Private equity deals in India are taking significantly longer to close, with transaction timelines stretching from the earlier three-four months to as long as six-nine months. Geopolitical uncertainty, supply-chain disruptions and the emergence of new investment themes such as the AI value chain, defence manufacturing and data centres are forcing investors to spend more time evaluating risks, testing business assumptions and negotiating valuations, investment bankers, PE funds and consultants said.
A recent acquisition of an industrial company, yet to be announced, took nearly six months to conclude after repeated rounds of due diligence on demand, margins and order-book visibility before the buyer and seller could agree on valuation. In another transaction involving a defence components manufacturer, extensive checks on manufacturing standards, quality controls and regulatory compliance prolonged negotiations before a consortium of private equity and strategic investors committed capital.
“The deal cycle varies across industries, but in many cases we have seen it extend by as much as six months over earlier timelines,” said Vineet Satija, partner and head of investment banking at PwC India. He attributed the delays partly to the widening bid-ask spread between buyers and sellers.
The uncertainty triggered by the West Asia conflict and continuing supply-chain disruptions has made forecasting business performance more difficult. Higher freight and insurance costs, volatile energy prices and uncertainty over global demand have made investors more cautious.
“Promoters are not able to predict with confidence what will happen over the next one to three years or how much better they can perform,” said Rohit Mantri, managing director and co-head of private equity at Motilal Oswal Alternates.
Navigating Untested Sectors
At the same time, investors are venturing into sectors with relatively limited operating history.
“New sub-sectors such as the AI value chain, defence components and data centres require investors to spend more time understanding business models and evaluating risks before committing capital,” Mantri said.
Eshwar Karra, deputy managing director at Kotak Alternate Asset Managers, said emerging themes such as climate transition and digital infrastructure continue to attract investor interest, but some areas still require greater maturity and visibility before large-scale capital deployment.
He said investors are placing greater emphasis on cash-flow visibility, governance standards and downside protection. While volatile public markets and a narrower IPO window have increased demand for private capital, they have also enabled investors to negotiate stronger deal structures and better risk-adjusted returns.
The longer timelines come amid a broader slowdown in private capital activity. Private equity and venture capital investments in Indian companies fell 3% year-on-year to $6.45 billion across 266 deals during the April-June quarter, according to Venture Intelligence.
Satish Chander, co-managing partner- private equity, True North said good investment opportunities have healthy competition, and this has kept most PE firms honest in the evaluation / diligence timelines.” Difficult investment themes have always taken longer to evaluate; not because PE firms have been tactical, but because one has to be careful in evaluating overall macro situation and the impact on different sectors,” Chander said.
Vivek Soni, partner and national leader for private equity services at EY India, said heightened geopolitical uncertainty has left little room for error in investment assumptions.
“When investors are less certain about the macro environment, they spend significantly more time on due diligence and negotiating transaction terms, which naturally elongates deal cycles,” he said.
Nithya Easwaran, managing director at Multiples Alternate Asset Management, however, argued that the issue is not merely about navigating macro volatility but choosing businesses capable of withstanding it.
“Since Covid, disruption cycles have become much more frequent — from the pandemic and the Russia-Ukraine war to tariffs, conflict in the Middle East and extreme weather events. We are preparing for a world that is structurally more volatile,” she said.
Multiples has responded by subjecting investment cases to more rigorous stress tests and strengthening its value-creation capabilities. The firm has hired senior executives dedicated to value creation and developed frameworks to identify operational priorities from day one, supported by a network of advisers who help portfolio companies execute those changes early.
Resilient Valuations
Despite longer negotiations, valuations for quality assets have remained firm. Mantri said competition remains intense for companies with market capitalisation above $500 million and proven management teams.
“A lot of money is chasing companies with a market capitalisation of more than $500 million and strong management. There is no question of bargain valuations. Deals are getting done at fair prices,” he said. Discounts, he added, are more likely in companies valued below $500 million that have been hit by recent market volatility.
Srikrishna Dwaram, co-managing partner- private equity, True North said public markets have definitively become tad more difficult and very selective towards companies that have strong short/ medium term prospects. This has helped in deal flow in many of our focus sectors; especially in interesting companies that are looking for growth capital., he said
“. Since we are entering into longer term partnerships with companies, we always look at fair valuation and terms that incentivise leadership teams to drive value creation along with us,” he said.
Satija agreed that volatility in public markets and a narrower IPO window have not materially strengthened buyers’ negotiating position.
“Private market valuations have remained relatively resilient because many sellers continue to hold firm on their expectations. Valuations have not softened enough for investors to consistently negotiate tougher terms, particularly for high-quality assets,” he said.
