India’s PE market turns tougher as buyers seek more protection: Khaitan & Co Survey

Mumbai: India’s private equity market is becoming more demanding of sellers. Buyers are asking for more protection on price, business performance and potential problems that may emerge after a deal closes.

That is one of the clearest shifts highlighted in a new Khaitan & Co study, shared exclusively with ET, covering 265 PE and VC transactions in 2025.

The change is most visible in how purchase prices are settled. Deals with price-adjustment clauses rose to 24% in 2025 from 13% a year earlier. Among these deals, post-closing adjustments accounted for 74%, up from 53%. Buyers are increasingly leaving room to revisit the final price once the actual financial numbers are known.


Shantanu Gupta, partner at Khaitan & Co, said the PE ecosystem is showing greater institutional maturity, with more structured processes, sharper negotiation dynamics and closer alignment with global deal standards, even amid global uncertainty.

“During the year, the Indian rupee weakened to historic lows, which, alongside global macroeconomic volatility, introduced valuation sensitivities and greater selectivity among foreign investors,” said Gupta. “Despite these headwinds, the private equity (PE) industry delivered one of its strongest years on record – underscoring the resilience of domestic growth drivers and sustained long-term investor conviction in India,” he added.

Sellers are also being asked to set aside part of the money. Holdbacks rose sharply to 19% of deals from 3% in 2024, while escrow arrangements increased to 8% from 2%. These mechanisms give buyers a pool of money to fall back on if claims or other problems arise after closing.

The period between signing and closing is also coming under tighter buyer control. Deals with interim operating covenants rose to 88% from 63%. These clauses restrict how sellers can run the business before the transaction is completed.

Rohan Shrivastava, partner at Khaitan & Co, said the past twelve months have seen a notable wave of liberalisation measures that are collectively reshaping India’s investment and deal-making landscape.

“Auction processes are becoming the preferred route for exits, as sellers increasingly seek to maximise value through wider bidder participation,” said Shrivastava. “This has directly translated into a growing appetite for warranty and indemnity insurance, which allows bidders to make sharper bids with greater contractual protection, while giving sellers a cleaner exit through no-recourse structures,” he added.

Restrictions on sellers themselves have widened. Non-compete clauses appeared in 80% of deals in 2025, compared with 57% in 2024. Non-solicit clauses rose to 77% from 54%. Longer non-compete periods are also becoming more common.

Sellers, however, have gained in disclosure. Updated disclosure letters appeared in 73% of deals, up from 52%. But buyers increasingly secured the right to walk away if new disclosures revealed problems. That right was present in 77% of such deals, compared with 19% in 2024.

The changes are happening alongside a broader shift in where PE money is going. Technology accounted for 14% of deals in 2025, down from 21% in 2024, while manufacturing rose to 11% from 8%. Pharma, retail, real estate, electric vehicles, aerospace and defence also attracted capital.

The broader picture is of a more mature market, where buyers and sellers are spending more time deciding who carries the risk when things don’t go according to plan.

And increasingly, buyers are making sure that risk doesn’t sit entirely with them.