Brazilian M&A Market Hits Four-Year Low Amid Global Uncertainty

According to recent data released by Seneca Evercore, the Brazilian mergers and acquisitions market registered its weakest first quarter since the pandemic year of 2020.

Companies completed only 148 transactions totaling $8.7 billion from January to March 2025. The market showed a significant drop in transaction volume compared to the same period in 2020, which saw 220 transactions worth $5.3 billion.

The higher dollar value despite fewer deals stems from several larger-value transactions. By April 2025, the cumulative transaction count reached 206, still lagging behind the 261 recorded during the same timeframe in 2020.

Daniel Wainstein, founding partner of Seneca Evercore, attributes this slowdown primarily to global factors rather than domestic concerns. Trump’s unpredictable policies stand out as a major source of market hesitation.

“Nobody believed that Trump‘s rhetoric would be put into practice, until the announcement of tariffs,” Wainstein explains. This uncertainty differs fundamentally from pandemic-era concerns, creating a climate where many potential deals remain on hold.

Brazil’s challenging economic environment further complicates the landscape. The country faces persistent 12.25% interest rates and inflation that reached 4.83% in 2024, exceeding the government’s 3% target.

The Brazilian real has also depreciated significantly against the US dollar, affecting cross-border transactions. The implementation of Brazil’s tax reform, approved in December 2023, adds another layer of uncertainty.

Companies continue evaluating its implications before committing to major structural changes. These factors combine to create a risk-averse market atmosphere.

Energy and Natural Resources Lead M&A Activity in Brazil

Energy and natural resources sectors dominate current M&A activity, showing the highest concentration of deals since 2020. Technology, real estate, and resource management sectors maintain reasonable activity levels, functioning as “islands” in an otherwise subdued market.

Domestic transactions currently represent approximately 80% of all deals, with Brazilian companies primarily acquiring other local businesses. Foreign investors remain cautious, accounting for only about 20% of transactions.

Japanese companies have emerged as an exception, showing increased interest in Brazilian assets as they diversify supply chains away from China. Private equity funds actively seek opportunities in the current market.

These investors target companies needing capital structure adjustments or those selling minority positions to fund their own acquisitions. This trend provides some market liquidity despite broader hesitation.

Despite the disappointing quarter, some analysts remain cautiously optimistic. “We’ve reached the bottom,” suggests Wainstein, who expects a recovery if global uncertainties diminish.

The currency depreciation also makes Brazilian assets more attractive in dollar terms for potential foreign investors willing to navigate the current environment.

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