A bigger M&A toolbox but more rules in 2026

Hello,

This week, India’s high frequency trading firms reported a surge in profits despite tighter regulatory scrutiny. Market analysts have said that even modest volatility, combined with expanding derivatives participation will keep spreads attractive for algorithmic players, suggesting that curbs have not meaningfully dented activity.

Meanwhile, the RBI added seven more unauthorised forex trading platforms to its alert list, a reminder that retail speculation remains a growing supervisory concern. At the same time, the central bank’s latest bulletin flagged signs of ‘heightened exuberance‘ in global financial markets, and the frothy valuations, rapid portfolio flows and over-leverage that come with it, which could spill over into emerging markets if conditions turn.

However, early estimates of the economy’s growth remained buoyant, extending the country’s run as the fastest-growing major economy. Strong construction activity, resilient services and improving manufacturing output helping to offset headwinds.

And finally, a sharp fall in India’s headline inflation has reopened the eternal debate on monetary easing, and whether it works. 

I hope you enjoy this week’s roundup – please connect on LinkedIn to discuss how Ideals VDR can help with your next M&A deal.

Let’s dive in.

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Expect a bigger deal-toolbox but also more rules in 2026

As we near the start of 2026, dealmakers will see new tools and challenges taking shape in Indian M&A. 

So rather than just sheer volume of activity, let’s consider what new horizons are emerging and how they might reshape the next wave of transactions.

Financing is being rewritten

To begin with, the sharp rise in private credit continues to dominate deal financing. Multiple reports from Business Standard and EY’s H1 private credit update note that funds are writing larger cheques, with domestic players underwriting chunkier deals. 

Further expansion of the shadow banking sector seems likely as financial papers picked up on rumours of RBI looking into further liberalising External Commercial Borrowings (ECBs). Approval routes will be simplified, which would give sponsors additional room to structure offshore-onshore deals.

Discipline in distress

Layered onto this is a shift in the bankruptcy ecosystem, already considered somewhat of a success in the economy. IBBI’s proposed uniform valuation formats suggest a clear push to tighten the screws around fairness of value calculations. 

If implemented properly, the move could reduce last-minute disputes, speed up auctions and create tighter pricing discipline, addressing longstanding complaints about inconsistency in distress valuations.

Labour reform may add to post-deal risks

A brand new labour code adds another moving part, that most likely will impact cost structures, particularly regarding retrenchment, social security provisioning and fixed term employment. For M&A practitioners, this translates into slightly longer diligence and more complex integration planning.  

As a result, HR liabilities will need deeper modelling; indemnities may need to stretch further; and capital budgets for post-deal integration may rise. For cross-border buyers, especially, this could be the first time labour compliance moves from a footnote to a headline risk in India.

Taken together, these developments point to the early contours of a new era: where the toolbox is widening, but so is the rulebook.