While some companies adopt a more conservative stance, others use the M&A strategy to accelerate their business.
Brazil ended 2019 with an all-time record for mergers and acquisitions. In all, 912 transactions were recorded (more than the historical series of 879 transactions in 2014). The expectations for this year were even better until the pandemic put at stake the resilience of the Merger and Acquisition (M&A) market in the crisis.
But what we saw in this first semester was just the opposite, as the market performed even better than last year. In the cumulative period from January to July, 483 M&A transactions were announced — a 5% increase over the same period in 2019. According to the PwC advisory, the Southeast region still represents the largest share of transactions (66%), with a highlight to the IT, auxiliary services, public and health, and financial sectors.
In these areas, two M&A transactions conducted by us, 3Capital Partners, stand out. The first of them is the purchase, by SmartFit, of Queima Diária, which is considered the largest online exercise platform in Latin America and the “Netflix of fitness”. The second, which was carried out at the end of July, was BTG Pactual’s advance in the world of startups by increasing its stake in CredPago from 20% to 49%. The transaction, fully conducted by us in two tranches, brings the bank even closer to the startup, which has developed a platform to eliminate bureaucracy in real estate renting, a segment that moves BRL 150 billion per year in the country.
Opportunities in sight
And while the pandemic has caused some companies, such as Boing, to adopt a more conservative stance, as shown in “What M&A Looks Like During the Pandemic,” published by the Harvard Business Review; others, such as Google Cloud, Nestlé, BlackRock, and the British clothing company Boohoo, have publicly stated that they are open to acquisitions.
Our experience and market insight shows that in the face of accelerating digital transformation and the “new normal,” many companies will use M&A to accelerate their business. And, no doubt, they will need more than ever to rely on experts to help them look at the transformation drivers as opportunities for change and reinvention.
Companies that face the uncertainties with clarity and purpose, whether looking at the M&A market defensively or offensively, will certainly be able to protect their business, accelerate their recovery, and enter this “new world” in a leading position.
