Last updated: 2026-02-19
Complete Guide to Buying a Business in India (2026)
This guide covers everything you need to know about acquiring a small business in India — from finding opportunities to closing the deal and running your new company.
What you'll learn:
- ✓How to find businesses for sale in India
- ✓Methods to value a small business accurately
- ✓Due diligence checklist to avoid costly mistakes
- ✓Financing options for Indian acquisitions
- ✓Legal requirements and documentation
- ✓Post-acquisition transition strategies
Key Insight
India has over 63 million SMBs but fewer than 20 PE firms focused on small business acquisitions. Businesses typically sell for 2-4x annual profit — significantly lower than the 4-6x multiples common in the US and Europe.
How much does it cost to buy a small business?
Small businesses in India typically sell for 2-4x annual profit (Seller's Discretionary Earnings), with prices ranging from ₹10 lakh for micro-businesses to ₹10+ crore for established mid-size companies.
| Business Profit (Annual) | Typical Multiple | Estimated Price Range |
|---|---|---|
| ₹5 lakh | 2-3x | ₹10-15 lakh |
| ₹10 lakh | 2-3x | ₹20-30 lakh |
| ₹25 lakh | 2.5-3.5x | ₹62-87 lakh |
| ₹50 lakh | 3-4x | ₹1.5-2 crore |
| ₹1 crore | 3-5x | ₹3-5 crore |
How to Buy a Business in India
The complete step-by-step process from search to close.
Why Buy Instead of Start?
When buying makes more sense than starting from scratch.
How Much Money Do You Need?
Capital requirements, deal sizes, and structuring options.
Where to Find Businesses for Sale
Platforms, brokers, and off-market deal sourcing.
How to Value a Small Business
Valuation methods, multiples, and pricing factors.
Due Diligence Checklist
What to verify before buying any business.
How to Negotiate the Deal
Negotiation tactics, deal structure, and terms.
Financing Your Acquisition
Loans, seller financing, and creative funding.
Legal Requirements
Documentation, compliance, and transfer process.
First 90 Days After Buying
Transition playbook for new business owners.
Where can you find businesses for sale?
The primary channels for finding businesses for sale in India include online marketplaces, business brokers, CA networks, and direct outreach to business owners.
Online Marketplaces
- • SMERGERS — India's largest SME platform
- • IndiaMart Business Transfer
- • BizBuySell India
Professional Networks
- • Business brokers and M&A advisors
- • Chartered Accountant networks
- • Industry associations
Frequently Asked Questions
What is the minimum investment needed to buy a business in India?
You can acquire small businesses in India starting from ₹10-15 lakh, though ₹25-50 lakh opens up significantly better opportunities with more stable cash flows. Micro-businesses like small retail shops, service franchises, or online businesses occasionally list for under ₹10 lakh, but these often have minimal profitability or high owner dependency. The sweet spot for first-time buyers is typically ₹30-75 lakh, where you find businesses with ₹10-25 lakh annual profits, established customer bases, and some operational systems. Remember to budget beyond the purchase price—you'll need working capital (3-6 months of expenses) and transaction costs (legal, accounting, due diligence) adding 5-10% to total investment.
Is it better to buy an existing business or start from scratch in India?
For most entrepreneurs, buying an existing business offers better risk-adjusted returns than starting from scratch. Acquisitions provide immediate cash flow, proven products/services, and established customer relationships—eliminating the 2-3 year startup phase where most businesses fail. However, starting fresh makes sense in certain situations: when you have a truly innovative idea, when industry knowledge lets you improve significantly on existing models, or when acquisition prices don't justify the value received. The decision ultimately depends on your risk tolerance, capital availability, and whether you're passionate about building something new versus optimizing something existing.
What percentage of businesses for sale in India are actually profitable?
Approximately 40-50% of businesses listed for sale in India are genuinely profitable, though many sellers overstate earnings. This is why due diligence is non-negotiable. Businesses are sold for many reasons beyond profitability: owner retirement, health issues, family disputes, relocation, partnership dissolution, or desire to pursue other opportunities. Truly distressed businesses (losses, declining revenue) often sell at asset value or below. The key is verifying reported profits through bank statements, tax returns, and GST filings rather than relying on seller-provided financials. A quality CA can help normalize financials and identify whether stated profits are real and sustainable.
How do I negotiate the price when buying a business?
Effective negotiation starts with thorough valuation and due diligence—knowing the business's true worth gives you negotiating power. Begin by understanding the seller's motivation and timeline. A retiring owner seeking a smooth transition has different priorities than someone facing financial pressure. Use findings from due diligence to justify price adjustments: "The customer concentration is higher than represented, which increases risk..." Structure the deal to address both parties' concerns—consider earnouts, seller financing, or consulting agreements that share risk. Most importantly, be willing to walk away. The best deals come when you're negotiating from a position where you don't need this specific deal.
What happens if I discover problems after buying the business?
Your protection against post-closing problems comes from the purchase agreement's representations, warranties, and indemnification clauses. These legal protections allow you to seek compensation from the seller if they misrepresented material facts. Common protections include warranties about accuracy of financial statements, absence of undisclosed liabilities, compliance with laws, and validity of customer contracts. Indemnification clauses require the seller to compensate you for losses arising from breaches. However, collecting is only possible if the seller has assets and the purchase agreement was properly drafted. This is why engaging an experienced M&A lawyer is essential—a few lakhs in legal fees can save crores in potential losses.
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