Industry Overview & M&A Landscape: How to Secure Acquisition Targets in India’s Consumer Goods Sector

India’s consumer goods sector stands as a crucial pillar of economic growth, contributing over 8% to the nation’s GDP. This vast ecosystem includes FMCG giants, emerging D2C brands, and regional players across segments such as packaged foods, personal care, home care, and durables. While manufacturers, distributors, retailers, and e-commerce platforms form the value chain backbone, mid-sized firms increasingly aim to scale through inorganic growth and secure acquisition targets that align with their long-term strategy.

Notably, the M&A landscape has evolved significantly post-2024. As large players focus on consolidating market share, mid-sized firms are striving to secure acquisition targets that align with their strategic vision. For example, consolidation is intensifying in categories like regional snacks, organic personal care, and wellness products.

Moreover, investor expectations in the FMCG space are shifting. While valuations once prioritised topline growth, stakeholders now assess profitability metrics, customer stickiness, and regulatory compliance. Consequently, mid-sized companies must position themselves with stronger M&A readiness if they aim to secure acquisition targets in such a competitive environment.

Recent Developments (As of June 2025): Market Shifts That Influence How Firms Secure Acquisition Targets

Several policy and market shifts in 2025 have altered the acquisition landscape. First, the government’s expansion of the PLI scheme to cover household essentials and food processing has incentivised capex in previously underserved sub-segments. As a result, acquisition interest in these sectors has surged.

Additionally, the GST Council revised input tax credit guidelines in April 2025, making deal structuring more nuanced. Although retail inflation moderated in May, raw material cost volatility—especially for palm oil and packaging materials—continues to affect valuation models.

At the same time, ESG mandates from CPCB and FSSAI are prompting legacy companies to pursue sustainable targets with better compliance readiness. This push has created an opportunity for forward-looking mid-sized firms to secure acquisition targets that meet the evolving sustainability expectations.

Furthermore, investor sentiment has changed post-2024. While capital remains available, funders increasingly focus on unit economics, data security, and post-merger integration feasibility—making strategic alignment more critical than ever for those looking to secure acquisition targets.

1. Challenges Mid-Sized Firms Face in Securing Acquisition Targets

Despite intent, mid-sized firms often face roadblocks in their quest to secure acquisition targets. One key challenge is stiff competition from larger conglomerates and well-funded PE roll-up platforms that can outbid them easily. Consequently, promising high-value targets may get absorbed before mid-sized firms complete their due diligence.

In addition, limited access to structured capital, coupled with a lack of internal M&A expertise, hinders execution speed. Many mid-sized players also struggle to identify targets that align with their brand ethos, regulatory readiness, or supply chain footprint.

Moreover, due diligence frameworks remain underdeveloped. This often results in missed red flags related to FSSAI licences, IP claims, or pending litigations. On top of that, cross-border deals get complicated by evolving FDI norms and data localisation laws, which many firms overlook initially.

As a result, although intent exists, execution becomes fragmented unless mid-sized companies build structured M&A muscle to secure acquisition targets effectively.

2. Strategic Solutions Using a Hybrid Consulting Lens: Customised Approaches to Secure Acquisition Targets

To overcome these hurdles and effectively secure acquisition targets, mid-sized firms must deploy an integrated strategy across management, finance, legal, and tech domains.

• M&A Readiness & Pipeline Strategy

To begin with, defining a clear acquisition thesis is crucial. Firms should establish target filters such as category adjacency, CAC-to-LTV ratios, tech stack maturity, and distribution capabilities. In doing so, they can shortlist acquisition candidates that deliver strategic value.

Next, building dedicated M&A taskforces or advisory partnerships will improve deal velocity. Additionally, firms should leverage data tools such as social media tracking, GST analytics, and D2C platform metrics for proactive scouting to secure acquisition targets early.

• Deal Structuring Innovation

Innovative structuring plays a key role in helping mid-sized firms secure acquisition targets. For example, incorporating earn-outs, royalty-based payments, or minority stakes with control rights can reduce upfront capital requirements while maintaining upside.

Asset-light acquisition models—such as IP licensing or contract manufacturing tie-ups—offer another way to integrate operations without full ownership risks. These models allow for faster synergy realisation and lower integration costs.

Moreover, a phased integration plan mitigates disruption and ensures smoother cultural alignment post-acquisition.

• Financial & Legal Planning

Capital strategy also matters. Firms should explore structured debt, mezzanine funding, or SPV-led buyouts to maintain balance sheet flexibility. At the same time, robust legal due diligence is essential.

This includes checks for FSSAI/Legal Metrology licences, pending litigations, and ESG disclosures. Ensuring regulatory compliance early helps avoid post-merger surprises. Further, aligning with GST regimes and CPCD packaging rules ensures sustainability-linked acquisitions don’t fall through the cracks.

• Technology-Driven Synergy Mapping

Finally, technology enablement can differentiate successful acquirers. Using AI tools for target scoring, integration simulations, and ROI forecasting helps prioritise deals with the highest strategic fit.

Post-acquisition, tech synergies—such as shared ERP systems, unified CRM platforms, and IoT-led logistics—can unlock cost efficiencies. Meanwhile, implementing cybersecurity protocols ensures data integrity during and after the transaction.

By approaching M&A with this hybrid lens, mid-sized consumer goods firms can confidently secure acquisition targets that drive growth and strategic edge.

Illustrative Case Studies: Real-World Approaches to Secure Acquisition Targets

Case 1 – IP-Led Acquisition Strategy
A mid-sized personal care company sought to scale its reach in the natural wellness space. By identifying a skincare D2C brand with strong IP and influencer equity, it structured a royalty-based IP deal. The legal team embedded data privacy protections, while finance split payouts into milestone-linked tranches. As a result, the company could secure the acquisition target without straining cash flows.

Case 2 – Cross-Border FMCG Tie-Up
A packaged foods firm eyed international expansion. It acquired a UAE-based brand via a minority investment with a call option. Technology teams ran supply chain digitisation audits, while management aligned the product lines under a shared regional campaign. This low-risk approach allowed the firm to secure a high-value target and build international presence.

Conclusion: Final Insights on How to Secure Acquisition Targets

To secure acquisition targets in today’s complex environment, mid-sized consumer goods firms must act decisively and strategically. By aligning financial strength, legal compliance, operational preparedness, and technology insight, they can compete with larger players and unlock scalable growth.

As M&A continues to evolve in India’s FMCG and D2C space, the winners will be those who not only find the right targets—but know how to capture and integrate them effectively.As M&A continues to evolve in India’s FMCG and D2C space, the winners will be those who not only find the right targets—but know how to capture and integrate them effectively.

About LawCrust

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