Mergers and acquisitions (M&A) deal volume in Latin America experienced a decline in 2022 compared to 2021. The total number of deals dropped from a record high of 1,311 in 2021 to 1,020 in 2022, representing a decrease of 22%. This trend was observed across all sectors, except for Industrials, which showed a small increase in the number of transactions in 2022. Aggregate deal value in Latin America was around 60 billion dollars, down from approximately 100 billion in 2021, but in line with prior years.

The decrease in M&A transactions in 2022 can be attributed to several factors including uncertain macro-economic outlook, the political environment, local election cycles and social unrest. Furthermore, higher interest rates and inflationary concerns further impacted the M&A landscape.

Brazil has historically been the most active M&A market in the region, accounting for 57% of deals in 2022. Mexico and Colombia have also been significant contributors to M&A activity historically. Countries like Chile, Peru, and Argentina also have significant M&A markets.

Mexico maintained its position as the second-largest market for deals in the region in 2022. Its Industrials sector recorded a historical high of 34 transactions which can be attributed to Mexico benefiting from the trend of US “nearshoring” in manufacturing following the supply chain disruption of 2020 and 2021.

In terms of the number of deals, Colombia ranked as Latin America’s third largest market for M&A in 2022. The country experienced a small decline in the number of transactions, from 85 in 2021 to 81 in 2022. The elections held in 2022, which resulted in the election of the first leftist president, Gustavo Petro, may have contributed to this trend. Consumer Goods was the most active sector in Colombia terms of deal activity in 2022, with 23 transactions or 29% of the total.

Latin America has witnessed both inbound and outbound M&A transactions. Inbound deals involve foreign companies acquiring or investing in Latin American businesses, while outbound deals refer to Latin American companies expanding internationally through acquisitions abroad. Most deals in 2022 involved acquirors from within Latin America, but US, Canadian and European investors were also well represented. The proportion of buyers from the Asia/Pacific region experienced a decline from 4.1% in 2021 to 3.5% in 2022.

Private equity and venture capital investments have also played a role in the M&A landscape in Latin America, particularly in sectors such as Technology. It is worth noting that in 2021, Softbank, a high-profile technology sector investor from Japan, was involved in a total of 33 transactions across various territories in Latin America. Out of these, 23 transactions took place in Brazil. However, in contrast, during 2022, Softbank’s participation in the region decreased significantly, with only 7 deals, all of which were in Brazil.

In 2022, private companies in Latin America were the dominant players in M&A, accounting for around 59% of the total deal volume. Public companies and private equity firms had a smaller share compared to 2021. The proportion of private-equity acquisitions decreased from 22% in 2021 to 19% in 2022. This decline in private-equity activity was particularly notable in two countries: Mexico, where the number of deals involving this type of buyer decreased from 45 to 29, and Brazil, where it dropped from 154 to 90.

(Data is sourced from S&P Global)