Secure Funding for Consumer Goods Mergers: A Strategic Guide for India’s FMCG Leaders

India’s consumer goods sector, valued at over ₹9.5 lakh crore in 2025 and projected to reach ₹42 trillion by 2027, is a dynamic powerhouse growing at 8-10% annually. Fast-moving consumer goods (FMCG), personal care, and processed foods drive this expansion, fueled by rising incomes, urbanisation, and digital adoption. Mergers and acquisitions (M&A) serve as critical growth levers, enabling companies to scale, innovate, and compete. For senior leaders, the ability to secure funding for these transformative deals is paramount. This article outlines the strategic rationale, market trends, challenges, and a hybrid consulting approach to secure funding for consumer goods mergers.

Why Mergers Matter to Secure Funding For Consumer Goods Sector

Mergers unlock scale economies, optimising supply chains and reducing costs. They enable distribution synergies, allowing brands to penetrate new markets through combined regional strengths. Intellectual property (IP) consolidation strengthens competitive advantages, while digital transformation via shared tech platforms enhances customer engagement. Trends like FMCG consolidation, regional brand tie-ups, and retail-tech convergence underscore the need to secure funding for strategic M&A. Large FMCG players acquire agile direct-to-consumer (D2C) brands to tap e-commerce growth, while regional firms merge to counter national giants, all requiring robust plans to secure funding.

1. Recent Market Trends Impacting M&A (June 2025)

The funding environment for M&A has shifted post-2024 venture capital corrections. Investors now prioritise unit economics, focusing on gross margins and sustainable growth. Debt/equity hybrid instruments, like convertible notes, offer flexibility to secure funding without immediate equity dilution. The Production-Linked Incentive (PLI) Scheme’s expansion into FMCG, personal care, and processed foods incentivises domestic manufacturing, making M&A deals more attractive to investors. ESG-led financing is surging, with green bonds and sustainability-linked loans gaining traction among consumer goods firms aligning with net-zero goals. Recent IPOs and strategic exits have tightened deal valuations, requiring nuanced strategies to secure funding. Budget 2025 provisions, including MSME M&A incentives, streamlined acquisition tax rules, and import duty rationalisation, further bolster the climate to Raise capital.

2. Key Challenges to Secure Funding for Consumer Goods Mergers

• Securing funding for consumer goods mergers faces several obstacles:

1. High Valuation Multiples: Competition for scalable brands inflates deal costs, complicating efforts to secure funding at justifiable terms.
2. Limited Collateral: Asset-light D2C and consumer tech firms lack traditional collateral, hindering debt financing to secure funding.
3. Regulatory Delays: Approvals from the Competition Commission of India (CCI), Food Safety and Standards Authority of India (FSSAI), and GST classifications can delay deals, increasing funding risks.
4. Cash Flow Mismatches: Integration phases often involve working capital demands and cash flow gaps, necessitating careful planning to secure funding.

3. Hybrid Consulting Strategy to Secure Funding for Consumer Goods Mergers

A hybrid consulting approach integrating financial, legal, and technological expertise ensures leaders can secure funding and execute seamless mergers. Here’s how:

• Financial Strategy

Craft a balanced funding mix to secure funding effectively. Combine senior debt for stability, mezzanine capital for flexibility, and private equity (PE) or structured convertible notes for growth. Use bridge financing for staggered payouts to manage cash flow during integration. Monetise receivables or inventory via supply chain finance for short-term liquidity. Engage strategic co-investors, such as family offices or brand-aligned corporates, to Raise capital with aligned interests and favorable terms.

• Legal & Regulatory Strategy

Conduct pre-merger diligence to address compliance with FSSAI, Legal Metrology, and GST liabilities, mitigating risks that could deter funders. Design robust Share Purchase Agreements (SPA) or Share Subscription Agreements (SSA) with clear earn-outs, indemnities, and regulatory conditions precedent to build investor confidence and secure funding. Prepare National Company Law Tribunal (NCLT) and CCI filings with transparent disclosures to avoid delays, streamlining the process to secure funding.

• Tech & Operational Enablement

Build a unified digital infrastructure by integrating Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), and Supply Chain Management (SCM) systems to drive post-merger efficiencies. Develop integration playbooks for organisational alignment, standard operating procedures (SOPs), and data migration to ensure smooth transitions. Use AI-led scenario modeling to forecast funding impacts, providing data-driven insights to secure funding and optimise capital allocation.

• M&A Structuring & Valuation

Evaluate synergy potential cost savings, channel expansion, and IP pooling to justify valuations and attract investors. Leverage adjusted EBITDA, Lifetime Value to Customer Acquisition Cost (LTV/CAC) ratios for D2C brands, and ESG scores as valuation levers to secure funding at optimal terms. Recommend phased mergers to manage cultural and operational risks, easing the path to secure funding for each stage.

Illustrative Examples

• Example 1: FMCG-Dairy Merger: A leading FMCG player secured ₹200 Cr in debt and equity from a family office and PE firm to acquire a regional dairy brand. The financial model projected a 24-month payback through cross-distribution synergies, leveraging the FMCG’s national network. Legal structuring included deferred consideration with performance triggers, aligning costs with post-merger success to secure funding effectively.

• Example 2: D2C Brand Consolidation: Two D2C personal care brands merged via a share-swap agreement, securing funding through a ₹50 Cr structured convertible debt facility from a brand accelerator and an ESG-focused fund. The deal capitalised on shared e-commerce channels and sustainability credentials, showcasing how ESG-led financing can secure funding for high-growth ventures.

Conclusion

Securing funding for consumer goods mergers requires an integrated approach blending financial structuring, legal diligence, and technological enablement. By aligning capital strategies with post-merger synergies and ESG compliance, companies can unlock transformative growth in India’s dynamic consumer goods sector. Leaders must prioritise forward-looking planning to navigate valuation pressures, regulatory complexities, and integration challenges. With LawCrust’s expertise in hybrid consulting, firms can secure funding and position themselves for sustainable, market-leading success through strategic M&A.

About LawCrust

LawCrust Global Consulting Ltd. delivers cutting-edge Hybrid Consulting Solutions in Management, Finance, Technology, and Legal Consulting to ambitious businesses worldwide. Recognised for our cross-functional expertise and hybrid consulting approach, we empower startups, SMEs, and enterprises to scale efficiently, innovate boldly, and navigate complexity with confidence. Our services span key areas such as Investment Banking, Fundraising, Mergers & Acquisitions, Private Placement, and Debt Restructuring & Transformation, positioning us as a strategic partner for growth and resilience. With an integrated consulting model, fixed-cost engagements, and a virtual delivery framework, we make business transformation accessible, agile, and impactful.

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