COLOMBIA Trends and Developments Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
value businesses, leading to an increase in the use of earn-outs and deferred payment mech - anisms in M&A transactions. Earn-outs and deferred payments are payment structures that allow the final purchase price to be contingent on the future performance of the acquired busi - ness. These mechanisms help bridge the valu - ation gap between buyers and sellers, and miti - gate the risks associated with past performance volatility and uncertain future outcomes. However, while earn-outs and deferred payments offer a practical solution to valuation challenges, they also come with potential downsides. These structures can lead to future disputes and litiga - tion if the agreed-upon performance targets are not met or if there are disagreements over the calculation of earn-outs. Despite these risks, the use of earn-outs and deferred payment mecha - nisms has become increasingly common in the Colombian M&A market as investors seek to navigate economic uncertainty. Artificial intelligence (AI) in due diligence Identifying how target companies are relating and adapting to AI developments has become a key part of conducting due diligence. It has become important to identify whether the target has incorporated AI tools and applications into its business, and whether the AI tools being used comply with intellectual property (IP) regulations and are not misusing IP rights of third parties. Buyers conducting due diligence in IP-related companies are also seeking to understand whether the IP rights of the target are properly protected from potential misuses of third parties’
decision-making and improving efficiencies. AI tools can quickly analyse vast amounts of data, identify patterns and provide insights that help legal professionals and investors make more informed decisions. This technological advance - ment is expected to continue shaping the M&A market in the years to come. In the Colombian legal sector, AI is increasingly being used in due diligence, document prepara - tion and deal execution overall. ESG considerations Environmental, social and governance (ESG) factors are playing an increasingly critical role in M&A and corporate-related processes. Inves - tors are prioritising thorough due diligence on ESG matters to ensure that potential targets align with their own ESG values, have sustain - able business models and are not exposed to significant reputational risks. This focus on ESG integration is becoming a key driver in decision- making processes, as investors seek to mitigate risks and capitalise on opportunities related to sustainability. Processing of personal data in the fintech ecosystem In 2025, the Superintendence of Industry and Commerce, acting as the data protection author - ity, published a draft External Circular (the “Draft Circular”) outlining specific guidelines for the processing of personal data within the fintech sector. The aim is to guide data controllers offer - ing financial services through digital platforms on their legal obligations regarding data protec - tion. Key provisions of the Draft Circular include the following. • Legitimate purpose and proportionality: the processing of personal data must serve a legitimate purpose, and must be necessary
AI developments. Integration of AI
The adoption of AI is transforming the M&A land - scape by streamlining processes, enhancing
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