This year there will probably be fewer mergers and acquisitions (M&A) in Brazil due to the uncertain national and international political and economic scenario.
“In 2023 we are living in an environment very similar to the one we had in 2022, of uncertainty, and I do not see great growth potential for M&A operations. It is unlikely that we will have a stronger year in 2023 than we did in 2022,” Luis Motta (pictured), an M&A partner at professional services firm KPMG, told BNamericas.
In 2022, Brazil registered 1,728 mergers and acquisitions operations, a 12% decline compared to 1,963 in 2021, which constituted an annual record, according to KPMG.
“2022 was the second strongest year since we began compiling those numbers in 2003. Despite this, there has been a gradual reduction in the number of transactions since the first quarter of last year, primarily due to less investor appetite for technology companies, which historically contribute the vast majority of transactions,” Motta said.
Brazil’s economy is expected to expand just 0.77% this year, according to the most recent survey of 100 economists conducted by the central bank, compared with the 3% expansion estimated for last year.
One of the main reasons for the expected economic slowdown is the high level of the Selic rate, which stands at 13.75%, due to the monetary entity’s efforts to reduce inflationary pressures.
TECHNOLOGICAL
Mergers and acquisitions of ICT companies reached 640 transactions last year.
“During the first quarter of the pandemic, we saw a flood of companies from all segments trying to buy technology companies to speed up their digital processes. Now, we are seeing a reduction in that appetite. However, technology, due to the nature of its business, is very dynamic and it is a sector that will tend to recover quickly in number of operations, since in the coming years we will have innovations and new businesses will be generated with 5G”, said Motta. .
According to the KPMG executive, in 2023, despite the difficulties, the technology sector will continue to be the one that will generate the most operations, while other segments will give rise to a high number of transactions, such as health, education, financial services and logistics. .
For the next few years, Motta says that the privatization plans of the country’s main states, such as São Paulo, Rio de Janeiro and Minas Gerais, will probably bring an increase in operations.
