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Aug 09

Global M&A: Mexico

Donald Grava August 9, 2016

Global M&A: Mexico

Versailles Group - Global M&A

 

Global M&A: Mexico

Regarding Global M&A, Latin America has moved into the spot light for investors.  Both private equity firms and strategic buyers are realizing the potential this location holds, and as of late, Mexico has been of great interest.  Over the past few years the Mexican government has made a big push to increase investment in its country.  Mexico has specifically targeted foreign investors by working hard to address corruption, labor, and tax issues.  Additionally, laws have changed to allow Mexico’s pension funds to invest up to ten percent of their assets in private equity, which will promote economic growth.

Despite new investment, as a whole, Latin America is still struggling.  Brazil is currently in a recession, and Columbia’s GDP growth rates are low.  While these economic problems are of great concern to locals, it allows foreign investors to capitalize on both the exchange rates and discounted assets and companies.  These investors see an opportunity to buy low and sell high.  The World Bank recently announced that by 2030, fifty percent of the population in Latin America will be middle class.  This fact alone has provided investors with confidence that the economies will continue to grow and bounce back in the coming years.

Mexico is popular due to its strategic location.  Not only do the time zones correspond with the United States, but its location is unbeatable.  For firms that are looking to expand supply chains abroad, Mexico is a perfect fit.  As compared to China, producing in Mexico greatly shortens the supply chain, and is generally less expensive.  Coincidentally, China is currently experiencing an overall decline in local manufacturing.  Businesses selling to consumers in the United States are looking to keep supply chains as short as possible, and Mexico is becoming the cheapest and easiest way to do it.

Strategic buyers are not the only group interested in Mexico; private equity firms are moving in too.  The volatility in the region is attractive, especially for investors who have a longer time horizon.  Experienced investors are making purchases not bothering to worry about short term problems, but rather focusing on the long term gain.  Mexico has now surpassed Brazil as the most popular destination for private equity investment in Latin America.

All in all, over the last 10 years the focus of M&A in Latin America has changed significantly.  Argentina was previously a hot spot for deals; however, Brazil then started to gain popularity and most of the investment activity.  Brazil is still very exciting for foreign investors as they are able to buy companies at deep discounts, but now investors are also exploring Mexico.  Another country that currently presents unique investment opportunities is Chile, which may provide more stability than other Latin American countries.

Versailles Group is a 29-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

August 9, 2016

 
Aug 04

M&A - Top Five Countries - First Half 2016

Donald Grava August 4, 2016

M&A Activity - First Half 2016

Top Five Countries

With regard to M&A in the global arena, it’s fascinating to observe which countries attract the most activity and how that evolves over time.  The charts below reflect the top five countries with the highest deal value and volume for the first six months of 2016.

The United States and China have been able to maintain their M&A leadership in the first half of 2016.  In terms of deal volume—the number of transactions completed worldwide—the US accounted for 23% of the deals completed while China captured 10% of the deals worldwide.

The chart below represents the number of M&A transactions completed by country in the first six months of 2016.  The US and China dominate this category, with 10,151 and 4,519 deals completed respectively.  When compared to the first quarter, the breakdown by volume for these five countries has remained remarkably similar.  Each country has been able to continue closing deals at roughly the same pace. 

Versailles Group - M&A activity

Represented in the chart below is the value of M&A transactions completed by country, for the top five countries, in the first six months of 2016.  The US and China are again leaders in this category.  Collective deal value in the United States reached US$633,441MM, and China’s total transactions were valued at US$390,570MM.  Switzerland remains in the top five countries for deal value, which is uncommon; however, during Q1 Syngenta was acquired by ChemChina, and this one large deal is in part responsible for Switzerland’s high rank.  

Versailles Group - M&A

 

Two countries to keep an eye on for the remainder of the year are Australia and France.  Lately, Australia has been receiving media attention for potential growth in M&A deals.  For the first half of 2016, Australia came in only 282 deals behind Germany.  It will be interesting to see if Australia is able to push up into the top five countries for volume next quarter.  Likewise, France is trailing Canada in the rankings for deal value so far in 2016.  As M&A activity is likely to experience shifts throughout Europe after the Brexit vote, M&A activity by county may look slightly different next quarter.

Versailles Group is a 29-year-old Boston-based investment bank that specializes in international mergers, acquisitions, and divestitures.  Versailles Group’s skill, flexibility, and experience have enabled it to successfully close M&A transactions for companies with revenues between US$2 million and US$250 million.  Versailles Group has closed transactions in all economic environments, literally around the world.

Versailles Group provides clients with both buy-side and sell-side M&A services, and has been completing cross-border transactions since its founding in 1987.  

More information on Versailles Group, Ltd. can be found at www.versaillesgroup.com.

For additional information, please contact

Donald Grava

Founder and President

+617-449-3325

August 4, 2016