At a time when India Inc is scorching the tracks in its race for overseas assets, it is equally fascinating to consider the reverse trend of mergers and acquisitions from overseas. It is also pretty robust shorthand to judge the business climate in a country — assessing the ease with which mergers and acquisitions (M&A) can be carried out in the economy. In the current environment of high profile M&As that have captured the popular imagination and fired the dreams of India Inc, it is therefore a good time to find out if we give the same free space to business entities to acquire.

Analysts and investment bankers are now generally agreed that the constraints for picking up assets in India are more in terms of valuation than any regulatory hassles. The reform process has definitely opened up the M&A space in the country. The certificate is worth treasuring. As the frenzied coverage of the recent buyouts have demonstrated, M&A are the holy grail in any company’s pilgrimage towards value addition for its shareholders. Accordingly, if the experts believe that Indian receptivity to M&A has moved away beyond the the swadeshi versus videshi syndrome, it is certainly cause for cheer.

But the swadeshi-videshi tangle remains extant in one critical dimension. This is where the target company is closely held, typically the family run industrial empires. The promoter stake is so heavy in these companies that a hostile takeover is almost impossible. This means for most M&A activities involving the promoter is essential. This is a key differentiator of the Indian market from that of European and American markets.

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