Mergers and acquisitions increase due to the rise of nearshoring

With the increase of the so-called nearshoring in Mexico, the country has become one of the main investment focuses worldwide, thanks to the production costs and the logistic facility due to its proximity to the United States; an example of this is the manufacturing sector, which grew 1.7% in January 2023, compared to the same period in 2022, according to the National Institute of Statistics and Geography (Inegi).

This has led to an economic growth of 3% for the whole year, which has been reflected in the increase of Mergers and Acquisitions (M&A) throughout the country. This increase reached a value of 7.8 billion dollars in the first four months of 2023, an increase of 189% over the 2.7 billion dollars of the same period last year.

Thus, and according to the firm that tracks mergers and acquisitions, Private Equity & Venture Capital, as well as comprehensive corporate information in Latin America and Ibero-America, Mexico ranked second in the M&A business in the region, only surpassed by Brazil.

The report, which also presented a quarterly analysis of the Mexican panorama in which the market dynamics can be evaluated, gathered a complete and correlational study of the most active economic sectors, as well as the most outstanding transactions, which allowed concluding that, since January 2022, U.S. companies were the ones that carried out the largest number of acquisitions with Mexican companies.

It is important to highlight that during the first four months of the year, the sectors that have presented an increase in M&A activities of Mexican companies abroad are: industrial, with 43.8%; information technology (IT), with 12.5%; financial, with 12.5%; consumer, with 12.5%; and telecommunications, with 6.3%.

In the current situation, transactions and partnerships must be strategic and meticulously chosen to represent a clear benefit for both parties, since all procedures related to nearshoring also present legal, cultural and operational challenges and considerations that must be carefully evaluated in the M&A process. Furthermore, decision evaluated in the M&A process. Furthermore, decision making in this area must be based on a thorough analysis of market conditions, strategic objectives and the financial viability of the proposed operations.

For this reason, it is essential to have a comprehensive and specialized legal team.

For more information, please contact us:

Bernardo Llaca Martínez

Luis Cuesta Salces

Diego Canals López Velarde