Dealmaker Q&A

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TTR Dealmaker Q&A con Felipe Junqueira, líder de M&A and Transaction Solutions de AON para LatAm

AON

Felipe Junqueira

Felipe es el líder de M&A and Transaction Solutions de Aon en América Latina.  Licenciado en derecho, contabilidad y administración de empresas y tiene un posgrado en gestión de proyectos por Ibmec Business School. Cuenta con una amplia experiencia y conocimiento en los campos de M&A y Private Equity, abarcando actividades en las áreas financiera y legal con una trayectoria en trabajos de asesoría y consultoría enfocada en fusiones y adquisiciones, finanzas corporativas, y experiencia en due diligence contable, financiero y de riesgos y seguros para transacciones.
Felipe cuenta con experiencia en la industria de petróleo y gas, logística, infraestructura, retail, entre otros sectores. 

TTR: ¿Cuáles son sus principales conclusiones para el mercado de M&A en el primer semestre del año? ¿Cuáles son los drivers más relevantes para consolidar el mercado de M&A en Latinoamérica en lo que resta del año?

 El primer semestre fue un período de grandes desafíos, con una reducción significativa en el ritmo de transacciones en el período en comparación con el mismo período del año anterior. El nivel de incertidumbre en relación a algunos temas globales como los conflictos geopolíticos, la inflación y las altas tasas de interés entre otros, contribuyó junto con temas más locales como el bajo nivel de crecimiento de las economías en el año anterior y algunos cambios políticos relevantes en algunos países, que dejaron a la mayoría de los inversionistas a la espera de la evolución política y económica en busca de señales más claras y estables para evaluar empresas y realizar negociaciones más favorables.

Vemos una interesante reanudación del interés chino en inversiones en América Latina, lo que puede favorecer al mercado, especialmente considerando el ticket habitual para este tipo de transacciones. El sector de tecnología continúa siendo muy relevante y tiende a continuar o mostrar un aumento en su participación total en el número de transacciones.

TTR: Desde la perspectiva de asesoramiento en Aon ¿Cuáles son los riesgos más latentes que se están viendo en las transacciones de M&A en América Latina?

Recientemente lanzamos la 4° edición (2023) de nuestro estudio anual de reclamaciones relacionados con seguros transaccionales, con énfasis en los seguros de Representations and Warranties (R&W) y Warranty and Indemnitiy (W&I) insurance, que si bien presenta datos más globales, nos ayuda a comprender de manera más amplia el patrón de reclamaciones relacionados con el mercado de M&A. Entre los principales temas vemos Impuestos, Estados Financieros, cumplimiento de la ley, litigios y contratos materiales, lo que refleja en gran medida el comportamiento que observamos también en Latinoamérica.

Aunque a un ritmo muy acelerado, el mercado latinoamericano aún se encuentra en etapa de desarrollo en relación a estos tipos de seguros , pero no presentamos datos específicos para la región, lo que esperamos hacer en nuestra próxima edición  aprovechando el aumento considerable en el nivel de interés y uso del producto en la región combinado con el avance observado en relación al apetito de las aseguradoras por América Latina, con énfasis en las condiciones y costos relacionados con el producto. En caso de querer mayor detalle acerca de los hallazgos del estudio pueden leerlo completo en el siguiente link: 

TTR: Aún vemos un entorno de incertidumbre en el ámbito económico mundial. No obstante, se está viendo un mayor apetito inversores en zonas estratégicas de América Latina. Cuál es la opinión de Aon sobre este tema?

A pesar de la repercusión de la alta incertidumbre,  podemos ver una clara recuperación en el mercado transaccional. Como se mencionó, la reanudación del interés chino en grandes transacciones en América Latina, combinado con el nivel de Dry Powder de gran parte de inversionistas de capital privado, además de la existencia de tesis de inversión consistentes en mercados específicos y relativamente nuevos, tienden a impulsar las transacciones en el segundo semestre.

TTR: ¿Qué sectores en el mercado de M&A están requiriendo de mayor asesoría por parte de Aon y por qué? 

Tradicionalmente en América Latina somos mayormente requeridos para asesorar transacciones de tickets medianos a grandes y más asset based, lo que tiende a reflejarse en transacciones más enfocadas en energía, infraestructura e industria en general. Sin embargo, hemos visto un aumento en el interés en las transacciones de tecnología, especialmente en lo que respecta a los seguros transaccionales para facilitar las mismas, además de la debida diligencia en cyber y propiedad intelectual, temas cada vez más materiales en las negociaciones, independientemente del sector de la Target.

TTR: ¿Hacia dónde se reconduce la inversión en compañías de renovables en América Latina tras la baja en la actividad en el primer semestre del año?

Entre los sectores donde vemos una recuperación a nivel de proyectos/negociaciones está el sector energético, que también incluye las renovables. Además del movimiento global de transición energética, también destacamos las políticas de incentivos de algunos países para invertir en proyectos de energías renovables.

TTR: ¿Cuál es su evaluación para la industria de Private Equity y Venture Capital en América Latina en 2023?

Como mencioné anteriormente, los financial sponsors en general tienen un nivel de Dry Powder muy alto, lo que favorece las inversiones. Específicamente el mercado de Venture Capital, por otro lado, tuvo algunos impactos relevantes recientes, lo que tiende a provocar un menor ritmo de negocios, haciendo que las empresas que recibieron la inversión o que buscan rondas de inversión procuren alternativas de capitalización. Destacamos aquí la solución de financiación basada en el uso de la propiedad intelectual, recientemente creada, en la que apoyamos la evaluación de la propiedad intelectual en asociación con el mercado de seguros y los inversores para favorecer la financiación con tasas generalmente más favorables basadas en la propiedad intelectual, muchas veces infravalorada y poco utilizada para estos fines pero que pueden ser de gran relevancia para las empresas en el mercado actual.

TTR: ¿Qué papel juega Aon en la coyuntura actual del mercado transaccional?

Nuestra actuación en la debida diligencia de riesgos y seguros y los más diversos temas dentro de personas ya están bastante consolidados en la región. Vemos un aumento en la preocupación de los inversores con temas relacionados al análisis de la propiedad intelectual y cyber (principalmente los inversionistas extranjeros), pero sin duda lo más destacado es el aumento del interés de los clientes y también el apetito de las aseguradoras por los seguros de Representaciones y Garantías (Representations and Warranties (R&W) / Warranty and Indemnitiy (W&I) insurance). Además de las transacciones multimillonarias en las que operamos en la colocación de seguros del tipo con límites récord, hemos visto transacciones de tickets más pequeños con condiciones muy ventajosas, logrando condiciones de cobertura y costos (tasas) muy cercanos a lo que vemos en mercados más desarrollados. como Estados Unidos y EMEA. Este seguro ha sido especialmente buscado por private equities, con énfasis en desinversiones (permitiendo una salida más limpia) e inversionistas corporativos que buscan reducir incertidumbres relacionadas con el Target y desbloquear algunas negociaciones, además de permitir una mejor discusión del precio de la transacción.

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TTR Dealmaker Q&A with Urbano Vitalino Advogados Partner Ricardo Thomazinho

Urbano Vitalino Advogados

Ricardo Thomazinho

Partner focusing his practice on tax law and business law, especially in mergers and acquisitions and foreign investments in Brazil, with extensive experience in infrastructure.
He has a strong presence in corporate reorganizations, credit recovery and judicial recovery.
He also has experience in antitrust and antidumping law.

TTR: What are your main conclusions for the M&A market in 1H23? What are the most relevant drivers for consolidating the M&A market in Brazil in the rest of the year?

In the first semester, we felt that the market was cautious, and this resulted in a reduction in the pace of investments and corporate transactions. We can attribute this to the change of government and uncertainty about the direction that will be given to the economy, which is somewhat unclear to this day and depends, to a large extent, on the relationship between the Executive and Congress, which is unpredictable.

The slow pace of business can also be attributed to the maintenance of high interest rates as a form of containing inflationary pressure, which, in turn, is a product of the pandemic: sectors most susceptible to the effects of lockdown experienced disruptions or had to reduce staff, leading to a period of disinvestment. With vaccination programs and the end of confinement, demand has returned without a corresponding increase in supply, and we are still in a process of recovery – this is not to mention the effects of the war in Ukraine.

For the consolidation of the market in the remainder of the year, we are optimistic. We believe that the same factors that weighed negatively on the economy will also drive its recovery, as they are cyclical in nature.

We expect that the novelty factor regarding the new government, the normalization of political tensions and the approval of structural reforms will improve international confidence in our country. Although the Brazilian Real has been gaining strength in recent weeks, it is a fact that Brazil remains “cheap” in the eyes of foreign investors, and this should contribute to foreign interest in Brazilian assets and the movement of the M&A market.

TTR: In which sectors might international investors find the biggest opportunities in Brazil? Why?

In our view, the most promising sectors for foreign investment in Brazil currently are renewable energy, agribusiness, tehnology (software & IT) and sanitation.

With the rise of concerns about ESG principles, there is a lot of emphasis on the field of clean energy, and Brazil, due to its geographical characteristics – in terms of territory and population size, solar radiation incidence, wind intensity, and ample water resources, among others – is a country naturally suited for this activity. Recently, the legal framework for distributed generation (Law 14.300/2022) was approved, allowing independent consumers to generate electricity, providing legal certainty and benefiting from tax incentives. 

Brazil is the global leading producer of several agricultural commodities and, allied with a growing local consumer market, has become a very attractive for investment. Investors want to own cost-efficient and competitive producers of commodities and processed foods and ingredients, and related industries.

Software and IT services continue to attract a lot of attention and investments.  Brazil has a very creative and innovative environment, which will certainly be as magnet for new M&As.

In the field of sanitation, there is an expectation that the number os deals increase substantially.  The new legal framework dates back to 2020 but sets targets for universal access to water supply and waste collection and treatment over the next ten years. It also creates legal certainty for private investments in the sector. When considering the current statistics, it becomes evident that the country still has a lot to do (a large percentage of the population lacks water supply and sanitation). It is estimated that an investment volume of between R$ 700 billion to R$ 1 trillion is necessary to achieve full coverage within a decade, which shows how the opportunities in this sector are enormous.

TTR: Continuing with the Venture Capital segment, we see that, after the boom of 2021, the emergence of unicorns is slowing down and some are disappearing. What is your evaluation for this industry in Brazil in 2023? 

I consider it natural that a decline in the emergence of unicorns occurs after a boom period, but that doesn’t mean new waves of growth cannot occur, both in Brazil and abroad.

I believe these fluctuations occur due to various factors, with significant influence from technological innovations. For example, we are currently experiencing a revolution in artificial intelligence technologies, which can pave the way for exploring new solutions to everyday problems and the subsequent success of new startups. In the not-too-distant future, advances in quantum computing may also lead to their own boom. Eventually, new challenges and technologies will bring opportunities that are currently unknown.

There is also the regional factor. Brazil has proven to be a fertile ground in the technology field and has its own success stories, such as QuintoAndar, iFood, and the company Pismo, which develops technology for payment solutions, acquired by Visa, for example. These companies operate in important sectors and outperform international competitors in their respective industries. Whether they are unicorns or not, there are noteworthy cases of foreign companies that did not adapt to the cultural peculiarities of the Brazilian market (such as Walmart) or found unexpected success in Brazil (like Outback). This illustrates that the startup field in Brazil does not necessarily follow foreign trends, and the interest of venture capital in startups may continue to grow, even in 2023, if the expectations of an improved economy are confirmed.

TTR: In terms of global prospects, how do you think what happened with Silicon Valley Bank will affect the world of Venture Capital? What are the main lessons for the players in this market?

I believe that the Silicon Valley Bank episode served as a warning and brought an end to the excitement of venture capital in the technology startup sector after a period of flourishing. On the other hand, even though we may not return to previous levels, I do not think that venture capital activity or the interest in startups will suffer a significant loss. This is because the SVB phenomenon is a result of local and specific factors, such as the Silicon Valley’s inclination towards technological innovation (a risky sector subject to rapid changes and intense competition), certain characteristics of the American banking regulation, which will likely be reviewed, and especially the mismanagement of the bank itself.

Their collapse is also attributed to other unlikely factors such as the pandemic and the microchip “cold war” between the United States and China, which caused supply-chain problems for technology companies.

Therefore, it cannot be immediately concluded that technology startups are doomed or lack potential. They are a natural target for venture capital, and we believe that the interest from this type of investor will be regained over time.

In any part of the world, it is essential to learn the lesson that the banking sector needs a strong regulation that protects against interest rate fluctuations and maintains safe levels of reserve requirements. I do not believe that the problem that led to the collapse of SVB lies with startups or the technology sector intrinsically, nor with venture capital investors.

TTR: What will be Urbano Vitalino’s main challenges in Brazil in the upcoming months?

I believe that the main challenge for our firm is to incorporate new technologies to the M&A practice. In an everchanging and evolving world, technology is at the center of improving the client-driven experience by increasing the perceived value of our legal services. As more routine procedures are automated, our professionals can spend more hands-on time with clients, working through more high-value processes.

We are already an innovative law firm in the field of technology, having created in 2017, in a partnership with IBM, a cognitive intelligence platform that we named “Carol”. This technology assists our professionals in the analysis of procedural data, the positioning of judges, precedents, and case law.

In light of this scenario, we see that the field of artificial intelligence (AI) inevitably becomes integrated into the daily lives of professionals and has the potential to revolutionize legal practice. Therefore, our main challenge for the near future is to incorporate new AI-based technologies to the M&A practice area, honoring the pioneering role we have had in this field over the past decade.

Portuguese version

Urbano Vitalino Advogados

Ricardo Thomazinho

Sócio centrando sua prática em direito tributário e direito empresarial, especialmente em fusões e aquisições e em investimentos estrangeiros no Brasil, com vasta experiência em infra-estrutura.
Tem forte atuação em reorganizações societárias, recuperação de crédito e recuperação judicial.
Tem também experiência em direito antitruste e antidumping.

TTR: Quais são suas principais conclusões para o mercado de M&A no primeiro semestre de 2023?, Quais são os fatores mais relevantes para a consolidação do mercado de M&A no Brasil no resto do ano?

Nesse primeiro semestre sentimos que o mercado se comportou de forma cautelosa, o que resultou numa redução do ritmo de investimentos e de transações societárias. Podemos atribuir isto à mudança de governo e ao desconhecimento sobre os rumos que serão dados à economia, o que até hoje não se esclareceu e depende, em grande medida, de como se dê a relação entre o Executivo e o Congresso, o que é imprevisível.

Também se pode atribuir a lentidão dos negócios à manutenção das taxas de juros em níveis elevados como forma de conter a pressão inflacionária que, por sua vez, é um produto da pandemia: os setores mais suscetíveis aos efeitos do lockdown enfrentaram quebras ou precisaram reduzir pessoal, e passamos por um período de alto desinvestimento; com os programas de vacinação e o fim do confinamento, voltou a demanda sem a contrapartida da oferta à mesma altura, e ainda estamos em fase de acomodação desse fenômeno – para não falar dos efeitos da guerra.

Para a consolidação do mercado no resto do ano, estamos otimistas. Acreditamos que os mesmos fatores que pesaram negativamente na economia é que impulsionarão a sua retomada, visto que são cíclicos por natureza. 

Espera-se que o fator de novidade quanto à troca de governo, a normalização das tensões políticas e a aprovação de reformas estruturais permitam uma melhoria na confiança internacional em nosso país. Ainda que o real esteja ganhando força nas últimas semanas, é um fato que o Brasil continua “barato” aos olhos dos investidores estrangeiros e isso deve contribuir para o interesse externo em ativos brasileiros e movimentação do mercado de M&A. 

TTR: Em quais setores os investidores internacionais podem encontrar as maiores oportunidades no Brasil? Por quê?

Em nossa visão, os setores mais promissores para investimento externo no Brasil atualmente são o de energias renováveis, agronegócio, tecnologia (software e TI) e o de saneamento.

Com a ascensão das preocupações com os princípios de ESG, há muita ênfase no campo de energia limpa e o Brasil, por suas características geográficas – tamanho territorial e populacional, incidência de radiação solar, a intensidade de ventos e amplos recursos hídricos, dentre outras – é um país com vocação natural para essa atividade. Recentemente houve a aprovação do marco legal da geração distribuída (Lei 14.300/2022), que permite a geração de energia elétrica por consumidores independentes, o que gerou segurança jurídica e ainda se beneficia de incentivos fiscais.

Brasil é líder global na produção de diversas commodities agrícolas e, aliado com o crescimento do mercado consumidor, se tornou muito atraente para os investimentos.  Os investidores têm o interesse em adquirir produtores eficientes e competitivos de commodities, de comida processada e ingredientes, além das indústrias correlatas

Software e serviços de TI continuam atraindo muita atenção e investimentos.  Brasil tem um ambiente muito criativo e inovador, que certamente servirá como um ímã para novos M&As.

No campo do saneamento, há uma expectativa de que o número de transações aumente substancialmente.  O novo marco legal é do ano de 2020, mas prevê metas de universalização do suprimento de água e da coleta e tratamento de resíduos nos próximos dez anos, além de criar segurança jurídica para investimentos privados no setor; quando consideramos as estatísticas atuais, fica evidente que o país ainda tem muito a fazer: estima-se entre R$ 700 bilhões a R$ 1 trilhão o volume de investimentos necessários para alcançar o atendimento de toda a população em uma década, e isso ilustra como esta é uma fonte gigante de oportunidades.

TTR: Continuando com o segmento de Venture Capital vemos que, após o ‘boom’ de 2021, o surgimento de unicórnios está diminuindo e alguns estão desaparecendo. Como você avalia essa indústria no Brasil em 2023? 

Consideramos natural que haja um declínio no surgimento de unicórnios após uma época de boom, mas isto não significa que novas ondas de crescimento não possam ocorrer, no Brasil ou no exterior. 

Acreditamos que essas oscilações ocorrem em função de diversos fatores, sendo muito influenciadas pelas inovações tecnológicas. Por exemplo, passamos agora pela revolução nas tecnologias de inteligência artificial, e isto pode abrir caminho para a exploração de novas soluções aos problemas cotidianos e o consequente sucesso de novas startups; num futuro não muito distante, é natural que os avanços na computação quântica também propiciem um boom próprio. Eventualmente, novos desafios e novas tecnologias trarão oportunidades que hoje são desconhecidas.

Existe, também, o fator regional. O Brasil tem se mostrado um campo fértil no ramo da tecnologia e possui os seus próprios casos de sucesso, tais como o QuintoAndar, o iFood, e a Pismo, que desenvolve tecnologia para soluções de pagamento, adquirida pela Visa, por exemplo. São empresas que atuam em setores de peso e que estão à frente de concorrentes internacionais em seus respectivos setores. Unicórnios ou não, há casos emblemáticos de redes estrangeiras que não se adaptaram às peculiaridades culturais do mercado brasileiro (Walmart) ou que encontraram no Brasil um sucesso inesperado (Outback) – isto ilustra como o campo para as startups não segue, necessariamente, tendências estrangeiras e o interesse do Venture Capital por startups pode ainda crescer, mesmo em 2023, no Brasil, caso se confirmem as expectativas de melhora na economia.  

TTR: Em termos de perspectivas globais, como você acha que o ocorrido com o Silicon Valley Bank afetará o mundo do Venture Capital? Quais são as principais lições para os players desse mercado?

Acredito que o episódio do Silicon Valley Bank serviu de alerta e colocou fim a uma empolgação do Venture Capital com as startups de tecnologia após um período de florescimento deste setor. Por outro lado, mesmo que não se retorne aos níveis anteriores, não penso que a atuação do Venture Capital ou o interesse pelas startups sofrerá uma perda tão significativa, mesmo porque o fenômeno do SVB resulta de fatores locais e específicos, isto é, a vocação do Vale do Silício à inovação tecnológica (setor arriscado, sujeito a mudanças rápidas e muita concorrência), certas características da regulação bancária americana, que provavelmente serão revistas, e especialmente a má gestão do próprio banco.

Também se atribui o colapso a outros fatores improváveis como a pandemia e a guerra fria dos microchips entre Estados Unidos e China, responsável por problemas de abastecimento às empresas de tecnologia.

Portanto, não se pode concluir imediatamente que as startups de tecnologia estejam condenadas ou que não tenham potencial. E são um alvo natural do Venture Capital, de modo que acreditamos que o interesse desse tipo de investidor será retomado com o tempo. 

Em qualquer lugar do mundo, é preciso aprender a lição de que o setor bancário precisa de uma regulação firme no sentido de se proteger das oscilações das taxas de juros e de manter os níveis de depósito compulsório em patamares seguros. Não acredito que o problema que levou ao colapso do SVB esteja com as startups ou com o setor tecnológico, intrinsecamente, e nem tampouco com os investidores de Venture Capital. 

TTR: Quais serão os principais desafios para a Urbano Vitalinono Brasil nos próximos meses?

Acredito que o principal desafio do nosso escritório seja incorporar novas tecnologias à área de M&A. Em um mundo em constante mudança e evolução, a tecnologia está no centro da melhoria da experiência orientada ao cliente, aumentando o valor percebido dos serviços jurídicos prestados por nós. Na medida em que mais procedimentos de rotina são automatizados, nossos profissionais poderão passar mais tempo trabalhando de forma mais ativa com clientes, trabalhando em processos de maior valor.

Já somos um escritório inovador no campo da tecnologia, tendo criado em 2017, em parceria com a IBM, a plataforma de inteligência cognitiva que chamamos de Carol. Essa tecnologia auxilia nossos profissionais na análise de dados processuais, no posicionamento de magistrados, precedentes e jurisprudência. 

Diante desse cenário, vemos que o campo da inteligência artificial (IA) passa inexoravelmente a integrar o dia a dia dos profissionais e pode revolucionar a atividade jurídica. Portanto, nosso maior desafio para o futuro próximo é de integrar à área de M&A novas tecnologias baseadas em IA, honrando o pioneirismo que tivemos nesse campo ao longo da última década.

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TTR Dealmaker Q&A with Gómez-Pinzón Partner Juan David Quintero

Gómez-Pinzón

Juan David Quintero

He is a partner of the Merger & Acquisitions and Corporate Law practices in Gómez-Pinzón. He has more than 14 years of experience and is licensed to practice law in Colombia and in the State of New York. His practice centers on domestic and cross-border mergers and acquisitions, private equity, joint ventures, and corporate reorganizations. Juan David has also counseled international and local multinational companies in acquiring and selling publicly traded companies, and in different corporate restructurings via mergers, spin-offs, and transformation processes.

TTR: What are your main conclusions for the M&A market in 1Q23? What are the most relevant drivers for consolidating the M&A market in Latin America in the rest of the year?

In general terms, there has been a decrease in the number of transactions in the first quarter compared to the same period of time of the previous year (almost 50% according to the reports given by you). Colombia has not been oblivious to the region’s trend. In particular, we have seen a concern in clients prior to venturing to invest in certain sectors (for example, conventional energy, hydrocarbons and health), due to the legal reforms that the current Government is promoting, in tax, labor, pension and health. All of the above and the “shake downs” that we are currently seeing from the American, European and other economies in the region, may be an explanation for this downward trend in the first part of the year.

However, in the coming months we will see how the different Latin-American economies are reactivated; the market will continue to be attractive to international investors who, in a way, “support” more the political movements in the region; unlike local investors who would seem to be more averse to these sudden changes in local government policies.

TTR: In which sectors might international investors find the biggest opportunities in the Latin American transactional market? Why?

Without a doubt, investment in renewable energies (wind and photovoltaic) will be preponderant in the international and national investor appetite. We´ve seen it in Chile and Peru; Colombia is no stranger to this reality and the national government has been announcing its commitment to an energy transition that points to these new energy sources as an important focus in its government plan. The health sector, paradoxically, could also bring opportunities to investors. The health service is inelastic by nature, people will continue to get sick and require this service, regardless of the political overtones of the government on duty. Lastly, the technology sector will offer important opportunities to investors looking for businesses that are quickly adaptable to other jurisdictions, as well as synergies with more “traditional” businesses. Facing the decrease in the appetite for fixed assets and the spirit of business in which know-how is of the greatest preponderance will make this sector one of great importance for investors.

TTR: Continuing with the Venture Capital segment, we see that, after the boom of 2021, the emergence of unicorns is slowing down and some are disappearing. What is your evaluation for this industry in Latin America in 2023? Which countries could perform better in this segment?

We have seen how most of the so-called unicorns have lagged behind in a development stage and have not been able to consolidate their position in the market and in many cases, if not all, they have not been able to go public. There is greater skepticism that they may advance to consolidate the business and have had to go through rounds of financing and refinancing. Clearly, equity holders are looking for investments that have a lower risk profile than VC. The economic situation in the region, added to the situation in the United States, means that the flow of capital is not so constant and the risk profile of investors changes and, in a certain sense, they are averse to these investments. The countries that can best adapt regulation and different entry barriers to startups and emerging companies will be the ones that will attract these investors.

TTR: In terms of global prospects, how do you think what happened with Silicon Valley Bank will affect the world of Venture Capital in LatAm? What are the main lessons for the players in this market?

In general terms, we do not see a clear incidence relationship between with what happened with SVB and the VC market in Latin America. Unlike what happens in the United States, we have not seen a concentration of economic sectors and capital in Latin American countries. Undoubtedly, the SVB precedent is a lesson learned, not only for financial institutions but also for our clients and their businesses. The concentration of liquidity and capital in the same sector is a risky bet. Most of SVB’s long-term assets were in Treasury bonds and mortgage bonds and as interest rates rose, the value of these assets fell. In the Latin American market, the stock markets are not as deep and there is not such a marked concentration of capital. Clearly the SVB case study is as a lesson learned for clients, particularly on investment diversification. As we say in Colombia, “You don’t put all your eggs in one basket”

TTR: What will be Gómez-Pinzón’s main challenges in Colombia in the upcoming months?

Our work as lawyers for our clients will be to accompany them at all times and keep them informed about the reforms that are being carried out and those that will come; Continuously monitor changes that occur, and comprehensively analyze what implications they may have for our clients and their respective industries. The message we seek to convey is that moments of uncertainty will also offer attractive alternatives and those who know how to position themselves better will be able to take advantage of others.

Spanish version

Gómez-Pinzón

Juan David Quintero

Es socio de las prácticas de Fusiones & Adquisiciones y Derecho Corporativo de la firma Gómez-Pinzón, cuenta con más de 12 años de experiencia profesional y se encuentra admitido a la práctica del derecho en Colombia y en el estado de Nueva York. Su trayectoria se ha centrado en fusiones y adquisiciones locales y transfronterizas, así como en fondos de capital privado, joint ventures y reorganizaciones de grupos empresariales. Juan David ha asesorado a importantes empresas locales y multinacionales en la adquisición y venta de compañías privadas y listadas en bolsa, y en procesos de reorganización de estructura societaria mediante fusiones, escisiones y transformaciones.

TTR: ¿Cuáles son sus principales conclusiones para el mercado de M&A en el primer trimestre del año? ¿Cuáles son los drivers más relevantes para consolidar el mercado de M&A en América Latina en lo que resta del año?

En términos generales se ha evidenciado una disminución en el número de transacciones en el primer trimestre a comparación del mismo periodo del año anterior (casi un 50% de acuerdo con las cifras reportadas por ustedes mismos). Colombia, por supuesto, no ha sido ajeno a la tendencia de la región. En particular hemos visto una preocupación en clientes previo a aventurarse a invertir en determinados sectores (p.ej. energías convencionales, hidrocarburos y salud), con motivo de las reformas legales que se encuentra promoviendo el Gobierno actual, en materia tributaria, laboral, pensional y de salud. Esto sumado a los “coletazos” que vemos de la economía americana, europea y otras de la región, puede ser una explicación a esta tendencia a la baja en la primera parte del año. 

Ahora bien, en los meses venideros veremos cómo se reactivan las diferentes economías de Latinoamérica; el mercado seguirá siendo atractivo para los inversionistas internacionales que en cierta manera “soportan” más los movimientos políticos de la región; a diferencia de los inversionistas locales que parecerían ser más adversos a estos cambios repentinos en las políticas de los gobiernos locales.  

TTR: ¿En qué sectores los inversionistas internacionales podrían encontrar las mayores oportunidades en el mercado transaccional de América Latina? ¿Por qué?

Sin duda alguna la inversión en energías renovables (eólicas y fotovoltaicas) serán protagonistas en el apetito inversionista internacional y nacional. Lo hemos visto en las jurisdicciones de Chile y Perú; Colombia no es ajena a esta realidad y por parte del gobierno nacional han venido anunciando su apuesta por una transición energética que apunta a estas nuevas fuentes de energía como un foco importante en su plan de gobierno. El sector salud, paradójicamente, también podría traer oportunidades a los inversionistas. El servicio a la salud es inelástico de naturaleza, las personas nos seguiremos enfermando y consumiendo este servicio, sin importar el tinte polítrico del gobierno de turno. Por último, el sector de tecnología ofrecerá oportunidades importantes a inversionistas que busquen negocios de rápida adaptabilidad e internacionalización para otras jurisdicciones, al igual que sinergias con los negocios más “tradicionales”. Frente a la disminución de apetito por activos fijos (difícil traslado) y el ánimo por negocios en los cuales el know how resulta de la mayor preponderancia harán de este sector uno de muchísima importancia para los inversionistas.  

TTR: Continuando con el segmento de Venture Capital vemos que, después del ‘boom’ de 2021, el surgimiento de unicornios está disminuyendo y algunos están desapareciendo. ¿Qué evaluación tiene de esta industria en América Latina en 2023? ¿Cuáles países de la región podrían tener un mejor desempeño en este segmento?

Hemos visto como la mayoría de los llamados unicornios se han quedado rezagados en una etapa de desarrollo y no han logrado consolidar su posición en el mercado y en muchos casos, sino todos, no han podido salir a la bolsa. Existe un mayor escepticismo en que avancen a una consolidación del negocio y han tenido que pasar por rondas de financiación y refinanciación. Evidentemente los tenedores de capital están buscando inversiones que tengan un perfil de riesgo menor que el de VC. La coyuntura económica de la región sumada a la coyuntura de Estados Unidos, hacen que el flujo de capitales no sea tan constante y el perfil de riesgo de los inversionistas cambie y en cierto sentido sean aversos a estas inversiones. Los países que mejor puedan adaptar la regulación y diferentes barreras de entrada a los startups y empresas emergentes serán los que lograrán atraer a estos inversionistas. 

TTR: En términos de perspectivas globales, ¿cómo cree que lo que sucedido con Silicon Valley Bank pueda afectar al mundo del Venture Capital en la región? ¿Cuáles son las principales lecciones para los jugadores en este mercado? 

En términos generales no vemos una clara relación de incidencia entre lo que pasó con SVB y el mercado de VC en Latinoamérica. A diferencia de lo que ocurre en Estados Unidos, no hemos visto una concentración de sectores económicos y de capital en los países de Latinoamérica. Sin duda, el precedente de SVB es una lección aprendida, no solo para entidades financieras sino para nuestros clientes y sus negocios. La concentración de liquidez y capitales en un mismo sector es una apuesta arriesgada. La mayoría de los activos a largo plazo de SVB se encontraban en bonos del Tesoro y bonos hipotecarios y a medida que las tasas de interés aumentaban, el valor de estos activos disminuía. En el mercado latinoamericano los mercados de valores no son tan profundos y no existe una concentración de capital tan marcada. Claramente el caso de estudio de SVB sirve de base como una lección aprendida para los clientes, en particular sobre la diversificación en las inversiones. Como decimos en Colombia, “No hay que colocar todos los huevos en una misma canasta” 

TTR: ¿Cuáles serán los principales desafíos de Gómez-Pinzón en Colombia en los próximos meses?

Nuestra labor como abogados frente a los clientes será la de acompañarlos en todo momento y mantenerlos informados sobre las reformas que se adelantan y las que vendrán; hacer seguimiento continuo sobre los cambios que se presenten, y analizar de manera integral qué implicaciones pueden tener para nuestros clientes y sus respectivas industrias. El mensaje que buscamos transmitir es que los momentos de incertidumbre ofrecerán también alternativas atractivas y quienes sepan posicionarse mejor, podrán tomar ventaja frente a los demás. 

Dealmaker Q&A

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TTR Dealmaker Q&A with AON Head of M&A in LatAm Felipe Junqueira

AON

Felipe Junqueira

Felipe is our M&A and Transaction Solutions Leader in Latin America. He holds degrees in law, accounting and business administration and has a post-graduate degree in project management from Ibmec Business School. He has extensive experience and comprehensive knowledge in the M&A and Private Equity arenas, covering activities in the financial and legal areas with a background in advisory and consultancy work focused on mergers and acquisitions and corporate finance, and experience in accounting, financial, risk and insurance due diligence for transactions.
He has experience in the oil and gas industry, logistics, infrastructure and retail, among other sectors. 

TTR: What are your main conclusions for the M&A market in 1Q23? What are the most relevant drivers for consolidating the M&A market in Latin America in the rest of the year?

The M&A market started at a slow pace in 2023 as a reflection of global phenomena such as the increase in interest rates, inflation, the global political crisis (with emphasis on the war in Ukraine) and more regional phenomena such as the low level of economic growth in some countries and recent political changes. We understand that throughout the year, as global phenomena unfold towards stabilization and more regional issues with emphasis on the change of governments in some countries (as governments give clearer signals to investors), the level of investments tends to be resumed.

TTR: In which sectors might international investors find the biggest opportunities in the Latin American transactional market? Why?

Technology continues to be one of the main sectors, but we have seen great potential for the resumption of large infrastructure transactions, with emphasis on Power.

TTR: Continuing with the Venture Capital segment, we see that, after the boom of 2021, the emergence of unicorns is slowing down and some are disappearing. What is your evaluation for this industry in Latin America in 2023? Which countries could perform better in this segment?

The Venture Capital sector, as it is quite daring and dependent on investments, has suffered to some extent with uncertainties and the change in paradigms in the circulation and destination of capital in recent times. We have seen an interesting movement in the Caribbean and in some countries in the region with increasing investments in start-up ecosystem development centers that we understand still have a very large growth potential.

TTR: In terms of global prospects, how do you think what happened with Silicon Valley Bank will affect the world of Venture Capital in LatAm? What are the main lessons for the players in this market?

It is common knowledge that a mismatch between assets and liabilities drove Silicon Valley Bank’s equity to almost zero, leading to its failure. The bank’s delicate situation, together with other recent events in the global banking market, has caused some volatility in the credit market. While this does not necessarily mean systemic risk, there is a tendency towards relative conservatism and impact on banks’ willingness to lend and take risks which may boost the equity market (and therefore the VC market) even if it depends on other matters that need to occur since the Equity Capital Market tend to compete with atypical higher returns from the Debt market.

TTR: What will be Aon’s main challenges in countries like Colombia, Mexico, Brazil and Chile in the upcoming months?

We saw that the number of transactions was relatively stable in Mexico and Colombia in 2022 (compared to the previous year) but, on the other hand, Chile shows to have been the country that performed best in the first Quarter. Regarding Brazil, which has undergone a very recent change from a political point of view, we expect a gradual recovery. In any case, we noticed that the transactions ticket had a considerable reduction at a general level, and we expect that this paradigm changes throughout the year.

TTR: As a leading global professional services firm in M&A and Transactions, what advice would you give to the M&A players in Latin America considering the market moment and your expertise?

Due to the current market uncertainties, a more detailed and assertive mapping of opportunities combined with a broader analysis effort over the target businesses and the search for alternative negotiation tools can be considered fundamental for the success of the transactions and the resumption of the pace of the market. From a due diligence standpoint, considering the assessment of topics such as risks, insurance, people and intellectual property has proven to be key to avoiding future surprises that could together erode part of the value of the Deal. Added to this, knowing the insurance tools for transferring risks that often get stuck at the negotiation table can be another key factor. In recent times, there have been several opportunities in which we spoke to our clients and prospects and heard that if they knew in the past insurance such as Reps & Warranties (or Warranties & Indemnities) for unknow risks, Tax insurance, Litigation insurance, or even surety bonds (like the Escrow Bond) some negotiations that were not successful would probably have been completed. In summary, information and the right tools here is essential and our focus is to help our clients to better understand the business and transfer risks to make better decisions.

Dealmaker Q&A

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TTR Dealmaker Q&A with Seale & Associates Managing Director  Sergio García del Bosque

Seale & Associates México

Sergio García del Bosque

He is a managing director with significant experience in mergers, acquisitions, divestitures, arrangement of financing, general financial advisory, valuation and strategy consulting. Mr. Garcia del Bosque joined Seale & Associates in 2008 and has acted as lead advisor to numerous public and private companies on international and domestic transactions. Representative corporate clients include CEMEX, FEMSA,  Tyco, United Technologies, among other. Mr. Garcia del Bosque has also advised the shareholders and management of many founder-owned, family-owned and other private organizations and helped them achieve their strategic objectives through transactions, strategic alternatives assessments and generational planning. Representative privately owned clients include Caffenio, Cosmocel, Cuprum, Grupo Tampico, INMAGUSA, Torrey, among other. Mr. Garcia del Bosque leads the Mexico City office of Seale & Associates since 2016.

TTR: What are your main conclusions for the M&A market in 1Q23? What are the most relevant drivers for consolidating the M&A market in Mexico in the rest of the year?

The M&A market in Mexico remains strong despite the global economic headwinds such as high interest rates and inflation, as well as geopolitical tensions in different parts of the world. Global companies and private equity groups are showing renewed interest in investing in Mexico due to the potential for nearshoring operations to serve the North American market, as well as the opportunity to tap into the large and growing Mexican domestic market. Based on the current level of activity and inquiries for new projects, we expect the Mexican M&A market to remain robust for the rest of the year.

TTR: In which sectors might international investors find the biggest opportunities in the Mexican transactional market? Why?

International investors may find the biggest opportunities in sectors such as agriculture & livestock, IT services, and manufacturing. Mexican companies in these sectors can offer competitive prices and quick time response for delivering products and services to the North American market. Other sectors that are also attractive to global companies include building products, consumer products, and healthcare, which continue to grow as the Mexican population and economy expand.

TTR: Continuing with the Venture Capital segment, we see that, after the boom of 2021, the emergence of unicorns is slowing down and some are disappearing. What is your evaluation for this industry in Mexico in 2023?

In 2023, there is still significant interest from Venture Capital to invest in Mexico, but valuations and risk tolerance have decreased compared to 2021. Funds in this space are becoming more selective about their investments. We expect that some companies may not be able to secure additional rounds of investment and will need to explore strategic alternatives such as mergers, partnerships, or divestitures. However, there are still significant opportunities in fintech and e-commerce, and companies in these industries will continue to be funded despite the current headwinds.

TTR: In terms of global prospects, how do you think what happened with Silicon Valley Bank will affect the world of Venture Capital in the region? What are the main lessons for the players in this market?

The collapse of Silicon Valley Bank will affect many startups across the world, including those in Mexico, as there are no other specialized banks that can provide the same tailored services. One lesson for startups is to consider that higher returns and benefits always come with more risk.

TTR: What will be Seale & Associates’ main challenges in the upcoming months?

Seale & Associates’ main challenges will be to select the best projects and clients, as some companies may lack a well-defined strategy or strong commitment from management and boards to do acquisitions in the region. The firm will also continue to focus on developing the M&A market in Mexico by educating companies about M&A matters across the region. Additionally, headcount growth will be a priority for Seale & Associates, and the firm will implement a new training program with collaboration from top advisors in the M&A ecosystem to develop talent faster and have relationships with all the players in the industry early on.

Spanish version

Seale & Associates México

Sergio García del Bosque

Es director ejecutivo con una importante experiencia en fusiones, adquisiciones, desinversiones, arreglos de financiación, asesoramiento financiero general, valoración y consultoría estratégica.
Se unió a Seale & Associates en 2008 y ha actuado como asesor principal de numerosas empresas públicas y privadas en transacciones internacionales y nacionales. Entre los clientes corporativos representativos se encuentran CEMEX, FEMSA, Tyco, United Technologies, entre otros.
Ha asesorado a los accionistas y a la administración de muchas organizaciones de propiedad de los fundadores, de propiedad familiar y otras organizaciones privadas y les ha ayudado a alcanzar sus objetivos estratégicos a través de transacciones, evaluaciones de alternativas estratégicas y planeación generacional. Entre los clientes privados representativos se encuentran Caffenio, Cosmocel, Cuprum, Grupo Tampico, INMAGUSA, Torrey, entre otros. Sergio Garcia del Bosque dirige la oficina de Seale & Asociados en la Ciudad de México desde 2016.

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TTR: ¿Cuáles son sus principales conclusiones para el mercado de fusiones y adquisiciones en el primer trimestre de 2023? ¿Cuáles son los impulsores más relevantes para consolidar el mercado de fusiones y adquisiciones en México durante el resto del año?

El mercado de fusiones y adquisiciones en México sigue siendo fuerte a pesar de los obstáculos económicos globales, como las altas tasas de interés y la inflación, así como las tensiones geopolíticas en diferentes partes del mundo. Las empresas globales y los grupos de capital privado están mostrando un renovado interés en invertir en México debido al potencial de operaciones de nearshoring para servir al mercado norteamericano, así como a la oportunidad de incursionar en el mercado interno mexicano, que es grande y está en constante crecimiento. Basados en el nivel actual de actividad e indagaciones de nuevos proyectos, esperamos que el mercado de fusiones y adquisiciones en México se mantenga sólido durante el resto del año.

TTR: ¿En qué sectores pueden los inversores internacionales encontrar las mayores oportunidades en el mercado transaccional mexicano? ¿Por qué?

Los inversores internacionales pueden encontrar las mayores oportunidades en sectores como la agricultura y la ganadería, los servicios de TI y la manufactura. Las empresas mexicanas en estos sectores pueden ofrecer precios competitivos y una rápida respuesta para entregar productos y servicios al mercado norteamericano. Otros sectores que también son atractivos para las empresas globales incluyen productos de construcción, productos de consumo y cuidado de la salud, los cuales continúan creciendo a medida que la población y la economía mexicanas se expanden.

Continuando con el segmento de capital de riesgo, vemos que, después del boom de 2021, la aparición de unicornios se está desacelerando y algunos están desapareciendo.

TTR: ¿Cuál es su evaluación para esta industria en México en 2023?

En 2023, todavía hay un interés significativo por parte del venture capital para invertir en México, pero las valoraciones y la tolerancia al riesgo han disminuido en comparación con 2021. Los fondos en este espacio están siendo más selectivos en cuanto a sus inversiones. Esperamos que algunas empresas no puedan asegurar rondas adicionales de inversión y necesiten explorar alternativas estratégicas, como fusiones, alianzas o desinversiones. Sin embargo, todavía existen oportunidades significativas en fintech y comercio electrónico, y las empresas en estas industrias seguirán siendo financiadas a pesar de los obstáculos actuales.

TTR: ¿Cómo cree que afectará lo sucedido con Silicon Valley Bank al mundo del capital de riesgo en la región? ¿Cuáles son las principales lecciones para los actores de este mercado?

El colapso de Silicon Valley Bank afectará a muchas startups en todo el mundo, incluyendo aquellas en México, ya que no hay otros bancos especializados que puedan proporcionar los mismos servicios personalizados. Una lección para las startups es considerar que mayores rendimientos y beneficios siempre conllevan más riesgos.

TTR: ¿Cuáles serán los principales desafíos de Seale & Associates en los próximos meses?

Los principales desafíos de Seale & Associates serán seleccionar los mejores proyectos y clientes, ya que algunas empresas pueden carecer de una estrategia bien definida o de un fuerte compromiso por parte de la dirección y los consejos para llevar a cabo adquisiciones en la región. La firma también seguirá enfocándose en desarrollar el mercado de fusiones y adquisiciones en México, educando a las empresas sobre los temas de M&A en toda la región. Además, el crecimiento de la plantilla será una prioridad para Seale & Associates, y la firma implementará un nuevo programa de capacitación en colaboración con los principales asesores del ecosistema de M&A para desarrollar el talento más rápido y establecer relaciones con todos los actores de la industria desde el principio.