M&A Trends: Brazil’s Resilience Compared to North America and Europe

The volume of mergers and acquisitions (M&A) involving Brazilian companies has seen a resurgence in Q2 and H1 of 2024.

This continues a recovery trend that began in the second half of the previous year. From April to June 2024, there were 426 M&A transactions in Brazil.

According to a KPMG report, this is the highest quarterly number in two years. This represents a 16.7% increase compared to the same period in the previous year.

The first half of 2024 closed with 776 transactions. This is 5.3% more than the first half of 2023.

Domestic vs. Foreign Transactions

A significant portion of these transactions—60%—were domestic, involving Brazilian companies. Foreign acquisitions also played a crucial role, accounting for 28% of the total deals.

This uptick in M&A activity is partly attributed to the depreciation of the Brazilian real. This makes Brazilian assets more affordable for foreign investors.

Market Dynamics

Paulo Guilherme Coimbra, a partner at KPMG Brazil, noted key drivers for these deals.

Many investors, realizing that interest rates would not drop as much as expected, decided to proceed with acquisitions.

This environment enabled transactions to complete at lower prices than those seen six months prior.

Companies facing financial stress and difficulties in raising debt were more likely to sell. This created opportunities for buyers with liquidity.

Latin America vs. North America and Europe

Brazil leads the Latin American M&A market both in terms of transaction volume and value. The region saw a decline in M&A activity in 2023.

However, a recovery is anticipated in 2024, driven by sectors such as renewable energy, healthcare, and infrastructure.

In the first half of 2024, Latin America recorded approximately 1,242 transactions. These transactions were valued at $33.57 billion.

In contrast, the M&A market in North America experienced a significant downturn in 2023.

There was a 30% drop in deal volumes in the first half of 2024 compared to the same period in 2023.

However, deal values increased by 5%, largely due to megadeals in the technology and energy sectors.

The United States alone saw about $864 billion in M&A transactions in the first half of 2024.

European M&A activity also faced challenges due to high inflation and regulatory uncertainties.

Despite these hurdles, certain sectors like technology and renewable energy continued to attract significant investment.

The total transaction value in Europe fell from €23.8 billion in the first half of 2023 to €17.1 billion in the same period of 2024.

The number of transactions decreased from 15,249 in 2022 to 11,629 in 2023.

Sectoral Insights

The technology sector remains a major focus for M&A in Brazil, mirroring global trends. In the first half of 2024, technology-related deals accounted for a significant portion of the total transactions.

Healthcare and pharmaceuticals are also seeing increased M&A activity. This is driven by the need for consolidation and expansion in response to growing healthcare demands and technological advancements.

The real estate sector in Brazil has been active. Numerous transactions aimed at capitalizing on the country’s urban development and infrastructure projects.

M&A Trends: Brazil’s Resilience Compared to North America and Europe

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