09 April 2020

Political uncertainty weighs on Latin America M&A activity in first quarter

Protest in Chile

A protest in Santiago last December; political unrest in Latin America had dampened M&A even before Covid-19

Covid-19 slower to impact region as Debevoise, Weil Gotshal and Gibson Dunn lead advisory rankings

Debevoise & Plimpton finished the first quarter as Latin America’s top M&A adviser amid a turbulent start to the year that saw a steep drop off in activity as ongoing political strife in the region dampened appetite for dealmaking.

Latin America deal value plummeted to $8.7bn in the opening three months of the year, 50% lower than in 2019, according to Mergermarket’s 1Q20 M&A report. In Brazil and Colombia, deal value was lower than during the financial crisis, while deals involving only domestic buyers and sellers in the region stumbled to the slowest start to a year since 2002.

Viviana Balan, research relationship manager for the Americas at Mergermarket, said: “Following two shaky years of political unrest, Latin America saw weak activity in its first quarter of 2020. After a strong 2019, a decent 1Q20 was expected. However, recent protests in Bolivia, Chile, and Ecuador have fulled a wave of uncertainty.”

Debevoise topped the rankings by deal value despite only working on two transactions. They were worth a combined total of $2.3bn, putting the New York-based firm ahead of Weil Gotshal & Manges, which advised on two deals worth $2.2bn.

Gibson Dunn & Crutcher was ranked third with one deal worth $2.2bn, followed by Brazilian firms Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados ($1.4bn) and Cescon, Barrieu, Flesch & Barreto Advogados ($1.2bn). 

Sao Paulo headquartered Pinheiro Neto Advogados was the busiest M&A adviser in Latin America, leading the rankings by deal count with 14 transactions. It was followed by Brazilian peer Demarest Advogados (7), Colombian firm Brigard & Urrutia (6), Mattos Filho (5) and White & Case (5).

Deal values are likely to shrink even further this year as the coronavirus pandemic, which has already roiled M&A activity in the US and Asia, begins to advance more fiercely across the region.

Balan said: “Latin America has not seen the worst yet. The region was hit by Covid-19 later than other parts of the world, and still saw activity decrease along with global trends. As the coronavirus spreads, the region could see further declines in M&A activity in the months ahead.”

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