After a year marked by political uncertainty, inflation and high interest rates, Latin American entrepreneurs are setting their sights on 2024, a year that presents the initial challenge of a slowdown in the global economy and the headwinds that this entails for business.

Mergers and acquisitions (M&A) activity faltered this year, registering a total of 2,854 transactions to November, which represents a decrease of 14.47% compared to the same period of 2022, with an amount of 67,009 million dollars, indicating a decrease of 26.04%, according to data provided by the specialized transaction tracking platform, TTR Data.

The institutional spokesperson of TTR Data, Marcela Chacón, commented in an interview with Bloomberg Línea that “so far as 2023, it is clear that the global M&A market has adopted a cautious and selective stance in its investments. Despite these challenges, investors are still optimistic about the investment landscape in Latin America.”

Despite the current social and political challenges, the director of Mergers and Acquisitions at the law firm Gómez-Pinzón, Lina Uribe, said that “investors have shown cunning in adapting to the new circumstances.”

Jaime Trujillo, partner in Mergers and Acquisitions at the international law firm Baker McKenzie, told Bloomberg Línea that although 2023 was a year marked by a decrease in mergers and acquisitions activity, relevant transactions were carried out, such as those involving the companies of GEA (Nutresa, Sura and Argos), Almacenes Éxito and Genfar in Colombia.

Trujillo stressed that in 2024, the completion of the acquisition of Nutresa by the Gilinski Group, as well as potential transactions related to GEA companies, should be closely monitored. He also noted that the exploration of alliances and other measures by Grupo Sura and Grupo Argos aroused the interest of many investors.

For next year, Brazil, Mexico and Argentina are expected to boost M&A activity in the region, while Colombia could experience the effects of investments from the same region, especially Brazil.

Jaime Trujillo stressed that “big investors did not have Latin America among their priorities” due to factors such as the fragility of the economic recovery, populist policies and the uncertainty generated by changes of government and elections in some countries.

Economic growth in Brazil could not only increase M&A activity in the country, but also lead Brazilian companies to rethink the region as an investment destination.

As for Mexico, Mexican investment is expected to remain focused on its trade relationship with North America, being relatively marginal in the rest of Latin America. In Argentina, recent announcements by President Javier Milei suggest an increase in local transactional activity through privatizations, Trujillo said.

Lina Uribe de Gómez-Pinzón noted that in Colombia, entrepreneurs will face new attempts at reforms by the government, such as labor reform, pension reform and persistent health reform. However, it is confident that the institutions and the opposition will be able to react in order to maintain some stability in the Colombian market.

K. Tovar

Source: Bancaynegocios

(Reference image source: Towfiqu barbhuiya, Unsplash)

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