How to become a searcher in India

02Which Indian filters belong in your thesis?

A thesis is a short written statement of the businesses you will buy, so that a lender or investor can test it. In India it needs filters a thesis written elsewhere would not carry.

If investors outside India will hold the target's shares, directly or through a buying company they own or control, start with the sector. Not every sector is open to foreign money.

Under India's consolidated FDI policy, foreign direct investment in sectors the policy does not list is allowed up to 100% without prior approval. Listed sectors carry a cap or need government approval.

A few sectors are closed to it altogether, including chit funds, nidhi companies and real estate business. The same rule covers indirect investment: an Indian buying company owned or controlled from abroad must meet the target sector's conditions.

The state the business sits in comes next. Under section 25 of the CGST Act, a business registers for GST in every state where it is liable, and each registration counts as a separate person.

A business with depots in four states therefore brings four sets of GST returns to test against one set of books. Put the states you can cover into the thesis.

The structure and the state both affect stamp duty. A transfer of shares carries stamp duty of 0.015% of the price. Land and buildings in a business sale carry state stamp duty and registration fees, as Khaitan & Co's Panoramic guide notes.

Last, ask whether the books can be restated. Many good Indian businesses keep their books for the tax return. A buyer has to rebuild the earnings from them, and that only works when the invoices, bank entries and payroll records behind them exist.

Write the thesis knowing that many of these businesses are family-run. The owner is often the main relationship with the largest customers, the bank and the suppliers, so moving those relationships to you takes time.

04Build your bench of advisers before the first owner meeting

A good business may turn up early in the search, and there will be no time to find advisers then. I would have these six in place before writing to a single owner:

• A chartered accountant for the financial diligence: the records above, the quality of the earnings, and the working capital the business needs to run.
• A company secretary for the share records and filings, so you know who owns the shares you are buying and that every allotment and transfer was filed.
• A deals lawyer for the share purchase agreement (SPA), the contract that sets the price, the seller's promises about the business, and what happens if those promises prove untrue.
• A registered valuer, where the deal needs a valuation under the Companies Act or another statute.
• A tax adviser for the structure: buying the shares, or a slump sale, where the business is sold as a going concern for one lump sum. A slump sale is taxed under section 77 of the Income-tax Act, 2025 (formerly section 50B). Our piece on what makes a good business to buy compares the two.
• A lender. For a first search, that is likely to be a non-banking financial company (NBFC), a family office, or the seller.

06What happens between a letter of intent and closing in India?

A letter of intent (LOI) sets out the price you propose, how you will pay it and the main conditions. It is signed before full diligence. Indian deals often call it a term sheet.

Its commercial terms, including the price, are usually not binding, but its confidentiality and exclusivity clauses are.

Expect to sign several. Searchers in IESE's study signed about 6 LOIs on average in 2024-25. Those who went on to buy averaged 4.6, and those who did not averaged 8.2.

Indian private deals are usually negotiated one-to-one. Auctions are "not that common in India", Khaitan & Co's Panoramic guide notes, and appear mainly when the seller is a fund or the sector is in demand.

A deal can take three to six months to close, in this order:

1. A non-disclosure agreement (NDA), before any numbers change hands.
2. A term sheet or LOI, with a period of exclusivity.
3. Diligence, usually looking back over about three years of records, often in two rounds.
4. The deal documents, drafted by the buyer's side and negotiated while diligence runs.
5. Signing the share purchase agreement, or the business transfer agreement in a slump sale.
6. The conditions precedent: the approvals, consents and fixes agreed before money moves.
7. Closing, when the price is paid and the shares or the business pass to you.

The same guide describes how Indian deals are usually priced and protected. A locked box is still common: the price is fixed on accounts at a past date, and the seller promises no value leaves the company after it.

Pricing on accounts drawn up at closing is gaining ground. Cash is the most common form of payment.

Warranties, the seller's statements of fact about the business, usually survive for 12 to 36 months. Warranty and indemnity insurance, which pays out when a warranty proves untrue, is gaining traction.

Diligence findings in Indian books are where deals change price. A GST mismatch, unpaid provident fund dues, sales that never reached the bank, or dealings with the owner's other companies all move the number.

Diligence findings in Indian books are where deals change price.

Each finding has a remedy short of walking away: a lower price, a specific indemnity from the seller, or part of the price held in escrow. Khaitan's guide finds escrows for indemnity fairly common.

Earn-outs, where part of the price depends on later results, are common when strategic buyers acquire founder-run private companies. Our piece on search fund models covers how they fit a searcher's deal.