PERFORMANCE OF MERGERS AND ACQUISITIONS IN MEXICO

2023 AND OUTLOOK FOR 2024

At a global level, 2023 continued to be marked by a high level of uncertainty, mainly due to continued high inflation levels, high interest rates (which have an impact on discount rates, valuations and, therefore, the value of companies, as well as on costs and leverage levels in transactions with a debt component) and multiple geopolitical tensions (continuity of the war in Ukraine, increased tension in the Middle East with the war in Israel and Hamas, tension between Taiwan and China, the attempted coup in Peru, the electoral surprise in Argentina, to name a few). Given these scenarios, Mexico presented itself to the world as a relatively stable investment destination by managing to reduce inflation throughout the year, maintain fiscal discipline and relative social and political stability. Investor confidence in the country was reflected on the one hand in the exchange rate, where the Mexican peso appreciated by 11.7% throughout the year; the price index and listings on the Mexican Stock Exchange, which increased by 17.1%; and in the activity of the M&A market, which remained practically at the same levels observed in 2022 (1.2% increase in the number of transactions), when in most geographies in the rest of the world it showed a contraction. According to Pitch Book data, the number of M&A transactions globally dropped by 13.2%, from 45,777 transactions to 39,733.

2024: a year of uncertainty

2024 will most likely be an year of uncertainty for M&A activity in Mexico, mainly due to presidential elections to be held in the United States, given that if the winner turns out to be Donald Trump, there will surely be fear regarding the measures he might take in relation to the increase in import duties, pressure for American companies to invest domestically instead of in other geographies, and even, in an extreme case, decisions that would affect the free trade agreement between Mexico, the United States and Canada.

In 2024 we would expect to see activity in the real estate and logistics sectors, as the vehicles that have set out to raise capital in the markets in recent months are beginning to use it. Next is a summary of the main placements throughout 2023 (USD 1,749 million):

Source: RIóN M&A