Bogotá — Amid a business landscape marked by high inflation and strong interest rates, the mergers and acquisitions (M&A) market continues to suffer in Latin America, while segments such as venture capital remains subdued.
According to the latest monthly report by TTR Data and Datasite, an estimated total of 1,757 M&A transactions took place win Latin America to July, for an aggregate amount of $45.30 billion, a 20% drop, while the volume of capital invested in deals contracted by 34% compared to the same period in 2022, according to the report.
In July alone, there were a total of 206 M&A deals, among announced and closed, for an aggregate amount of $6.76 billion.
Which countries lead the M&A scene?
By number of transactions, Brazil is the most active market in the region with 1,075 transactions (a decrease of 30%), and capital mobilized for $25.23 billion, down 38% on first-half 2022.
Brazil is followed by Chile with 223 transactions (up 21%) with a combined value of $48.99 billion (down 23%).
Mexico remains in third place in the ranking with 203 transactions (a drop of 23%) and capital mobilized for $10.63 billion (down 9%).
Colombia saw 134 transactions (down 29%) for $2.57 billion in the period, representing a drop of 57%.
Argentina lagged behind with 120 transactions (down 2%) estimated to be valued at $1.56 billion (down 55%).
And Peru accounted for 70 transactions (down 5%) totaling some $3.85 billion, with a significant increase of 84% in the value of mobilized capital.
Business segments with the most deals
The venture capital segment accounted for a total of 515 transactions through July, with an aggregate amount of $2.21 billion, a negative variation of 32% in the number of transactions and a decrease of 67% in their amount, on a year-on-year basis.
Through July, the asset acquisitions segment accounted for 246 transactions for $4.29 billion, an increase of 14% in the number of transactions and a decrease of 66% in their amount compared to the same period in 2022.
A total of 92 private equity transactions for $3.43 billion were recorded, a downward trend in both the number of transactions (-23%) and their amount (-50%).
In the cross-border area, the report highlights “there was investment appetite of Latin American companies abroad, especially in North America and Europe, where 53 and 47 transactions have been carried out, respectively”.
The companies that have carried out the most strategic transactions in Latin America are from North America and Europe, with 264 and 190 deals respectively.
According to a recent survey conducted by LLYC in collaboration with iDeals and M&A Community, the slowing economy, geopolitical uncertainty and capital flow issues impacted business deals, but which could recover as soon as 2024.
“Nearly 50% of respondents believe that the recovery could come in 2024 and that it could be a record year for investment, and the other 50% think it could be brought forward to the third and fourth quarter of this same year. However, all experts agree that the pause in this activity has been serious and the reasons are related to a greater difficulty in accessing financing and its impact on prices,” Alejandra Aljure, director of operations at LLYC Colombia told Bloomberg Línea.
