PUERTO RICO Trends and Developments Contributed by: Juan Ramón Cancio-Ortiz and Cristina M García-Hall, Cancio Covas & Santiago LLP
the western municipality of Cabo Rojo as part of the USD2 billion “Esencia” resort development; Four Sea - sons replacing the St. Regis Bahia Beach Resort in Río Grande; Auberge Resorts Collection developing its “Moncayo” property in the eastern town of Fajar - do; and the development by Hard Rock International, alongside Misla Hospitality, Stonecrest Investment Management and The Interfin Companies, of its new USD850 million new-build project in San Juan. While not traditionally categorised as “corporate M&A”, these transactions share many structural simi - larities, including complex financing arrangements, negotiated governance structures and multiparty investment vehicles. Additionally, these develop - ments produce a myriad of directly related and unre - lated transactions and economic activity in general. Recent trends for the financing of hospitality devel - opments have included two-tiered structures where both commercial banks and private capital funds have participated taking advantage of investment tax cred - its granted under the Tax Incentive Code. These tax credits may be monetised to provide additional capital for hospitality projects. Private Equity Private equity participation in Puerto Rico’s M&A market has increased steadily, though it remains less developed than in mainland US markets. The most active segment for private equity investment is the middle market, where fragmented industries present opportunities for consolidation. However, executing private equity transactions in Puerto Rico presents unique challenges. In Puerto Rico, many businesses are family-owned and may lack formal governance structures or institutional - ised management practices. As a result, transactions often require extensive due diligence and negotiation regarding governance rights, management reten - tion and succession planning. Regulatory filings and approvals also play a critical role in certain sectors, particularly health, energy, banking and telecommuni - cations. Transactions in these industries may be sub - ject to extensive review processes, requiring careful co-ordination between legal, regulatory and financial advisers.
This segment of successful family-owned businesses is currently facing challenges primarily stemming from lack of succession planning. The foregoing has led to a growing number of M&A deals involving long-stand - ing family-owned business being acquired or merged into larger state-side or international, sometimes even publicly owned, firms. Common target sectors that have been part of this trend include healthcare servic - es, distribution, professional services and technology- enabled businesses. Puerto Rico’s highly educated human capital, which often enjoys both English and Spanish fluency, in addition to the island’s culture, business climate and its commercial practices can provide a strong foot - hold for corporate groups seeking a stepping stone into the broader Americas. The island also boasts a highly qualified workforce, particularly in the fields of engineering and biosciences, with the University of Puerto Rico Mayagüez Campus awarding more than 500 Bachelor’s degrees in engineering annually. US-based or other transnational corporate groups may use the acquisition of large local well-established family-owned businesses as their first step in expand - ing their presence into Central and South America. Emerging Trends and Forward Outlook Several key trends are expected to continue to shape the Puerto Rico M&A market in 2026 and beyond. First, supply chain realignment will reinforce Puerto Rico’s role as a manufacturing hub. As companies seek to reduce geopolitical risk, mitigate tariff-driven operational costs and improve supply chain resilience, the island is likely to attract additional investment in pharmaceutical and advanced manufacturing sectors. Second, infrastructure investment will continue to drive transaction activity. The deployment of federal funds for disaster recovery and climate resilience is expected to continue to generate opportunities in energy, water and transportation infrastructure. Third, business consolidation in sectors facing eco - nomic distress resulting from changes in economic and demographic trends may further accelerate M&A activity, particularly in the healthcare sector.
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