Understanding the Dynamics of M&As in Indian IT Sector: An Analysis of the Trends, Patterns, and Directions

Abstract

This study attempts to explore the trend of M&As by IT companies having headquarters in India. The results reveal that trend across the time is not unidirectional. Global recession of 2008 significantly affected the number of deals. It has more severe impact on international deals than on domestic deals. The study also revealed that companies engaged in more international deals than the domestic deals with USA alone, accounting for 56 percent of international deals. For domestic M&As, it has been found that the maximum number of target companies was located in Bengaluru, whereas the maximum number of acquirer companies was from Mumbai. Looking at the regional distribution of M&As, the study revealed that South India had dominant position followed by West, North and East India, respectively. This distribution of inorganic investment (through M&A) is very similar to the agglomeration of IT hubs and concentration of technical institutions in India. Another revealing finding of the study that majority of acquirer and target companies (42%) had headquarters in the same city, indicating that firms preferred deal partners in the same city.