Deal Street on the slow lane but Grant Thornton Bharat says it's still a good time for quality companies

The Indian deal-making space has been witnessing a slowdown in recent times. Grant Thornton Bharat's data from February 2023 show a decline in both deal value and volume, marking the second-lowest deal volumes and lowest values recorded since 2014. When compared with January 2023, the deal volumes witnessed a 39 percent decline while values decreased by 35 percent.

Despite this, India Inc recorded a total of 89 deals in February, with a total deal value of $1.75 billion.

Mergers and acquisition (M&A) deal volumes remained stagnant compared to January 2023 but the deal values were higher at $0.8 billion on the back of one big ticket transaction worth $578 million. The start-up sector led the volumes with 25 percent of the deals.

Private equity (PE) investments recorded 65 deals worth $1 billion. With 60 percent of total PE deal volumes, the start-up sector continued to top the deal chart.

Raja Lahiri, a partner at Grant Thornton Bharat, told CNBC-TV18 that the decline is reflective of the broader economic slowdown that India has been experiencing in recent times.

“There was a wind of slowdown that was happening. But given all that, I would say that quality companies with profitable business models will always win in these times as well,” he said.

The collapse of Silicon Valley Bank has sent shockwaves throughout the industry, leaving many founders and investors feeling sleepless and reflective. As the go-to bank for many startups, the sudden news that it was shutting down has left entrepreneurs scrambling to find new banking solutions to keep their businesses running.

Lahiri expressed his concerns about the sense of caution that is prevailing in the market because of the SVB news. He pointed out that the sense one is getting from the market is definitely one of caution, with investors being hesitant to take big risks.

He did identify a silver lining amidst the caution and said that the quick action taken by the Federal Reserve was a positive sign for the market.  “SVB was a predominant player in the tech segment, it had some role in the Indian tech sector as well. But from what has happened, in the last couple of days, with the Fed coming in to help is a very good sign,” he said.