BRAZIL Law and Practice Contributed by: Felipe Barreto Veiga, Rafael Teixeira, Gabriel Abdalla and Pablo Arana, BVA – Barreto Veiga Advogados
mechanisms. Locked-box structures remain com - mon in private deals, while completion accounts are still preferred in transactions characterised by higher volatility or greater working-capital sensitiv - ity. • Increased regulatory and compliance scrutiny: Investors have continued to place great emphasis on environmental, social and governance (ESG), general compliance and data protection compli - ance (LGPD/GDPR), tax contingencies and labour liabilities. Due diligence has become more granular and risk-led, particularly in mid-market transactions where execution risk and succession liabilities tend to be more pronounced. • Sector-driven consolidation: Rather than broad- based expansion, activity has remained concen - trated in industries undergoing structural consoli - dation, including healthcare, financial services, energy/renewables and technology/digital infra - structure (with additional momentum around data- related and AI assets). • Distressed and special situation transactions: While large-scale distressed M&A has not dominated the market, selective opportunities have emerged, often linked to refinancing pressure and portfolio rationalisations (notably in retail, energy, real estate development and specific technology verticals). • Strategic foreign capital in regulated sectors: Inbound investors have continued to pursue infra - structure and digital infrastructure assets, frequent - ly through structured partnerships, consortia or joint ventures, reflecting both regulatory sensitivi - ties and funding or operational reasons. • Buyer payment guarantees: Sellers are increas - ingly requiring buyers to provide guarantees of their payment obligations. These guarantees may include bank guarantees, escrow arrangements or other credit enhancement mechanisms, parent or sponsor guarantees, equity commitment letters or security interests, to ensure that deferred or staged payments are adequately secured, reflecting a heightened focus on counterparty and financing risk in volatile market conditions. This trend has also been reinforced by cases where certain buy - ers, including some large or well-known market participants, experienced financial constraints and did not proceed with previously agreed transac - tions, even for relatively smaller deals. This has
increased seller sensitivity to completion and credit risk. • Insurance-backed risk allocation in M&A: A parallel trend is that buyers are more frequently opting to secure sellers’ representations and warranties and other indemnification obligations through insur - ance (such as W&I insurance), rather than through traditional escrows or other forms of guarantees. This shift can streamline negotiations over indem - nity caps, survival periods and escrow amounts, and reduce the need for extensive post-closing recourse against sellers. 1.3 Key Industries The most active sectors in Brazil over the past 12 months have been the following: • Energy and renewables: There has been sustained activity across solar, wind and distributed genera - tion assets, supported by energy-transition policies and long-term demand visibility. Non-renewable projects also deserve highlighting, such as transac - tions involving thermoelectric and nuclear power. • Infrastructure and logistics: Concessions, sanitation projects and logistics platforms have continued to attract domestic and foreign investors, in line with Brazil’s infrastructure modernisation agenda. • Technology and digital infrastructure: Data cen - tres, SaaS providers, fintechs and cybersecurity companies have remained attractive targets. While venture capital funding has slowed relative to prior years, strategic acquisitions have continued. AI is gaining traction. • Healthcare: Consolidation among hospital groups, diagnostic laboratories and specialised clinics has progressed through buy-and-build strategies. • Financial services and credit platforms: Selec - tive acquisitions involving fintechs, securitisation platforms and alternative credit vehicles have taken place, reflecting the continued development of Bra - zil’s capital markets. • Agribusiness: Brazil’s position as a leading agri - cultural exporter continues to support investments in the whole country, including in inputs (including seeds and fertilisers), logistics and agtech solu - tions.
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