What Due Diligence Actually Costs in an Indian M&A Deal
Financial, tax, and legal due diligence together typically run 0.5% to 1.5% of deal value for mid-market transactions, higher as a percentage for smaller deals due to fixed-cost floors.
Due diligence cost in India scales with deal complexity more than deal size, which is why it lands as a higher percentage of transaction value on smaller deals, there's a practical floor below which financial, tax, and legal DD can't be meaningfully compressed regardless of target size. For a typical mid-market deal, combined DD spend (financial plus tax plus legal, run as parallel workstreams) commonly falls in the 0.5% to 1.5% of deal value range.
Tax due diligence tends to be the workstream that surfaces the most deal-relevant findings in India specifically, indirect tax history (GST, and legacy VAT/service tax exposure for older targets), transfer pricing documentation gaps, and withholding tax compliance are common sources of unbudgeted liability that show up in DD rather than in the seller's disclosed financials.
Scoping DD tightly to the actual risk areas for the target's sector and history, rather than running a generic full-scope review, is the main lever for controlling cost without leaving real exposure unchecked.