Cross-Border M&A: How Indian Companies Go Global and the Role of Virtual Data Rooms

Indian companies have started expanding beyond borders and have targeted Europe, the U.S, and other parts of the world. India was the second biggest investor in the United Kingdom in 2022 and 2023. This shows how Indian companies are looking beyond their borders. They aim to expand their market, gain new skills, or diversify revenue.

Cross-border mergers and acquisitions (M&A) happen when companies from different countries combine or are bought and sold. They usually aim for strategic, financial, or operational goals.

This article looks at the main aspects of cross-border M&A for Indian firms. It covers different aspects like

·   Regulatory approvals

·   Due diligence

·   Tex

·   Strategy

·   Post-merger integration

·   Importance of virtual data room solutions in the process

Why Indian Companies Are Going Global Now

Indian firms are expanding overseas faster than ever. They are driven by the need for new markets and technology. Global expansion also helps them access intellectual property and skilled talent. Many firms seek stronger brands and global distribution networks. Diversifying operations builds supply-chain resilience and reduces overdependence on one region.

Information technology and IT-enabled services continue to lead this push. Indian tech firms are setting up delivery and innovation centers abroad. Infosys opened new innovation hubs in Australia and Europe. These centers help clients with digital projects and reduce U.S. dependence.

The pharmaceutical industry is buying global brands and research assets to reach new patients. Sun Pharma bought the U.S. firm Checkpoint Therapeutics in 2025. The deal expanded its oncology portfolio and strengthened its U.S. presence.

The timing supports this global move. Global interest rates are steadying after recent highs, which have been helpful in financing cross-border deals. The Indian rupee remains relatively stable, which supports predictable investment planning. Shifting geopolitics and trade realignments also open new spaces for Indian firms. Many global supply chains now prefer a “China-plus-one” strategy, and India benefits from this shift.

Year-1 Strategic Wins

·   Build local teams and secure quick regulatory approvals

·   Integrate small but strategic acquisitions smoothly

·   Establish trusted supplier and customer relationships

·   Localize marketing for key regions

·   Capture early revenue from pilot projects

Strategy First: Market and Target Selection

Indian firms now use cross-border mergers and acquisitions to speed up global growth. The first step is strategy. Companies must define why they want to enter a market and what value they expect to gain. A structured market selection framework helps narrow choices.

This framework starts with a deeper evaluation of external factors. Key factors include

·   Market size

·   Growth potential

·   Ease of regulation

Firms study local competition, logistics quality, and cultural distance before committing. A large and growing market may attract interest, but a complex regulatory setup can delay progress. Cultural similarity helps teams integrate faster and reduces management friction.

Once the market is set, firms decide how to enter. They can buy, build, or ally. Here is how different methods help:

·   Acquiring gives quick access and full control, but carries a high cost and integration risk

·   Greenfield investment gives control from the start, but takes longer to scale

·   Joint ventures share risk and build local credibility, but reduce independence

Valuation discipline keeps deals sound. Companies use EBITDA multiples and discounted cash flow methods. They test the results under different foreign exchange and country-risk scenarios. These steps help protect returns and ensure the deal fits long-term goals.

India-Specific Regulatory Pathway

Cross-border M&A by Indian companies involves several regulatory steps. The FEMA/RBI handles foreign exchange and overseas investments. It provides specific routes and sets financial commitment limits for overseas direct investment (ODI). Inter-company loans and guarantees also require RBI approval. All transactions need extensive documentation and reporting.

The Competition Commission of India (CCI) reviews deals that meet certain thresholds based on assets or turnover. Some deals also require CCI approval if their value exceeds a specific amount. Listed Indian companies must follow the Securities and Exchange Board of India’s (SEBI) rules. These rules cover timely public disclosures and insider trading. Foreign control restrictions apply in sensitive sectors. This includes defense, telecom, and financial services.

Approval Checklist

·   RBI/FEMA Approval. This process depends on the complexity of the case and may take one to three months. Determine the correct ODI route and gather all necessary documents. File with an authorized dealer bank.

·   CCI Filing. This can take one to six months. Check if the deal meets asset or turnover thresholds. Confirm if the deal value exceeds ₹2,000 crores. Submit a notice using Form I or II. Await CCI clearance or approval.

·   Listed Company Approvals. These are ongoing requirements. Obtain board approvals as needed. Make timely disclosures to stock exchanges. Comply with SEBI takeover and listing rules.

·   Sectoral Approvals. Timelines vary greatly, especially for sensitive industries like defence or telecom. Engage with regulators specific to the industry.

Diligence Across Borders: Scope and Tools

Due diligence becomes critical when Indian companies pursue cross-border M&A. Companies must examine multiple workstreams to understand risks and opportunities. These may include

·   Financial audits

·   Legal compliance

·   Tax structures

·   Data privacy

·   Environmental-social-governance (ESG) factors

·   Commercial operations

Each workstream highlights potential challenges and informs deal terms.

Cross-border Due Diligence and Data Security Challenges

Cross-border due diligence faces unique data access challenges. Information is usually stored in multiple countries, which requires coordination with local counsel. Different languages and local privacy rules can slow down document collection and review.

Companies overcome these challenges by standardizing requests and engaging multilingual teams. They also adopt tools that comply with local regulations while maintaining centralized control.

Virtual Data Room Solutions: A Reliable Due Diligence Software for Secure Business Transactions

Virtual data room solutions are essential tools in international mergers and acquisitions. A virtual data room is a secure online repository for secure file sharing. They provide banking-grade security and ensure regulatory compliance during these deals. VDR providers for M&As also comply with international and regional regulatory requirements.  Here is how virtual data room software for M&As ensures the safety of confidential documents.

·   Granular access permissions allow controlled user access to sensitive data

·   Digital watermarks prevent copyright issues and help trace changes in sensitive documents

·   AI redaction automatically hides the sensitive information in the files

·   Audit trails keep track of all users’ activities in the virtual data room

Virtual data room software simplifies collaboration through structured Q&A sessions. They provide detailed insights related to the buyers’ or bidders’ activities for better decision-making.

Cross-border diligence pack checklist

·   Financial records and audit reports

·   Corporate structure documents

·   Key commercial contracts and agreements

·   Employee data and benefits

·   IP registrations and portfolio

·   Regulatory filings and permits

·   Tax returns and liabilities

·   Ongoing litigation details

·   Cybersecurity policies and audits

·   ESG compliance reports

·   Data privacy policies

·   Foreign investment approvals

·   Relevant local market data

·   Insurance policies

·   Customer and supplier lists

·   Anti-bribery and anti-corruption policies

·   Real estate and fixed asset records

·   Board and shareholder meeting minutes

Tax, FX, and Financing Mechanics

Navigating the tax and financing landscape is complex in cross-border M&A deals in India. A strategic holding structure is vital for efficiency. Many acquirers use intermediate holding companies in jurisdictions with favorable Double Taxation Avoidance Agreements (DTAA) with India. This can reduce withholding tax on dividends and capital gains.

However, authorities now focus more on “substance” requirements. Holding structures must have genuine business operations and not just be a shell for tax purposes. Buyers also examine potential tax basis step-ups. This is where the tax basis of assets is increased to their fair market value. This can provide future tax benefits. FX exposure is another major risk. Companies can use natural hedges by matching revenues and expenses in the same currency.

Alternatively, financial derivatives like forwards and options can lock in exchange rates. Cash-flow and covenant planning must account for these currency fluctuations. Financing mixes involve offshore and onshore debt, considering availability and costs. Seller notes and earn-outs are used to bridge valuation gaps. Covenants on financing need careful negotiation in a cross-border setting due to varying legal systems. Here are the pros and cons of the financing options mentioned above. 

Execution Timeline and Governance

Successful M&A requires a clear governance structure and a disciplined execution timeline. The process starts by creating a long list of potential targets. Next, parties sign a Non-Disclosure Agreement to ensure confidentiality.

A virtual data room is opened to support the due diligence process. It allows controlled access to documents for different buyer groups.

The virtual data room software also supports Q&A sessions between the buyer and seller to clarify information. The process moves to a binding offer and then to definitive agreements. Regulatory filings, including those with the Competition Commission of India, are completed.

The deal concludes at closing. A RACI model defines roles across corporate development, legal, tax, finance, and integration teams. This model assigns responsibility for each task and ensures everyone understands their part.

A milestone timeline visualizes the entire process. It keeps stakeholders aware of deadlines and progress.

Timeline Graphic: A simple horizontal or vertical timeline showing key phases. Mark milestones like Long-list → NDA → Open Virtual Data Room → Q&A → Binding Offer → Definitive Docs → Filings → Closing

Post-Merger Integration (PMI)

The first 100 days after a merger are critical for long-term success. On day one, it is essential to grant system access to new employees and maintain payroll continuity. Clear communication with employees and customers is also vital. Using virtual data room software during this phase can streamline safe and real-time communication between all concerned parties.

Internal controls should be set up from the start. Aligning culture and leadership is often overlooked but helps retain talent and reduce friction. Harmonizing systems and processes improves operational efficiency.

Key Performance Indicators track progress during the first 90 days. These can include revenue retention to monitor customer loyalty, synergy run-rate to measure cost savings, churn rates to spot customer loss, and talent retention rates to track employee departures.

30/60/90 Plan Outline

• Days 1-30. Focus on Day-1 essentials. Communicate the integration vision and secure key talent. Establish integration teams and define roles.
• Days 31-60. Focus on deeper integration. Start harmonizing systems and processes. Address culture and leadership differences.
• Days 61-90. Focus on optimization. Accelerate synergy realization. Monitor and adjust KPIs based on performance. Strengthen customer relationships.

Risk Map and Mitigations

Cross-border M&A comes with several risks. Being aware of them early helps companies avoid surprises.

Common Pitfalls to Look For

·   Regulatory delays. Approvals can take longer than expected, especially in strict jurisdictions

·   Hidden liabilities. Undisclosed debts, lawsuits, or tax issues may emerge after the deal

·   Culture clash. Differences in work style or management can slow integration

·   Data privacy gaps. Not following local rules can create fines or legal exposure

·   Integration drift. Losing focus during integration can reduce synergies

Tools and levers to reduce risk

·   Escrow accounts to secure funds for potential liabilities

·   Indemnities to protect against known risks

·   Reps & warranties insurance to cover unknown exposures

·   Phased integration to combine operations gradually

·   Data Protection Officer (DPO) review to ensure data privacy compliance

Early warning signals

Look for delays in filings, missing documents, employee resistance, or unclear data practices. Spotting these early allows quick corrective action and keeps the deal on track.

Tools and Next Steps

Successful cross-border M&A requires the right tools to simplify processes and maintain visibility. Virtual data room software provides a secure space to share documents, track access, and support due diligence.

E-signature tools in a virtual data room software speed up approvals, reduce paperwork, and maintain legal compliance across regions. Project trackers in data room solutions let teams manage timelines, assign tasks, and monitor progress to meet deadlines.

Communication playbooks set clear rules for updates, stakeholder messages, and crisis responses, reducing confusion during integration.

Pro Tip: Be careful when choosing from virtual data room providers. Always look for secure vendors with a user-friendly interface and transparent virtual data room pricing system.

Firms should define the next steps for each transaction phase. Here are a few pointers

·   Begin with planning and risk assessment

·   Organize due diligence and finalize agreements

·   Prepare for regulatory filings

·   Follow a phased integration to align operations and culture after the merger

·   Track key performance indicators to ensure expected synergies are achieved

Using these tools and steps together reduces errors and supports faster decision-making. Companies can move from strategy to execution while protecting value.