BRAZIL Law and Practice Contributed by: Felipe Barreto Veiga, Rafael Teixeira, Gabriel Abdalla and Pablo Arana, BVA – Barreto Veiga Advogados
BVA – Barreto Veiga Advogados Rua Fidêncio Ramos, 308 – 4th floor Vila Olímpia São Paulo
SP 04551-010 – Brazil Tel: +55 11 4081 1900 Email: atendimento@bvalaw.com.br Web: www.bvalaw.com.br
1. Trends 1.1 M&A Market
Overall, while the market is not experiencing much momentum, it has become more disciplined, struc - tured and risk-sensitive. Financing conditions and cost of capital (WACC) remain central to deal execu - tion: the Selic rate (the Central Bank of Brazil’s policy rate) was held at elevated levels (15.00% p.a. from June 2025), but the Central Bank reduced this to 14.75% in March 2026 – even so, borrowing costs remain significantly high, and it is not uncommon for banks to extend credit at rates exceeding 25.00% per annum. That said, from a debt capital markets standpoint, in 2025, B3 (the Brazilian stock exchange) recorded a 6.5% increase in the volume of corporate fixed- income securities issuances compared with 2024. This indicates that companies are increasingly relying on debt financing. However, many companies are also facing difficulties servicing their debt obligations: in 2025, the number of companies filing for judicial reorganisation proceed - ings – including enterprise companies – increased by 13.0% compared with 2024, according to an RGF report. 1.2 Key Trends Key trends in the Brazilian M&A market over the past 12 months include: • Valuation discipline and structured pricing mecha - nisms: Persistent valuation gaps and a higher cost of capital have reinforced the use of earn- outs, deferred or staged payments, seller (vendor) financing and more detailed price adjustment
The Brazilian M&A market has experienced a steady recovery over the last 12 months, although activity remains substantially below the 2021 peak. In 2025, transactional activity surpassed the constraining effect of elevated interest rates, tighter credit con - ditions, zero IPOs, and persistent valuation gaps between buyers and sellers. Nonetheless, the market has gradually stabilised, culminating in an increase in transaction volume compared with 2024, according to TTR Brazil Annual Report 2025. Three primary factors have contributed to this improvement: • a more stable macroeconomic backdrop and lower inflation volatility, despite still restrictive financial conditions and challenges related to federal gov - ernment spending; • enhanced policy and macroeconomic predictabil - ity; and • increased appetite from strategic buyers pursuing consolidation opportunities and operational syner - gies. Private equity activity remains selective, with greater emphasis on bolt-on acquisitions rather than large platform deals. Cross-border transactions have also persisted, particularly inbound investments in infra - structure, energy transition, agribusiness, education and tech (with a clear ramp-up to AI-related deals). Mid-sized tech companies are still driving M&A activ - ity in deals below USD100 million.
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