The beginning of last week, was thrilling with tunes of excitement all around in the start-up world. Putting an end to the several long tailed speculations, Flipkart-owned Myntra finally acquired Rocket-Internet backed Jabong in an all cash-only deal worth US $70 million. This creates a move towards biggest online fashion conglomeration in India and a world class example that elaborates on how synergies, when combined well can create a way towards successful longer-term business model.
Today, the Indian start-up scenario is at its unpredictable best. While 2015 witnessed huge funding rounds, with food-tech, hyperlocal & aggregators, in addition to e-commerce platforms, gaining edge over other segments. The year 2016 has already started with a trend towards consolidation among start-ups with much M&A action in segments like local services, eCommerce along with software-as-a-service (SaaS), and analytics.
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In 2016, India has seen an unprecedented rise in M&A activity with 123 deals in total, with a cumulative deal size of 534.9 million dollars (disclosed value). In July, there were as many as 36 M&As, almost twice that in June and about three times the January and February numbers.
The number looks exciting and signifies that there is one acquisition closure in every two days. While a bigger pie of this count resides within the domestic boundaries; this year has also explored new horizons in terms of much notified M&A activity across the foreign boundaries.
The numbers include a fair combination of outbound and inbound deals, covering matured markets including US, UK, Dubai, Canada and more, thereby, constituting 9 per cent (11 deals) and 10 per cent (12 deals) to the total deal volume respectively.
While most of the outbound M&As revolved around the start-up space, some of the industry majors have also realised the benefits of marrying start-ups. A few notable acquisitions include Mindtree (acquisition of US based Salesforce consulting and implementation provider, Magnet 360); Tech Mahindra (acquisition of UK based IT and digital company, Bio Agency) and Dabur (acquisition of South African cosmetics manufacturing and trading firm, Discaria). The key commonalities for inbound acquisitions include SaaS (as the top most target industry segment) and USA (as the top most acquirer location).
In domestic market, we have seen a sale season for start-ups – the industry is now showing the big signs of consolidation, with over 100 M&As till date.
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Delhi-NCR remained the top location within the domestic market and snaps up 29 deals followed by Bangalore (26) and Mumbai (16) deals respectively. Bangalore has remained the top acquirer region across the geographical boundaries (including outbound M&As). Local Services remained the top segment with 15 deals followed by SaaS and eCommerce respectively.
This article was originally published in Xeler8.com