Despite the global crisis, Latin America became a very attractive place to carry out operations of merger and acquisitionaccording to Global M&A Survey what did you do KPMG. Mexico moved to Brazil in first place as an attractive country to carry out M&A. While, Argentina it was in eighth place, since 44% of those consulted answered that it is attractive and very attractive to make this kind of investment.
Global investors are optimistic about operations in Latin America, 51% expect to carry out four or more operations in the next two years. And 48% of respondents also expect that increase the value of operations.
“M&A opportunities in Latin America are plentiful, and the successful execution of these transactions largely depends on having a deep understanding of local cultures, customs, and regulations that can otherwise catch investors by surprise.” “, says J.P. Trouillot, partner of United Statesleader of Deal Advisory & Strategy for Latin America.
The survey, which examines the M&A landscape in Latin America and the ways in which investors and companies can take advantage of the growing opportunity, was conducted between March and April 2023 among 200 to 400 company executives from 14 countries that have participated in investments in mergers and acquisitions worth more than $50 million in the last five years or who have advised on these types of investments. Among those surveyed were investors from Private capitalof venture capital, business executives and mergers and acquisitions advisors.
How Investors View M&A Deals in Latin America
Four in 5 respondents say their most recent M&A operation in Latin America was a success, the process is not always easy.
In turn, those consulted rated good corporate governance, 63%, and high-quality financial information, 62%, as crucial factors for the success of an operation, but the lack of reliability of the information makes it difficult to determine these factors. The main sectors of interest are technology, financial services, energy, agriculture and manufacturer.
“A shareholder-oriented corporate governance model is what shapes Latin America’s business culture. Although companies are disclosing more information in the region’s main markets, the level of comparability and quality of data remain low. uncertain, and there is an absence of international reporting standards. effective governance processes, such as having an audit committee and maintaining independent members on this committee, promote trust among shareholders and other stakeholders”add Trouillot.
45% of those surveyed believe that M&A opportunities in the region they have never been better. But they are not blind to the risks: 35% say it has never been so risky.
What are the most common reasons for those surveyed to carry out M&A operations in Latin America?
- The opportunity to enter new markets.
- Growth opportunities in specific sectors.
- Opportunities derived from general economic growth.
- The opportunity to diversify risk exposure.
- The quality and value of labor.
What position does Argentina occupy in mergers and acquisitions operations in Latin America?
Argentina ranked 8th Among the preferences of those surveyed, with 44% of the answers affirming that the country is attractive and very attractive to make this kind of investment.
For this reason, Argentina It is positioned far from Mexico and Brazil, who lead the ranking, but also behind countries like Costa Rica, Chile, Colombia, Peru and Uruguay.
“Mergers and acquisitions in Argentina are mainly driven by corporate reorganization processes that protect shareholder value and special situations that opportunistically take advantage of value gaps,” he says. Andrea Oteiza, Lead Partner of Deal Advisory & Strategy at KPMG Argentina.
Source: Ambito
