Brazil recorded a record amount of mergers and acquisitions in 2021. The M&A market, an acronym for “mergers and acquisitions”, totaled US$ 66 billion last year, the highest value since 2010, according to data from consultancy Bain & Company . Another survey, this one carried out by the Fusões & Aquisições portal , indicated 1,880 M&A deals carried out in 2021, an increase of 63% in the volume of transactions compared to 2020.
The phenomenon did not occur exclusively in Brazil, it was global. Also according to data from Bain & Company, the aggregate value of mergers and acquisitions in the world reached the historic mark of US$ 5.9 trillion. Information compiled by Reuters based on finance platform Dealogic reveals a similar figure: $5.63 trillion in M&A deals last year, surpassing the previous annual record set in 2007. Technology and healthcare, which typically account for the largest share of the M&A market, took the lead again in 2021, in part due to pent-up demand from last year, when the pace of mergers and acquisitions fell to the lowest level in three years due to the global financial crisis caused by the covid pandemic. -19, Reuters clarified.
In Brazil, the record number of initial public offerings (IPOs) – there were 46 operations in 2021, moving BRL 64 billion – favored the heating up of the M&A market. Most Brazilian companies that accessed the stock market last year reported their intention to use part of the funds raised in the IPO to carry out acquisitions.
The macroeconomic context also boosted the mergers and acquisitions market in the country, with low interest rates and a devalued exchange rate against the dollar. “All these factors played a role in the volume of M&A activity in 2021,” said Luis Frota, partner at Bain & Company, in releasing data from the Global M&A Report 2022.
Large transactions, those above R$10 billion, accounted for about half of the total value of mergers and acquisitions transactions in 2021, according to the consultancy. Most of them were for the consolidation of companies in different sectors.
In the healthcare area, for example, Hapvida and Grupo NotreDame Intermédica (GNDI) merged in February 2021, creating a company with combined revenue of BRL 18.2 billion and 13.6 million users. In the energy sector, the highlight was the purchase of Biosev by Raízen . In transport, Localiza joined Unidas and, in retail, Carrefour incorporated BIG .
On other fronts, last December, 3G Capital closed a US$ 7.1 billion deal for the acquisition of a controlling stake in the Dutch multinational Hunter Douglas , a blinds, curtains and architectural products manufacturer. In July, BTG Pactual acquired the control of InfraCo , Oi’s infrastructure unit, for R$ 12.9 billion.
The Mergers and Acquisitions portal listed the segments with the greatest appetite for M&A in 2021:
- Information Technology (IT)
- Telecommunications and Media
- Hospitals and Clinical/Health Analysis Laboratories
- Financial Institution
- Others
- Food, Beverages and Tobacco
- Energy Companies
- transport
- education
- Chemicals and Pharmaceuticals
Data released by KPMG indicate the concentration of M&A transactions in the Southeast region of Brazil, which recorded 1,472 mergers and acquisitions in 2021, an increase of 96.7% compared to the previous year, when 748 transactions were recorded.
The number of operations in the region corresponds to 76.2% of the total transactions involving all the federative units of Brazil carried out in 2021. The state of São Paulo leads nationally, with 1,160 transactions, reaching 78.8% of the regional total. Then come Rio de Janeiro (167), Minas Gerais (132) and Espírito Santo (13). “The expectation is that this strong increase will also contribute to the improvement of the business environment and the recovery of the economy”, said in a note Fernando Aguirre, partner of Regional Markets at KPMG in Brazil.
Mergers and Acquisitions in 2022
The M&A market should remain strong in 2022, according to the report by Bain & Company. However, some factors can negatively impact the national scenario of mergers and acquisitions. Are they:
- Global supply and demand shocks
- Uncertainties regarding the covid-19 pandemic
- Market uncertainties related to the second semester presidential elections
- Worse macroeconomic performance (inflation rate higher than its international peers, potentially requiring greater interventions from the Central Bank)
An analysis carried out by the consultancy Deloitte shows that mergers and acquisitions can play a relevant role in the recovery of post-pandemic companies.
According to the document, some sectors, such as specialized retail, hospitality, sports health and live entertainment, which have suffered irreversible changes in their business models with the covid-19 pandemic, may follow an inorganic growth strategy, which “at this moment will be paramount”, according to the consultancy.
Sectors that are more resilient, such as consumer goods, financial services, technology and telecommunications, should suffer reductions in the value of their
active. This trend, Deloitte points out, will represent unique opportunities for M&A, especially for disruptive technologies (corporate communication systems, cloud technology, etc.).
In addition, the new reality may accelerate the concentration of some sectors through alliances, such as media, banks and retail in general. The move, the consultancy claims, would be driven by new customer behaviors and spending patterns. “In this scenario, companies need to seek new partnerships, as well as M&A. These partnerships can include both more agile companies in the ecosystem as well as traditional partners”, mentions the report.
Another aspect that the document mentions is that aggressively seeking opportunities to create value during down cycles is a key point for sustainable performance.
Finally, private equities, activist investors, eager investors and large
corporations with strong balance sheets are all in a strong cash position to make quick moves by adopting more “predatory” M&A strategies, says Deloitte.
