Deal-making has largely disappeared in Latin America as buyers put acquisition plans on ice while they seek discounts to reflect the impact of COVID-19 on valuations and also move to strengthen force majeure and material adverse event clauses for eventual closings.

For corporate lawyers in the region, this means work has turned more toward offering strategic advice, arbitration services and even restructuring.

Some strategic buyers that had allotted capital for acquisitions have instead opted to stash those funds for the lean months ahead, while sellers have seen their businesses shrink amid quarantines and shutdowns.

In many cases, both buyers and sellers have taken a wait-and-see position.
The total value of mergers and acquisitions, private equity and venture capital deals either announced or closed in Latin America plunged to $3 billion in April from $16 billion during the same month of 2019, according to data compiled by Transactional Track Record.

Activity in April also slowed dramatically by number of transactions, with just 87 deals closing or announced in the region last month compared with 222 transactions in April 2019.

“While some operations have moved forward over the past two months— especially strategic deals in health, food and technology in Latin America— the transactional market faces a big challenge to advance in the middle of an environment of uncertainty and remote negotiating,” said Marcela Chacón Sierra, spokesperson for research and business intelligence at Transactional Track Record.

More information: https://www.law.com/international-edition/2020/05/18/covid-19-stunts-deal-making-in-latin-america-for-now/

Source: The American Lawyer - Estados Unidos