THE MERGERS AND ACQUISITIONS MARKET - M&A

After a few years of downturn, since 2016 the number of mergers and acquisitions in Brazil has been increasing, reaching a record in 2017. According to the KPMG 2017 – 4th Quarter Mergers and Acquisitions Report, the sectors with the largest market movements in the 4th quarter of 2017 were internet (12.5%), information technology (10.6%) and services (7.9%).

When it comes to M&A, it is important to highlight the rules of the Administrative Council for Economic Defense (CADE), a federal agency with the purpose of guiding, supervising, preventing and investigating abuses of economic power.

In general terms, transactions involving an economic group with revenues in Brazil worth BRL 750,000,000.00 or more, and another economic group with revenues of BRL 75,000,000.00 or more, must be submitted to CADE for approval (which has been more stringent recently). That is, only transactions involving large groups must be submitted, others do not.

The forecast for 2019 is that mergers and acquisitions will gain in strength, mainly due to the return of foreign investor confidence and the control of inflation in the country, resulting in lower interest rates. With this, the economy and the opportunities to close deals, whether small, medium or large, also grow.

As an example, transactions in the health sector are growing following the enactment of Law No. 13,097 in late 2015, which authorized foreigners to hold direct or indirect investments in hospitals, clinics, laboratories and healthcare companies located in Brazil.

The technology industry has already shown itself to be increasingly robust, with operations between companies supplying ERPs (Enterprise Resource Planning) and great interest in startups by domestic and foreign investors.

The education sector is also fueled by acquisitions involving not only colleges but basic education-level schools.

In addition to the above examples, we have seen a great deal of movement in agribusiness transactions, not only in the sugar and alcohol industry, but also through the entry of new financial players in the market or even the acquisition of startups.

It is the perfect time to finally close the deal you have been waiting for, and we are here to advise your company on all stages of the process

HOW WE CAN HELP YOU NAVIGATE IN THIS WORLD

  • Preparing the Memorandum of Understanding, or similar document, in which the parties involved establish the main business guidelines, such as price and the basic structure of the transaction.
  • Coordinating the closing of the transaction.
  • Analysis of tax and corporate matters related to the proposed structure for the transaction.
  • Preparing the transaction agreements, including Investment/Subscription Agreement, Share/Quota Purchase Agreement, Members’/Shareholders’ Agreement, Stock/Quota Option Agreement, Agreements referring to guarantees, among others; all depending on the structure.
  • Undertaking legal Due Diligence, with the purpose of verifying the current legal situation of the target company in all areas (labor, tax, contracts, among others), checking the liabilities and contingencies. In the end, we issue a report that includes the main aspects worth attention, which may affect the intended transaction, and propose any adjustments necessary to the transaction, in order to make the business viable with full legal certainty.
  • General defense of the client’s interests throughout the negotiation process, including participation in internal meetings (defining the strategy with the client) and external meetings with the other party.
  • Post-closing assistance, such as integration of activities in the future and use of goodwill paid on the acquisition.

WHAT MAKES US STAND OUT

  • We take care of the client’s pocket by recommending the most appropriate legal structure, always starting with the tax analysis of the intended transaction.
  • We discuss the possible alternatives for the transaction, considering price, conditions, guarantees, in order to collaborate with the closing of a good deal. We are creative. The phrase “it has always been like this” does not exist in our vocabulary.
  • We do not shy away from giving a concrete opinion to the client about the security (or otherwise) of the transaction.
  • We work in total harmony with the other professionals involved in the transaction, such as financial advisers, the other party’s lawyer, among others, always seeking to harmonize interests and implement the transaction securely.
  • We go the extra mile with the client: we only deliver the finished work! Either we actively participate in the operation, delivering everything promised, or we do not even start it.

PRACTICE AREAS