Dealmaker Q&A

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TTR DealMaker Q&A with Bronstein Zilberberg Advogados Founding Partner Sergio Bronstein

Sergio Bronstein – Bronstein Zilberberg Advogados

Sergio Bronstein is a founding partner of the firm and co-head of its M&A and Venture Capital practices. Sergio is a senior and well-seasoned M&A lawyer, recognized as one of the most active and experienced Brazilian dealmakers in the past five Years.
His clients include companies from a full array of sectors, including technology companies, VC, PE funds and CVCs

TTR: What’s your outlook for the M&A market in 2021?

S.B.: The M&A market in 2021 has been booming and the number and volume of transactions skyrocketed in the past year amid the pandemic and the need for digital transformation for all companies around the globe. We believe the pace will continue throughout the 3rd and 4th quarters of this year and we will not be surprised to see an increase in the number of M&A deals led by growth companies.

TTR: Foreign acquisitions of technology and Internet companies in Brazil have increased 134% in 2021. What will be the main drivers of consolidation in these segments over the course of the year?

S.B.: The main drivers of consolidation will remain in the fintech, online retail and proptech segments. Agtech and healtech are also very attractive due to the large room for improvement and digital transformation in these fields. Adding to this perfect storm scenario are the excess cash, the Real depreciation, newly funded investment vehicles and the continental size of the Brazilian market.

TTR: What does the dissemination of fintech platforms imply for access to the capital market in Brazil in the short and medium term?

S.B.: The dissemination of fintech platforms certainly contributes to a more client driven approach in the financial industry, thus enabling better solutions, credit alternatives and lower fees. The advantages are not simply related to the access to capital markets but to a broader base of financial products and a larger array of products made available to the general public. 

TTR: What would be another three sectors that could offer the greatest opportunities in Brazil for international investors in 2021 and why?

S.B.: Marketplaces, software companies and logistics are key sectors which will remain attracting attention of foreign investors. All three combine digital transformation with new habits fast-tracked during Covid-19 and also represent an immense market opportunity for better services and value creation.

TTR: What will be the main challenges for Bronstein Zilberberg Advogados in its M&A advisory work in Brazil in 2021?

S.B.: The firm was established 3 months ago and is a true digital native firm with all 50+ members still working remotely due to the pandemic. Having assisted clients in over 30 deals during this period, we realized that working remotely did not impact our performance. Nevertheless, the entire team is looking forward to meeting face to face and being able to work together and interact at the same premises. Perhaps for the first time in history, lawyers are eager to have more face to face interactions rather than spending their time at home.

Portuguese version

Sergio Bronstein – Bronstein Zilberberg Advogados

Sergio Bronstein é sócio fundador do escritório e co-lidera as práticas de M&A e Venture Capital. Sergio é um advogado experiente em operações de M&A, sendo reconhecido como um dos mais ativos e determinados dealmakers nos últimos cinco anos.
Sua gama de clientes combina os mais variados setores, incluindo empresas de tecnologia, fundos de Venture Capital, Private Equity e ainda alguns fundos de Corporate Venture Capital.

TTR: Qual é a sua perspectiva para o mercado de fusões e aquisições em 2021?

S.B.: O mercado de M&A em 2021 está muito prospero e o número e volume de operações explodiu no último ano em meio a pandemia e a necessidade de transformação digital. de todas as empresas ao redor do mundo. Acreditamos que o 3o e 4o trimestres deste ano manterão o ritmo visto e não nos surpreenderemos se houver um número ainda maior de transações de M&A liderados por empresas de alto crescimento.

TTR: As aquisições por compradores estrangeiros de empresas de tecnologia e Internet no Brasil aumentaram 134% em 2021. Quais serão os principais vetores de consolidação desses segmentos ao longo do ano?

S.B.: Os maiores vetores de consolidação continuarão sendo no segmento de fintechs, varejo online e proptechs. As agtechs e healthtechs continuarão sendo muito atrativas devido ao grande espaço para melhorias nessas áreas e a transformação digital verificada nestes segmentos. Soma-se a esse cenário de tempestade perfeita para investimentos o excesso de dinheiro disponível no mundo, a desvalorização do Real, novos fundos capitalizados e o tamanho continental de um país como o Brasil.

TTR: O que significa a disseminação das plataformas fintech para o acesso ao mercado de ações no Brasil no curto e médio prazo?

S.B.: A disseminação das plataformas fintech certamente contribui para uma indústria financeira mais focada ao cliente, permitindo desta forma melhores soluções, mais alternativas de crédito e taxas menores. As vantagens não são simplesmente relacionadas a acesso ao mercado de capitais, mas fundamentalmente a uma base maior de produtos financeiros e de uma gama maior de produtos destinadas ao público em geral.

TTR: Quais seriam os outros três setores que poderiam oferecer as maiores oportunidades no Brasil para investidores internacionais em 2021 e por quê?

S.B.: Marketplaces, desenvolvedores de software e empresas de logística serão setores chave que permanecerão atraindo a atenção de investidores estrangeiros. Todos os três combinam o tema da transformação digital aliada a novos hábitos digitais acelerados durante a pandemia, representando oportunidades enormes de mercado para melhorias nestes serviços e áreas e criação de valor.

TTR: Quais serão os principais desafios da operação de M&A no Brasil durante 2021 para o Bronstein Zilberberg Advogados?

S.B.: O escritório nasceu virtualmente há 3 meses com uma marca nativa verdadeiramente digital e com todos os seus mais de 50 colaboradores trabalhando remotamente. Este tem sido um grande desafio desde o 1o dia de nossa história e todo o time aguarda ansiosamente para se encontrar presencialmente e continuar nossa jornada num mesmo lugar físico. Creio que será a primeira vez na história moderna da advocacia que advogados estão ansiosos para passar mais tempo no escritório e não em suas casas.

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TTR DealMaker Q&A with Cescon Barrieu partner Daniel Laudisio

Daniel Laudisio – Cescon Barrieu

Daniel Laudisio is a partner of the Banking and Finance, Capital Markets, Mergers and Acquisitions, Private Equity, Corporate Law and Governance, and ESG & Impact practices of Cescon Barrieu Advogados. He represents banks and other financial institutions, private equity firms, multinationals, private and public companies and other investors in a wide range of transactions including mergers, acquisitions, asset sales, joint ventures, equity and debt offerings and structured finance transactions in several different industries. His ESG & Impact practice involves sustainable finance matters. 

He holds a Bachelor of Laws degree (LL.B.) from Pontifícia Universidade Católica de São Paulo (PUC-SP) and Master of Laws degree (LL.M.) from Columbia University School of Law and was an international associate at a major New York law firm.

He is consistently recognized among the most prominent Brazilian lawyers in capital markets and finance by “Chambers and Partners”, “International Financial Law Review – IFLR” and “The Legal 500”.

TTR: How have historically low interest rates impacted the appetite for fixed income products in Brazil over the past 12 months, and what has this meant for your practice? 

D. L.: The low interest rates that we recently experienced resulted in a substantial increase in ECM transactions. It also presented liability management opportunities, particular for frequent issuers. 

Brazilian retail investors were mostly used to high returns deriving from fixed income investments and reaping the benefits from traditionally high interest rates. They would sit on fixed income assets and enjoy acceptable returns. 

A new local environment where lower interest rates began to affect returns forced the hand of retail investors to look for other investment opportunities with higher return rates. At the same time, Brazilian retail investors have increasingly become more familiar with the ideas of financial planning and investment through asset managers and broker dealers, as opposed to traditional investment using large commercial banks with whom they have their checking accounts. The increased number of independent financial planners, broker dealers and asset managers, coupled with the public pension reform that was recently approved also played a hand in it. 

TTR: What has buoyed the fixed income market over the past 18 months and how did ECM volatility impact issuances in Brazil? 

D. L.: While low interest rates afforded issuers with liability management opportunities and resulted in a very large number of ECM transactions, we also saw the Covid-19 pandemic result in an increase in distressed and high-yield transactions for issuers in industries that were most affected by the Covid-19 pandemic, such as transportation and entertainment. 

The ECM market has been extremely volatile, though. Notwithstanding the large number of recent IPOs, an even larger number of potential IPOs failed to price or failed to meet the valuation that issuers and selling shareholders were expecting. A large number of IPOs also priced close to the bottom of the price range, while other issuers experienced a significant share price increase in the first days of trading, perhaps indicating a higher than usual discount by institutional investors that participated in the bookbuilding. 

TTR: To what extent have issuances been driven by a pressing need for cash, versus opportunistic financial padding or share buybacks, versus more typical corporate financial management? 

D. L.: The extent that a particular issuer has been affected by the Covid-19 pandemic has been a determining factor. Issuers that were mostly affected had to tap capital markets to increase liquidity positions while issuers that either were not materially affected or actually benefited from opportunities created by the pandemic accessed capital markets for liability management and to fund opportunistic acquisitions or other investments. 

TTR: How has the focus on ESG translated into practical benefits for issuers that have taken a proactive approach to ESG matters? 

D. L.: The focus on ESG and sustainable finance has clearly presented issuers with the opportunity of raising capital at a lower cost. Green bonds attract the interest of funds that can only invest in companies or projects that have been certified as “green”. We have seen transactions on which interest rates could be reduced by as much as 10 basis points to the extent that the issuer obtained a green certification. 

TTR: What is your forecast for the fixed income market in Brazil this year, and which sectors will be most represented amongst issuers? 

D. L.: On DCM, to the extent that the privatization and divestment program of state-owned companies, of the Federal Government and of certain State Governments continue, a significant number of transactions that are infrastructure-related is expected, given BNDES’ reduced financing role in the past two years. Liability management is also expected to continue. 

Healthcare and health-related companies, fintechs and other tech companies tend to continue to be stars of the ECM market given the effects of the Covid-19 pandemic and the changes to consumer behavior deriving therefrom.

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TTR DealMaker Q&A with Demarest Advogados Partner José Setti Diaz

José Setti Diaz – Demarest Advogados

Partner of the Demarest’s Mergers and Acquisitions and International and Customs Trade areas, José Setti Diaz holds a master’s degree in Law from USP’s Faculty of Law. Among his main clients are the Harvard University fund, the Private Equity fund Vinci Partners and important domestic and multinational companies operating in the agribusiness, auto parts, forestry, paper and pulp, chemical and retail sectors. José Diaz is also the Chief Financial Officer of CESA, a member of the International Chamber of Commerce (ICC), a member of the Board of Directors of Britcham and a member of the panel of Brazilian panelists for the WTO.

TTR: In 4Q20, M&A volume in Brazil returned to levels not seen since before the restrictions imposed in March 2020  but deal volume has decreased again in the first two months of 2021. What’s your outlook for the M&A market in 2021 given these swings?

J.S.D.: 2021 looks very promising for the M&A market, still drawing heavily on consolidations and spin-offs in sectors affected by the pandemic and the rapid rise of technology companies and other sectors that are at an advantage due to the new work format. The first two months of 2021 were marked by the advancement of the second wave of COVID-19 in Brazil which, together with hiccups in the global political and economic environment, were responsible for the downward trend, but certainly this behavior should not be expected to remain as such – particularly in light of the equities market.

TTR: Foreign acquisitions of technology and Internet companies in Brazil have increased 240% in 2021. What will be the main drivers of consolidation in these segments over the course of the year?

J.S.D.: We expect that the most susceptible markets are in line with global trends, including fintechs, edtechs, collaboration platforms, healthtechs, robotic delivery and 5G-relate  (smart cities, etc.).

TTR: What does the dissemination of fintech platforms imply for access to the capital market in Brazil in the short and medium term?

J.S.D.: The fintech sector in Brazil is booming, with exponential growth in the number of users resulting in pushes for the implementation of new policies by regulators, such as open banking. This outlook is borne out by the fact that fintech business models have been consistently incorporated by large financial institutions, with large banks investing in digitization to become more competitive.

The increase and facilitation of access generated by fintechs, added to the prospect of maintaining low interest rates for the economy, has drawn a wide variety of individuals to the stock exchange in Brazil and this movement can be seen in a macro scope. In the short and medium term, we can expect that this trend will continue and that the demonstration of stability by many of these platforms will bring more resources to the variable income profile.

TTR: What would be another two sectors that could offer the greatest opportunities in Brazil for international investors in 2021 and why?

J.S.D.: Health, agribusiness, infrastructure and logistics will be the sectors that should project the best level of opportunities in Brazil for 2021. Consultancies and specialized companies are already predicting that it will be in these sectors where the greatest number of job openings will occur in 2021.

The pandemic presented urgent needs in these 3 areas mentioned. Business professionals and entrepreneurs needed swiftly to enter the digital transformation with an urgent adaptation to the new work system and heavy investments in logistics and customer relations. Against this backdrop, 2021 will be a year of many opportunities for mergers and acquisitions of companies in Brazil, both for domestic and foreign companies in these sectors.

One of the reasons for such a forecast can be the favorable interest rate; the increase in investments on the Stock Exchange is stimulating the process of going public (IPOs), providing greater ease of funding and liquidity for the purchase of companies, in order to increase the competitive advantage of the business and eliminate, in some cases, competitors. Another reason for this is the current exchange rate, added to the low prices of Brazilian companies that seek to survive the crisis – making the acquisition opportunities of these targets even more attractive and cheap for foreign investment.

TTR: What will be the main challenges for Demarest Advogados in its M&A advisory work in Brazil in 2021?

J.S.D.: 2020 was a year full of challenges and learning in M&A operations as a result of the Covid-19 pandemic. The ultimate goal of companies was to survive. During the pandemic, several M&A operations remained suspended, resuming gradually from the second half of the year, both as a solution for some companies to maintain their operations, as well as for other well capitalized companies to take advantage of the acquisition opportunities and low prices, expanding their lines of business and increasing their market shares.

The learning curves in M&A projects at the firm during this pandemic have enabled us to overcome many challenges and find innovative solutions, even incorporating some as part of our “new normal”. An example of this is remote closing without any physical presence in M&A operations.

Thinking to 2021 and continuing to envisage a Selic rate at the level of 2% per year, such scenario will allow many companies to obtain good financing conditions, either due to the favorable interest rate or due to the ease in raising funds and liquidity that the market is offering. In this context, it is our understanding at Demarest that the challenges will be associated mainly with large-scale operations resulting from privatizations, from the consolidation of the market in companies that are already listed on the stock exchange and have a high level of governance, in addition to the great legal, tax and regulatory challenges that our market already faces. To name a few: (i) expectations of political reforms favorable to the business environment, (ii) democratic consolidation, among others.

Portuguese version

José Setti Diaz – Demarest Advogados

Sócio das áreas de Fusões e Aquisições e Comércio Internacional e Aduaneiro do Demarest, José Setti Diaz é mestre em Direito pela Faculdade de Direito da USP. Dentre seus principais clientes estão o fundo da Universidade de Harvard, o fundo de Private Equity Vinci Partners e importantes empresas nacionais e multinacionais com atuação nos setores de agronegócios, autopeças, florestal, papel e celulose, químico e varejo. José Diaz também é Diretor Financeiro Administrativo do CESA, membro do International Chamber of Commerce – Commission on Trade and Investment Policy (ICC), membro do Conselho de Administração da Britcham e faz parte da lista de painelistas brasileiros para a OMC.

TTR: No 4T20, o número de operações de M&A no Brasil ultrapassou os valores trimestrais anteriores às restrições impostas em março de 2020, mas a tendência diminuiu nos primeiros dois meses de 2021. Que perspectiva poderíamos ter para 2021 com isso comportamento?

J.S.D.: O ano de 2021 parece muito promissor para o mercado de M&A, ainda se valendo fortemente de consolidações e spin-offs em setores afetados pela pandemia e a rápida ascensão de empresas de tecnologia e outros setores privilegiados pelo novo formato de trabalho. Os primeiros dois meses de 2021 foram marcados pelo avanço da segunda onda de COVID19 no Brasil, o que juntamente com soluços na conjuntura política e econômica global, foram responsáveis pela tendência reduzida, mas certamente esse comportamento não deve se manter – inclusive á luz do mercado de equities.

TTR: As aquisições por compradores estrangeiros de empresas de tecnologia e Internet no Brasil aumentaram 240% em 2021. Quais serão os principais vetores de consolidação desses segmentos ao longo do ano?

J.S.D.: Esperamos que os mercados mais suscetiveis estejam em linha com tendências globais, entre eles fintechs, edtechs, collaboration platforms, healthtechs, robotic delivery and 5G related (smart cities, etc.).

TTR: O que significa a disseminação das plataformas fintech para o acesso ao mercado de ações no Brasil no curto e médio prazo?

J.S.D.: O setor de fintechs no Brasil está extremamente aquecido, com crescimento exponencial no número de usuários sendo responsável inclusive por empurrar a implementação de novas políticas pelos reguladores, como por exemplo o open banking. Essa visão é corroborada pelo fato de modelos de negócios das fintechs virem sido incorporados de forma contumaz por instituições financeiras de grande porte, com bancos grandes investindo na digitalização para se tornarem mais competitivos.

O incremento e facilitação de acesso gerado pelas fintechs, somada a perspectiva de manutenção de juros reduzidos para economia, trouxe diversos indivíduos pessoas físicas para a bolsa de valores no Brasil e esse movimento pode ser percebido de forma macro. No curto e médio prazo, podemos esperar que essa tendência permaneça e que a demonstração de estabilidade por muitas dessas plataformas traga mais recursos para o perfil de renda variável.

TTR: Quais seriam os outros dois setores que poderiam oferecer as maiores oportunidades no Brasil para investidores internacionais em 2021 e por quê?

J.S.D.: Saúde, agronegócio, infraestrutura e logística serão os setores que devem projetar o melhor nível de oportunidades no Brasil para 2021. As empresas de consultoria e especializadas já estão prevendo que serão nestes setores onde serão abertas a maior quantidade de vagas de trabalho em 2021. 

A pandemia apresentou necessidades urgentes em estas 3 áreas mencionadas. Empresários e empreendedores precisaram ingressar rapidamente na transformação digital com uma adaptação urgente no novo sistema de trabalho e com investimentos pesados em logística e relacionamento com o cliente.  Nesse contexto, 2021 será um ano de muitas oportunidades para fusões e aquisições de empresas no Brasil, tanto para as nacionais quanto para as estrangeiras neste setores. 

Uma das razões, pode ser a taxa de juros favorável, o aumento de investimentos na Bolsa de Valores está estimulando o processo de abertura de capital (IPOs), proporcionando maior facilidade de captação e liquidez para compra de empresas, a fim de aumentar a vantagem competitiva de negócio e eliminar, em alguns casos, concorrentes. Outra razão disso, a atual taxa de câmbio, somada aos preços baixos de empresas brasileiras que buscam por sobrevivência ao longo da crise, torna as oportunidades de aquisição desses alvos ainda mais atraentes e baratas para o investimento estrangeiro.

TTR: Quais serão os principais desafios da operação de M&A no Brasil durante 2021 para o Demarest Advogados?

J.S.D.: O ano de 2020 foi um ano cheio de desafios e aprendizados nas operações de M&A por causa da pandemia da covid-19. O objetivo maior das empresas era sobreviver. Durante a Pandemia, várias operações de M&A permaneceram suspensas, sendo retomadas aos poucos a partir do segundo semestre, tanto como solução para algumas empresas conseguirem manter suas operações, quanto para outras, bem capitalizadas, aproveitarem as oportunidades de aquisição e preços baixos, expandindo suas linhas de negócios e aumentando suas fatias de mercado.

Os aprendizados em projetos de M&A no escritório durante esta pandemia nos permitiu superar muitos desafios e encontrar soluções inovadoras, mesmo incorporando alguns como parte do nosso “novo normal”. Exemplo disso poderíamos mencionar closing a distância sem presença física nenhuma em operações de M&A. 

Pensando em 2021 e continuando a vislumbrar uma taxa Selic no patamar de 2% ao ano, permitirá que muitas empresas consigam boas condições de financiamento, seja pela taxa de juros favorável ou pela facilidade na captação e liquidez que o mercado está oferecendo. Nesse contexto, entendemos no Demarest que os desafios estarão associados principalmente com operações de grande porte decorrentes de privatizações, da consolidação do mercado em empresas que já cotizam em bolsa e possuem um alto grão de governança além dos grandes desafios legais, tributários e regulatórios que o nosso mercado já presenta, para citar alguns: (i) expectativa de reformas políticas favoráveis ao ambiente de negócios, (ii) democracia consolidada, entre outras.

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TTR DealMaker Q&A with Machado, Meyer, Sendacz e Opice Advogados Partners Gustavo Rugani, Adriana Pallis and Fernando Tonanni

Machado Meyer Advogados

Gustavo Rugani – Partner of the Corporate Finances practice, responsible for the Belo Horizonte unit. Rugani is specialist in subjects related to the capital markets (equity and debt transactions), mergers and acquisitions. His work is focused on structuring and implementing mergers and acquisitions (buy side or sell side, private placements, competitive bids and others) and capital markets’ transactions (equity and debt), both in the form of IPOs or follow-ons, primary and secondary, for equity transactions, or debentures, bonds, CRIs, and promissory notes and other securities for debt transactions. Has previous experience in the areas of knowledge of civil construction, machinery and equipment rental, electric energy, food, education, mining, steel, sanitation, transportation, logistics and finances.

Adriana Ballis – Adriana is a partner of the Corporate area since 2001 and was head of the M&A group from 2015 to 2018. She is now a member of the Board and of the Social Responsibility and Pro Bono committee of the office.
She is a specialist in Corporate Law, corporate governance, securities regulation, and in M&A involving listed and private companies, as well as cross border transactions. She has recognized experience in structuring and implementation of high complexity corporate reorganizations, equity investments, different acquisition structures and tender offer procedures, as well as in the legal assistance in the representation of companies and investors in administrative proceedings and consultations at the Comissão de Valores Mobiliários (Brazilian Securities and Exchange Commission).
She also acts in the structuring of businesses and establishment of companies, joint ventures, consortia, associations, and other forms of businesses and in advising on foreign investments in Brazil. She has worked in the most relevant privatization processes in the 90’s, as CPFL, Eletropaulo (both in the energy sector), Vale (mining sector) and Telebrás (Telecom sector).

Fernando Tonanni – Fernando is a tax specialist with strong knowledge of corporate law and extensive experience in advising international and Brazilian based clients in the tax aspects involved in their businesses. His focus includes tax consultancy, corporate restructuring, mergers and acquisitions, financial transactions, transfer pricing and administrative litigation. He is a frequent lecturer in events in Brazil and abroad, besides being visiting professor of international tax law at Brazilian institutions. Fernando has previous experience in a wide scope of industries such as automotive, agricultural, banking, energy, investment funds, oil and gas, pharmaceutical, telecommunications, retail, services, and transports.

TTR: In 4Q20, M&A deal volume in Brazil returned to ‘prepandemic’ levels. How do you interpret this upward trend compared to 2Q20 and 3Q20? What can we expect in 2021?

M.M.A.: In the beginning of 2020, investors and potential targets were trying to understand the economic impact of the COVID 19 crisis over different industries and how to work under this new scenario. Shortly, the business community realized that companies and industries were able to reinvent themselves and that the works should continue, which led them to consider that (i) notwithstanding the pandemics, business could continue and more than that, opportunities were arising in some areas as IT, electronic commerce, logistics, payment methods and Fintechs; (ii) other areas that could also keep moving forward as they did not depend on physical presence, were also good opportunities for those investors who decided going on and keep their investment plans by having “pre pandemic” cash resources levels. In Brazil, the exchange rates for USD and EUR were beneficial to foreign investors, as well as the low interest rates, helping to upward the M&A and capital markets transactions.

We believe the  trend shall be maintained with regards to 2021, as the world economy will still be active, with the vaccination benefits effective in most of the countries and making other industries move forward. Moreover, where there were more losses caused by the pandemics such as tourism and aviation for example (but not limited to those), companies may be distressed assets targets for acquisitions.

TTR: Which three sectors present the greatest opportunities for international investors in Brazil 2021, and why?

M.M.A.: Financial sector, with fintechs consolidating or being acquired by banks, health and telecom infrastructure (fiber network). 

TTR: The technology sector continues to lead M&A transaction volume in Brazil with a 19% uptick in 2020: What will be the main drivers for consolidation in this sector in 2021?

M.M.A.: As mentioned, the IT sector benefited from the pandemics with a greater focus from investors and also companies engaged in the traditional business. For instance, electronic commerce expanded and also became a target for traditional retailers buying small/medium IT businesses. Logistic assets became relevant targets, either for companies of the traditional economy or for new investors, seeking long term contracts with other players. In the banking sector, IT became also relevant, with a focus on IT developments for credit and investments, with a broader coverage of the population and with the intention of benefiting from the shift of the fixed income investments to other opportunities including capital markets ones, due to the reduction of the national interest rates.

TTR: 2020, especially during the period of the health emergency? What factors could coincide for companies to once again perceive an attractive window to go public?

M.M.A.: 2020 started really strong for equity offerings, with expectations of a record number of deals in the year. The Pandemics has brought transactions to a halt particularly from mid-March until late April. Beginning in May, however, we noted several transactions were resumed and this trend grew stronger throughout the year, resulting in a very strong and positive year. We believe the low interest rate (with an all-time low of the Selic Rate) was one of the main drivers to this result, increasing significantly the stake of local investors in the offerings, aiming at better returns on investments. The success of the first offerings following the beginning of the Pandemics served as an additional stimulus to Companies and banks to pursue transactions and the year ended with a very strong number of deals and funds raised.

As to debt transactions, several companies took advantage of the moment to launch transactions aimed at reducing the cost of their financings, and volume of transactions was also very strong, with longer payment dates and lower interest rates.

TTR: What does the dissemination of digital investment platforms imply for access to the capital market in Brazil in the short and medium term?

M.M.A.: Digital platforms, in addition to making access to the capital markets for small investors easier, often come with educational content also aiming at preparing and informing such investors, which were seeking better returns for their investments due to the low interest rates. During the pandemics, we could see increased content and demand for online lectures, seminars and other events which were otherwise inaccessible to those investors (due to the cost and/or the logistics involved for in person participation).


TTR: What will be the main regulatory and tax challenges for the M&A market in 2021?

M.M.A.: In 2021, the Congress might progress on the discussions of a comprehensive tax reform, aimed at unifying different value added taxes and simplifying the tax regime, extinguishing various industry tax incentives. Despite the underlying objectives, the impact of said tax reform over different industries may vary, with the increase of the tax burden (specially for the service industry). Also, discussions may also include changes to the corporate tax regime, with the taxation of dividends. Those discussions and potential approval of those reforms will bring investors challenges to assess the return of the investments, in different sectors.

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TTR DealMaker Q&A con Carlos Lobo, sócio do Veirano Advogados

Carlos Lobo – Veirano Advogados

É sócio do Veirano Advogados e atua principalmente nas áreas de fusões e aquisições, private equity e mercado de capitais. Carlos atua predominantemente nas área de energia, infraestrutura e Telecom/Tecnologia. É formado em direito pela Universidade do Estado do Rio de Janeiro e possui mestrado pela Columbia University em Nova Iorque.

TTR: As fusões e aquisições em 2020 tiveram um primeiro trimestre “recorde” no Brasil, mas no início da crise de saúde COVID-19, a tendência mudou consideravelmente: como você descreveria a situação atual dos players no mercado transacional no Brasil nesta “Nova Realidade”?

C. L.: Passado um primeiro momento de incerteza no começo da pandemia, quando várias operações de Fusões e Aquisições foram suspensas, o mercado começou a reaquecer a partir de junho, principalmente liderado pelos fundos de Private Equity nacionais e estrangeiros. Este segundo semestre está bastante aquecido com um perfil variado de players e setores, mas observa-se uma predominancia dos fundos de Private Equity e companhias abertas como compradores. Setores como tecnologia e energia renovável foram menos afetados que os demais e mantiveram um volume considerável de operações ao longo de todo o ano.

TTR: Veirano Advogados é um dos principais assessores de M&A do setor de tecnologia do Brasil de acordo com o ranking jurídico do TTR. Como você avalia o crescimento do setor em 2020 e quais as perspectivas de médio e longo prazo?

C. L.: Este movimento não começou este ano. O setor de tecnologia vem sendo um dos mais ativos em termos de Fusões e Aquisições no Brasil nos últimos cinco anos e acredito que esta tendência deva continuar pelos próximos anos. Vários fatores explicam esse fenômeno. Em primeiro lugar, uma questão cultural, tendo em vista que brasileiros, quando comparados a outros países, passam bastante tempo na internet e são consumidores habituais por meio de e-commerce. Em segundo lugar, o uso disseminado de smartphones e o bom nível de banda larga nos grandes centros permite a realização de transações digitais. Esse ambiente é favorável ao surgimento de variadas empresas do setor de tecnologia. Além disso, o perfil empreendedor do brasileiro, que tem boa formação técnica, aliado a uma indústria de Venture Capital bastante ativa, tem contribuído para esse movimento. Por fim, o surgimento de diversas fintechs no Brasil tem impulsionado o processo de aquisições no setor tecnologia para o setor financeiro.       

TTR: Quais as três mudanças mais importantes que o mercado de fusões e aquisições pode apresentar no Brasil para o quarto trimestre e início de 2021? Quais setores poderiam oferecer maiores oportunidades para investidores com potencial financeiro?

C. L.: Não vejo grandes mudanças no setor até o final do ano e começo de 2021. Acho que setores como tecnologia, energia renovável, saúde e serviços financeiros devem continuar entre os mais ativos.

TTR: Considerando sua experiência em Private Equity, como você espera que esse tipo de investimento evolua em 2021?

C. L.: Acredito que os fundos de Private Equity devem continuar bastante ativos em 2021. Eles estão bem capitalizados e a atual conjuntura econômica, com empresas em situação financeira difícil combinada com a desvalorização da moeda, tem resultado em um número elevado de oportunidades para os fundos.

TTR: Como você descreveria as medidas tomadas pelo governo brasileiro para enfrentar a crise empresarial causada pelo impacto do combate à COVID-19? Que outras medidas são necessárias no curto prazo para garantir a recuperação econômica?

C. L.: Acho que faltou uma atuação mais coordenada do governo federal para evitar o elevado número de casos no Brasil e um apoio maior para as empresas que estão enfrentando dificuldades financeiras. Acho que o governo deveria impor maiores restrições para evitar a aglomeração de pessoas e reduzir o número de casos e criar um programa de apoio às empresas dos setores mais afetados, como hotelaria, restaurantes e companhias aéreas.

Versão em inglês

Carlos Lobo – Veirano Advogados

Carlos Lobo is a partner with the Firm and focuses his practice on mergers and acquisitions (M&A), private equity investments and capital markets. He is a specialist in the energy, infrastructure and Telecom/Technology sectors. He graduated from law school from the Rio de Janeiro State University and has an LLM from the Columbia University Law School.

TTR: Brazil registered record M&A activity 1Q20, but the trend changed considerably with the onset of the COVID-19 health crisis: how would you describe the current M&A situation and outlook in Brazil?

C. L.: After the first moment of uncertainty at the beginning of the pandemic, when several transactions of mergers and acquisitions were put on hold, the market has rebounded from June on, especially led by domestic and international private equity funds. This second semester is very busy with a different profile of players and sectors, but it is observed a predominance of private equity funds and public companies as buyers. Sectors like technology and renewable energy have been less affected and remained active throughout the year.

TTR: Veirano Advogados is one of the main advisors on M&A in the Brazilian technology sector, according to TTR’s legal ranking.  How do you evaluate the sector’s growth in 2020 and what are the medium and long-term perspectives?

C. L.: This trend has not began this year. The technology sector has been one of the most active in terms of Mergers and Acquisitions activity in the past five years and I believe that such trend shall continue for the coming years. Many factors explain such phenomenon. In first place, a cultural aspect, since Brazilians, when compared to other countries, spend a significant time  on the internet and are regular consumers through e-commerce. In second place, the ample use of smartphones  and the good availability of broadband in the main centers are beneficial for digital transactions. These factors create a favourable environment for the development of technology companies. Also, Brazilians are entrepreneurial and have good technical formation, which allied to an active venture capital industry have contributed for such trend. Finally, the emergence of fintechs in brazil have contributed to the increase of acquisitions in the technology sector related to financial services.

TTR: What are the three most important changes that the M&A market will undergo in Brazil in 4Q20 and early 2021?Which sectors should investors with ample firepower be focused on? 

C. L.: I do not anticipate any major changes in the m&a market until the end of this year and the beginning of 2021. I believe that technology, renewable energy, health care and financial services will remain among the most active sectors.

TTR: Considering your experience in Private Equity, how do you expect this type of investment to evolve in 2021?

C. L.: I believe that the Private Equity funds will continue to be very active in 2021. They are well capitalized and the current macroeconomic situation, with companies in financial distress combined with the devaluation of the currency, have resulted in a elevated number of opportunities for the funds.

TTR: How would you describe the measures taken by the Brazilian Government to support the business community in the wake of the instability caused by the fight against COVID-19? What additional measures are needed in the short term to ensure economic recovery?  

C. L.: I believe that the federal government should have better coordinated the efforts against the pandemic to reduce the number of cases and to offer better support to companies in financial distress. It should impose social distancing and other restrictions to reduce the numbers of cases and create a program of support to the companies of sectors greatly affected, like hotels, restaurants, and air carriers.