep diligence starts before the data room. In India, it starts in the relationship. The longlist gives you confidence the universe has been screened. Relationships give you confidence the partner can integrate. You need both. If forced to choose what ultimately drives the quality of the deal, I would put more weight on the second.
The best target on paper is not always the best partner in practice. For mid-sized European buyers entering India through acquisition, that distinction is the one worth getting right.
If this resonates, let’s talk.
