Crossroads: When Succession Gaps Turn into M&A Opportunities
Understanding the brewing frontier for deal activity in India
"The rise and fall of empires often hinge on one crucial factor: succession."
This timeless truth echoes through history, from the Roman Empire to the Mughal Dynasty, where the strength and survival of a legacy were determined by how leadership was passed on.
In India, family businesses have long held a similar central role, shaping the economy and providing employment. However, like those ancient empires, many of these businesses face a crucial challenge today—succession. The lack of clear leadership transition plans is leaving a void, making once-thriving enterprises vulnerable. As heirs grapple with differences or fail to step up, these family-run businesses are increasingly finding themselves at a crossroads, making them ripe targets for mergers and acquisitions (M&A) and private equity (PE) buyouts.
The question is no longer just about passing the baton; it's about who will step in to carry the legacy forward—and whether external forces will play a role in this transformation.
The Succession Dilemma
In the quiet offices of many Indian manufacturing towns, the signs are subtle but telling—an owner-operator near or above the age of 60 is still signing cheques, and their children reluctant to return from their MBA abroad who are motivated in completely different directions. The machinery runs, orders go out, but the future hangs in limbo.
Succession in family-run businesses isn’t just a leadership question—it’s an emotional, cultural, and strategic crossroad. In India, where family and business often intertwine, the transition is rarely smooth. Loyalty to tradition often collides with the need for professionalization. Aspirations of the next generation may not align with the founder’s vision. And sometimes, there simply isn’t anyone willing—or able—to take the reins.
The numbers back this up. KPMG reports that only 13% of Indian family businesses have a formal succession plan. The remaining majority operate in a fog of “we’ll cross that bridge when we get there.” But when the bridge arrives, it’s often unstable.
Contrast this with the Mahindra Group—one of India’s more prominent success stories in planned succession. Leadership has transitioned methodically over decades, balancing legacy with innovation. But that’s the exception, not the norm. In India’s mid-market segment—companies worth ₹100 crore to ₹1,000 crore—the lack of a clear succession strategy often leads to a slow erosion of decision-making power, strategic paralysis, or outright conflict among heirs.
In a global market that demands agility, this kind of internal deadlock is not just risky—it’s fatal. And increasingly, it is this very vulnerability that opens the door for external intervention, in the form of M&A interest or private equity buyouts.
When the Outsiders Step In
Not too long ago, TCNS Clothing Co. Ltd., the force behind popular brands like W and Aurelia, faced a pivotal moment. As the family-run business grew, questions of succession and scaling loomed large. Here’s a quick rundown of what happened there:
Originally a family-run business.
As it scaled and succession questions emerged, the founding family brought in private equity investment from TA Associates in 2016.
Post-investment:
Professional management was strengthened.
The company implemented ERP systems.
Focus shifted to expanding organized retail and exports.
Eventually, TCNS went public in 2018, and in 2023, Aditya Birla Fashion and Retail Ltd. acquired a controlling stake.
This isn’t an isolated story. It's a growing pattern.
Private equity firms and strategic buyers are increasingly attuned to these quiet succession crises simmering across India’s mid-market. For them, it’s not just about distressed assets—it’s about untapped potential. These businesses often come with loyal customers, cash flow stability, and deep supply chain roots. What they lack is leadership clarity and operational discipline—both fixable.
Firms like ChrysCapital, True North, and Multiples have made a name doing just that: stepping into family-run businesses in flux and professionalizing them without stripping away their DNA. In many cases, the founders stay on as chairpersons or advisors, preserving continuity while freeing the company to scale.
Global analogies help crystallize the playbook. Think of it like what happened with Italy’s mid-sized family-run luxury brands—Prada, Gucci, and Ferragamo—many of which only unlocked global growth once external capital and professional management entered the picture. India, with its vast base of family-led manufacturing, distribution, and B2B businesses, stands at a similar inflection point.
A few architects of this ecosystem
As succession gaps widen across India's mid-market, a quiet ecosystem of investors and advisors has emerged. Private equity firms and boutique investment banks are stepping in—not just with capital, but as architects of transition—helping family businesses navigate one of their most critical turning points.
Here’s a look at some of the key players driving this shift:
The Hidden Alpha in Legacy
For investors, the alpha isn’t just in cost-cutting or financial engineering. It’s in the cultural pivot. The moment when a founder lets go—not out of failure, but foresight. That inflection point creates space for change: better hiring, faster decisions, more ambitious growth.
Yet, this requires a delicate balance. Many families are skeptical of outsiders, protective of their values, and wary of losing control. The best investors don’t just inject capital—they offer stewardship. They co-create a transition roadmap. They understand that in India, the business is often an extension of the founder’s identity.
That’s what makes mid-market succession plays so nuanced—and so valuable.
What Makes It Ripe: When Vulnerability Becomes Opportunity
To the untrained eye, a family business in flux might look like a problem waiting to implode. But to the right investor, it’s a diamond in the dust.
Here’s how it unfolds: A successful family business—say, a 40-year-old engineering components firm in Nashik—is growing sluggish. The founder still insists on signing off every invoice. The children, educated abroad, are disinterested or scattered across careers. Senior staff are loyal but aging. There’s no CFO. No digital systems. No plan B.
For the founder, these are blind spots. For an M&A strategist or PE fund, this is a playbook.
The first opportunity? Governance gaps. A professional board, structured decision-making, and incentive-aligned leadership can turn a directionless ship into a scalable enterprise.
The second? Operational inefficiencies. Many legacy businesses run on goodwill and jugaad. Inject working capital, streamline procurement, and digitize workflows—and margins improve, sometimes dramatically.
The third? Under-leveraged market position. Mid-sized family businesses often have sticky customer relationships but lack the muscle to expand nationally or globally. With capital and the right partnerships, what’s stagnant becomes scalable.
And finally, time—the one asset families run out of faster than they expect. Illness, internal strife, or market shifts force decisions that should’ve been made years ago. For funds with patient capital and a nose for transformation, this limbo creates the perfect entry point.
In the chessboard of Indian family enterprise, these aren't distressed assets—they're unfinished stories. And the right buyer? They come not with swords, but with scripts for Act II.
When the Family Fights Back—and Loses the Legacy
But not every family opens the door. Some bolt it shut.
The dangers of succession failure are not just theoretical—they are written across India's corporate landscape. Amtek Auto, once a powerhouse in auto components manufacturing, collapsed under a combination of leadership failure, overleveraging, and poor succession planning, eventually landing in bankruptcy proceedings. Its group company, Castex Technologies, met a similar fate, crippled by weak governance and strategic missteps. In the education sector, Educomp Solutions, once India’s largest education services provider, saw rapid decline after internal leadership issues, debt-fueled expansion, and lack of strategic clarity post-founder transition. While the industries differ, the pattern is the same: without timely leadership evolution and professional management, even market leaders can crumble—often faster than anyone expects.
This is the tragic irony. Families fear “losing control,” but in trying to protect the business from perceived vultures, they often turn into their own undoing.
Many believe they’ll “figure it out.” That a son will return. That markets will rebound. That legacy alone is a moat. But time is not kind to businesses that stand still.
Sometimes, succession isn’t about passing the torch—it’s about recognizing when to hand it to someone better equipped to carry it forward. And when families fail to see that, their legacy dies not with a bang, but with a whimper—quietly, painfully, and preventably.
Because in the end, it’s not just about ownership. It’s about stewardship. And the greatest honour a founder can give their life’s work… is letting it live on, even if it means letting go.
Crisis as Catalyst
Succession crises are often viewed as threats. But for India’s mid-market family businesses, they can also be catalysts—if handled right. What appears to be dysfunction can become an inflection point. What feels like the end of a legacy can be the beginning of reinvention.
And in that moment, when a founder lets go and the next chapter begins—quietly, often behind closed doors—a new kind of empire is born. One that still carries the family name, but runs on a different engine.
That’s where the real opportunity lies—for the family, for the investor, and for the economy.