Redefining operational due diligence in India’s evolving deal landscape

In a market where execution now drives returns, ODD has moved from validating risk to underwriting value creation.

In brief

• India’s M&A and private equity deal landscape is shifting toward mid‑market, control‑oriented deals, where execution certainty now drives investor conviction.
• Operational due diligence is now a forward‑looking check on scalability and readiness, shaping valuation and post‑close priorities.
• AI is speeding up diligence and sharpening insights, turning ODD into a tool for continuous value creation across the deal lifecycle.

India’s private equity and M&A landscape is undergoing a profound shift. Supported by a relatively stable macroeconomic environment, a long-term trend of GDP growth, and sustained domestic investment momentum, deal activity has remained resilient despite global uncertainty. Beneath this resilience, however, the nature of deals — themselves — is changing. India’s transaction landscape is increasingly skewed toward mid-market, control-oriented investments, where execution certainty — rather than reliance on financial engineering alone — has become central to investment conviction.

This shift has fundamentally reshaped the role of operational due diligence (ODD) in India. What was once a largely confirmatory, risk-focused exercise has evolved into a forward-looking, strategic assessment of execution readiness and value-creation potential. Today, ODD sits at the intersection of the investment thesis and operational reality, serving as a critical bridge between intent at entry and outcomes at exit.

Why operational due diligence matters more in India?

India’s mid-market presents a unique set of challenges and opportunities. Businesses often operate in fast-growing but operationally fragmented environments, with founder-led structures, evolving governance and uneven scalability. As competition for quality assets intensifies, differentiation at entry has become increasingly difficult, particularly for control deals in which investors assume direct responsibility for execution.

In this context, execution certainty has emerged as a core driver of investment conviction. Investors are no longer satisfied with validating historical performance or identifying downside risks in isolation. Instead, they are asking sharper questions: Is the organization capable of delivering the on-investment thesis? Are operating models scalable? Are cost, capex and working capital assumptions achievable? Importantly, what needs to change on Day 1 to unlock value?

Operational due diligence has become the mechanism through which these questions are answered. Reflecting this shift, nearly 90% of private equity professionals report undertaking ODD on more than one-quarter of their deals, underscoring their growing importance in underwriting decisions.

From confirmatory review to value creation blueprint

As control-oriented and execution-led investments become more prevalent, investors are increasingly explicit about value creation at the point of entry. Value creation diligence has evolved into a holistic, cross-functional assessment spanning operations, organization, technology, supply chains and commercial execution. Rather than only highlighting risks, modern ODD engagements identify actionable value levers and assess the feasibility, timing and sequencing of their delivery.

These insights are now directly influencing valuation, pricing and Investment Committee discussions. ODD findings inform not only whether to invest but also how much to pay, where to focus management attention post-close, and which initiatives can realistically drive returns within the hold period. In effect, ODD has become an early blueprint for Day 1 priorities and post-close value delivery roadmaps.

Importantly, the scope of ODD increasingly spans the entire deal lifecycle — from pre-deal diligence through integration, performance improvement and exit readiness. By embedding execution thinking early, investors are better positioned to translate investment theses into credible equity stories at exit.

ODD as a differentiator at entry

In competitive buyout environments, operational diligence has emerged as a critical differentiator. Investors who can demonstrate a clear, executable value-creation agenda at entry are better positioned to underwrite with confidence, move faster and engage more constructively with management teams.

Execution-led deals are reshaping how operational risks are assessed. The focus has shifted from identifying individual issues to understanding systemic constraints on growth and value realization. Control, capability and conviction are redefining both deal structures and the nature of operational diligence in India.

The future of operational diligence with AI

Looking ahead, the role of AI in operational due diligence is poised to further evolve, making it faster, deeper and forward-looking. AI-enabled tools allow the rapid ingestion and synthesis of large volumes of operational data, including data rooms, SOPs, KPIs, contracts and external signals. GenAI can identify value levers, size opportunities, and outline execution timelines in days rather than weeks, significantly compressing diligence timelines.

AI also enables stronger hypothesis-driven insights. By scanning earnings transcripts, patents, filings and operational disclosures, AI can construct dynamic peer sets and identify comparables that traditional approaches may overlook — often redefining benchmarks for performance and value creation.

Perhaps most importantly, AI allows for broader coverage with fewer blind spots. Full-population-based analysis across procurement, registers and ledger accounts reduces reliance on selective sampling, thereby increasing confidence in findings and conclusions.

Over time, diligence teams are expected to increasingly train AI models on proprietary datasets —drawing on past deal outcomes, synergy playbooks, KPI frameworks, and value creation methodologies. These reusable diagnostics are set to not only enhance diligence quality but also support continuous value identification and realization post-close.

From diligence to continuous value creation

As AI becomes central to value creation across the deal lifecycle, the role of ODD is set to expand. Value levers identified during diligence form the foundation for embedding AI and agentic workflows within portfolio companies, enabling continuous performance monitoring, the dynamic refresh of value-creation plans and faster course correction.

In India’s evolving deal environment, operational diligence is no longer optional, nor is it backward-looking. It is a strategic capability — one that converts conviction into execution, and execution into sustained value.

Summary

India’s private equity and M&A market is reshaping operational due diligence (ODD). With more mid‑market, control-focused deals, investors now look for execution certainty rather than only financial checks. ODD has shifted from risk validation to assessing scalability, operational readiness and value creation. It influences valuation, pricing and post-close planning. Faster data analysis is making diligence deeper and more predictive, turning ODD into a driver of ongoing value creation across the deal cycle.