Brazil M&As set to pick up in 2023

The number of mergers and acquisitions in Brazil is likely to recover in the coming quarters due to reduced political risk, according to an expert.

There were 370 M&A deals in Latin America's largest economy in the third quarter, down from 557 a year earlier, and down from 461 in the second quarter, a survey from KPMG Brasil shows.

"In general and despite the existing problems for next year, the business environment will likely be better in 2023 than in 2022 due to the reduction of political noise," Mário Braga, senior analyst for Brazil at Control Risks, told BNamericas. 

"The risks associated with Brazil next year are set to migrate from politics to doubts regarding the fiscal policy that the new government will adopt," he said.

This year saw former president Luiz Inácio Lula da Silva narrowly defeat President Jair Bolsonaro in an election with a high degree of political polarization.

During the campaign Bolsonaro hinted several times that he might not accept the election result in the case of defeat, as he questioned the country’s electronic voting machines without presenting any evidence to back up his concerns. 

Bolsonaro, who will remain in power until January 1, has also refused to congratulate Lula on his victory.

According to KPMG, the M&A slowdown in the third quarter was concentrated in the ICT sector, which is usually a sector with a high number of transactions.

There were 44 deals involving technology firms, down from 97 in the second quarter, while transactions involving internet firms dropped to 121 from 168 in the same comparison.