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M&A: What to Expect in 2018?

Ann Bruggeman's picture
Published: 17/04/18
Economic:

The market and activity of mergers and acquisitions (M&A) is a clear reflection of the economy and politics of a country.

On a global level, 2016 and 2017 were extremely good years in the M&A practice, transactions in stocks and bonds were very high, with volumes similar to the maximums that have been recorded during the golden years in 2006 and 2007.

Unfortunately, in the Latin American region and in Chile, the M&A market decreased severely. The main reason that affected the trust of corporations to undertake complex mergers and acquisitions, both at the company level and at the consumer level, was the existence of an uncertain political-economic climate. This demonstrated at a general level in Latin America, the activity declining according to international indices, but especially in Chile due to the instable electoral environment, and uncertainty regarding the socioeconomic reforms that were proposed. Only three months after the last elections in Chile, the market and in particular the Law Firms and Consulting Firms dedicated to M&A transactions, have noticed an increase in preliminary consultations and analyzes, which also coincides with good external conditions.

On an international level, the main economic concern today is the risk of an aggressive confrontation economic policy, such as that between the United States and China, which is affecting investment undertakings. This definitely represents one of the factors that help investors to turn and consider our region. Now, international investors see greater opportunities in Latin America in the area of ​​mergers and acquisitions, which is why Chile is considered as the favorite player for future business in the region, followed by Brazil, Mexico and Colombia.

Investors recognize Chile as institutionally solid with its clear regulations and great legal certainty in general. Chile stands for clear potential for economic growth at a country level, superior to that of its regional peers. Being a product of the stagnation and delay of investments suffered from during the last years, Chile is now standing strong with a political structure, which has remained stable, and a market in balance and overall growth. All these factors contribute to the appetite to invest in Chile; hence, expectations in the area of ​​M&A for the year 2018 are optimistic.

Given the above, it may be necessary for foreign investors to prepare their analyses and to plan promptly any M&A operation that was in their portfolio and that had been postponed. Or if necessary, to develop their M&A practice in the medium-short term, since the forecasts for movements in the market are now high – hence, the first to enter will be the one that benefits the most from this second very promising area in the Chilean economy.

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Ann Bruggeman's picture

Legal Adviser of the Corporate Department at Cuevas Abogados (Since 2017) qualified to practice in Luxembourg and Belgium.

She previously worked as a Lawyer in the Corporate Department at Loyens & Loeff Luxembourg SARL, Luxembourg (2012-2017).

She worked as an Intern at Loyens & Loeff Winandy, Luxembourg (2010).

She made an Internship at Bonn Schmitt Steichen, Luxembourg (2009).

She worked as an Intern at De San – Goethals, Lasne, Belgium (2008).