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Latin America Mergers & Acquisitions Study
Integration and divestiture best practices throughout the region
The last few years have presented a singular perspective for companies wishing to carry out mergers and acquisitions in Latin America.
In order to contextualize the challenges of mergers and acquisitions, Deloitte has prepared a study on mergers and acquisitions in Latin America, which presents an analysis of the main transactions in the region between 2014 and 2017.
The scenario shows an increase in divestitures as a result of some economic instability in the region and, more recently, a return to acquisitions as the depreciation of local currencies has made assets in those countries more attractive.
The study shows that there are common challenges in the region:
- Limited access to qualified informatito support decision-making and risk mitigation;
- In the case of integrations, there is a low level of maturity of the target’s processes, governance, and controls. Processes are often heavily manual and rely on local resources, rather than automation;
- There are ongoing difficulties to maintain compliance with all government requirements, mainly in respect to tax, regulatory, environmental, and legal matters;
- Safeguarding against the strong influence of local labor unions;
- Target company employees sometimes have difficulty to communicate effectively in other languages, meaning global integrations often face additional communication complexities;
- Adaptation to cultural differences, which influence the effectiveness of co-working and communication during critical M&A program milestones.
There are some enablers to effective integration & divestiture in the region:
- The financial services industry is highly developed within the region, and boasts profound capabilities;
- Highly competent regulatory institutions;
- Attractive risk levels for the investment market with a good balance of risk and return.
In Latin America, due diligence, effective integration planning and attention to change management, to be carried out by buyers, remain some of the most important considerations in preparing your next business. The “Latin America Mergers & Acquisitions Study” addresses some of these best practices and lessons learned to leverage your executive team in the near future.