The pro-market orientation of Javier Milei is generating expectations of a substantial increase in mergers and acquisitions deals in the coming years. A report supports these projections, although it emphasizes that the increase will not be instantaneous.
The promising future of these businesses will be closely linked to the progress that the Government achieves in the regulatory, macroeconomic, fiscal and labor spheres, according ton Juan Procaccinipartner of PwC Argentina and deal leader. Underlines the crucial importance of the legislative agenda to realize these expectations.
Although the number of transactions increased by 6% compared to 2022, the total amount traded decreased by 53%. Nevertheless, Despite the current economic uncertainty, experts project a strong recovery in M&A activity for the coming years.
This optimism is based on the recent recomposition of the stock markets, the expectations of a decrease in inflation levels and interest rates, as well as the prevailing need for many companies to adapt and transform their business models, which constitutes the essence of mergers and acquisitions agreements.
Even though the number of transactions increased by 6% compared to 2022, the total amount traded decreased by 53%. However, despite the current economic uncertainty, experts project a solid recovery in the activity of fusions and acquisitions for the next few years.
This optimism is based on the recent recomposition of the stock markets, the expectations of decrease in inflation levels and interest ratesas well as the prevailing need for many companies to adapt and transform their business models, which constitutes the essence of mergers and acquisitions agreements.
What is the basis of the projection?
Juan Procaccini highlights: “Milei’s administration generates expectations of a strong increase in the flow of mergers and acquisitions agreements for the coming years. We do not anticipate that it will be immediate, but rather gradual, and will depend on the progress that the government achieves in the different fronts on which it is working (regulatory, macroeconomic, fiscal and labor). RLet us remember that investments in mergers and acquisitions are medium-long term, and, above all, predictability is needed“.
Despite the forecast of persistent volatility in the local economy in the short term, which includes high levels of inflation, exchange gap and decrease in activity levelssectors such as Mining, Oil & Gas, Technology and Agribusiness are projected as natural generators of transactions.
These industries, according to Tripier, place more importance on access to capacity, resources and markets than on local economic conditions, and have the potential to grow even further if the Government creates the right conditions.
Given the prospect of a broader and deeper mergers and acquisitions market, and considering that 2024 could be a year of transition, Ignacio Aquino, partner of the consulting firm, suggests that those who are thinking about selling or opening the capital of their companies should start preparing. He highlights that mergers and acquisitions processes are intensive and demanding, and prior preparation increases the chances of success.
Source: Ambito
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