mergers and acquisitions in Latin America in 2023 – Sectors – Economy

For a long time, the invest in the region it was something that would be cautiously missed due to the political, social and economic complexities of its key markets; however, in a context of global depression and disturbances in other large regions, Latin America stands out as one of the most favorable options at the moment.

This is established by a recent study by the firm Kpmg. It reveals that 45 percent of investors believe that the opportunity to make mergers and acquisitions (M&A) in the region has never been so favorable. Of course, they affirm that there are risks ahead but that they are worth assuming.

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«When investors start to think about where to invest and develop new operations, Latin America becomes a very interesting territory,» he says. Daniel Kerner, executive director for Latin America of the risk consultancy Eurasia Group.

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most attractive countries

while traditionally Brazil has been the most attractive country for M&A in the region due to the size and stability of its market, its natural resources and its strategic location, the report reveals that 79 percent of companies consider it more attractive to invest in Mexico and that only 69 percent in the Brazilian country.

It is followed by Costa Rica, where 54 percent of the companies consider it attractive to do business: Chile, with 53 percent of the votes; and Colombia is in fifth position, with 51 percent.

On the contrary, at the bottom of the list are Venezuela (26 percent), Bolivia (30 percent) and Nicaragua (33 percent).

The research was carried out between March and April 2023. kpmg surveyed 400 leaders who have used in investments of more than $50 million in the last five years or who have advised on such activities in any term of the same period.

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List of the most attractive countries to do M&A in the next two years:

1. Mexico
2. brazil
3. Costa Rica
4.Chile
5.Colombia
6. Peru
7.Uruguay
8.Argentina
9. Panama
10.Honduras
11. Guyana
12. Republic
13. Dominican
14. El Salvador
15.Guatemala
16.Nicaragua
17. Bolivia
18.Venezuela

All operations would increase

The report entitled ‘In an uncertain world, M&A increases in Latin America’ They anticipate an increase in operations of all kinds in the region.

In 2022, 390 M&As were carried out in Brazil, followed by Mexico and Colombia with 104 and 66, respectively. The idea is to exceed these figures.

The increases are expected both in the purchase by private equity funds (60 percent), as well as sales by private equity funds (57 percent) and sales by corporate carve-outs (56 percent).

Also in purchasing agreements with outside the region (56 percent), border agreements (54 percent) and acquisitions (50 percent).

“M&A opportunities in Latin America are plentiful and the successful execution of these transactions is highly dependent on having a thorough understanding of local cultures, customs and regulations that can otherwise catch investors by surprise.” , said JP Trouillot, partner at KPMG United States, leader of Deal Advisory & Strategy for Latin America.

most attractive sectors

The report also indicates that the sectors in which the most operations will be generated are: technology, financial services and energy. This is directly related to the digital advances that countries have had and biodiversity and the ability to generate clean energy. Then there is agriculture and manufacturing.

And when asked why they do business in Latin America, most respond that to enter new markets, for growth opportunities in specific sectors, to take advantage of the general economic benefits and with the intention of diversifying risk exposure. .

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Risks when investing

Around three quarters of the companies and investors surveyed (73 percent) consider that it is a region that represents risks to do business. However, considering that it is worth assuming them.

“The political outlook in most of the region is delicate: there are weak governments and high levels of public discontent; governments are struggling to make reforms, maintain economic stability and boost growth. This is all taking place in a very difficult global environment, so there is caution on the part of investors,” says Kerner.

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Respondents are also suspicious. 40 percent of them believe that the second political «pink tide» in the region will make it less attractive for investment and 44 percent say that serious macroeconomic risks, such as recession and high inflation they make their companies prefer other regions.

“Despite the challenges, there is beginning to be a lot of interest from foreign investors to enter Latin America,” says Kerner. «Because? In different countries there are great challenges and risks that must be required. Russia is completely out of the game. So when you start to think about where people can really put their money, where they can grow and do new business, Latin America becomes very interesting.”