India saw 46% decline in overall deal activity in Q1 2023

New Delhi, April 19:India's deal activity experienced a significant decline in the first quarter of 2023, according to a report by Grant Thornton Bharat. The report showed that there were only 332 deals worth $9.7 billion in the quarter, representing a 46% drop in volume and a 35% decline in value compared to Q1 2022.

The report also revealed that M&A activity recorded 76 deals worth $4.4 billion, a decrease of 56% in volume and 21% in value compared to the same period last year. Private equity activity also witnessed a declining trend, recording 256 deals worth $5.3 billion, a decrease of 42% and 44%, respectively, in volume and value compared to the previous year.

The start-up sector, which had been the driving force behind deal activity in recent years, also experienced a significant decline. The report showed that the start-up sector accounted for only 22% of the deals for the quarter, which was 71% lower compared to Q1 2022, with only 17 deals valued at $69 million.

The report attributed the decline in deal activity to the funding winter and global developments that dampened domestic players' deal activity. The recent Silicon Valley Bank (SVB) collapse and the aftereffects of the Russia-Ukraine war were cited as reasons for the uncertainty that affected the deal activity.

However, the report also noted that the pre-deal activity picked up in March/April, indicating that the slowdown in deal activity may be temporary. Shanthi Vijetha, Partner, Growth at Grant Thornton Bharat, said, "Further, the global developments appear to have dampened the deal activity of the domestic players, however, it seems to be temporary as the pre-deal activity picked up in March/April."

In summary, the first quarter of 2023 saw a significant decline in deal activity in India compared to the same period last year. However, the report suggests that the decline may be temporary, and there are signs that pre-deal activity is picking up again.