COLOMBIA Trends and Developments Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
Earn-outs and deferred payments Valuation uncertainty, combined with a still‑elevated cost of capital, has continued to drive the use of earn‑outs and deferred consideration mechanisms. These tools are commonly used to bridge valuation gaps and allocate risk in light of earnings volatility and uncertain forward‑looking projections. While these mechanisms have facilitated deal execu - tion, market participants increasingly expect a rise in post‑closing disputes, particularly where performance metrics are not achieved, or where the calculation of earn‑out triggers gives rise to interpretative disagree - ments. Artificial Intelligence (AI) Assessing the adoption and use of AI has become a standard element of due diligence in many transac - tions. Buyers are increasingly focused on whether AI tools are embedded in the target’s operations, wheth - er their use complies with intellectual property, data protection and regulatory requirements, and whether there is exposure to third party IP claims. In IP‑heavy transactions, buyers are also evaluating whether the target’s intellectual property portfolio is adequate - ly protected against potential misappropriation or infringement risks arising from third party AI systems. AI has also become a tool to optimise and conduct efficient due diligence processes. At the same time, the growing adoption of AI tools by law firms and transaction advisers is reshaping deal execution and is expected to continue influencing the M&A process in the coming years.
Trends by Sector The industries that have experienced significant M&A activity over the past 18–24 months and that are expected to continue to do so in the near term include fintech (driven by the continued digitalisa - tion of financial services, financial inclusion initiatives and the scaling of platform‑based business models) and healthcare, notwithstanding ongoing regulatory uncertainty, due to demographic pressures, rising healthcare demand and the need for operational effi - ciencies. In addition, the electricity segment within the broader energy sector has remained active, despite regula - tory, environmental and permitting uncertainties. This activity has been fuelled by the energy‑transition agenda and, paradoxically, by a growing preference for acquiring existing, operational assets as investors anticipate slower approval cycles and greater execu - tion risk for new greenfield projects. Trends by Deal Structure Pre-organisation carve-outs Carve-outs remain a prevalent trend in the Colombian M&A market. Companies are increasingly engaging in pre-sale reorganisations to create portfolios that are easier to sell, more attractive to investors, and subject to less regulatory scrutiny. By isolating specific busi - ness lines or assets, sellers can unlock hidden value by excluding underperforming units from transactions and focusing on high-growth segments.
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