BRAZIL Law and Practice Contributed by: Rafael Lacerda, Eric Nahum, Rômulo Martins and Fernando Oliveira, Lacerda Diniz Advogados
are allocated to the buyer, and any adjustments are handled contractually, without automatic interest. 6.3 Dispute Resolution for Consideration Structures In Brazil, it is common for transactions of this type to include dispute resolution mechanisms related to con - sideration structures, especially when these involve complex calculations or future metrics, as is the case with completion accounts or earn-outs. Depending on the value of the transaction, the complexity of the par - ties and the structure of the transaction, these assess - ments are often conducted by large auditing firms and/or independent experts, ensuring impartiality and credibility in the determination of price adjustments. The dispute resolution mechanism is usually tiered: initially, the party that identifies a disagreement noti - fies the other party; then, the parties mutually agree on an independent auditor to analyse the issue, and only if there is no consensus between the parties can the dispute be referred to arbitration, as provided for in the contract. This system ensures that arbitration serves as a last resort, preserving faster and more collaborative solutions. In contrast, in fixed-price with locked box structures, where the value of the company is determined based on a date prior to closing, the need for experts or for - mal resolution mechanisms tends to be lower, being triggered mainly in cases of breach or interpretation of contractual clauses, since financial adjustments are already defined in advance and post-closing risks are allocated to the buyer. 6.4 Conditionality in Acquisition Documentation In Brazil, in addition to conventional conditions prec - edent, it is common for transactions to include sup - plementary conditions depending on the size and complexity of the target company. For targets engaged in regulated activities – such as oil and gas, electric power, telecommunications or air transportation – additional consents or notifi - cations from the relevant regulatory authorities may be required. Transactions may also be conditional upon clearance from CADE (the antitrust authority),
the Central Bank of Brazil (BACEN) or other financial regulators. Third-party consents are also a frequent requirement, particularly where the target has key contracts with strategic customers, exclusive suppliers or business partners. Bank financing arrangements in Brazil com - monly contain change-of-control provisions requiring lender consent prior to the transfer of ownership. Certain sectors impose foreign investment restric - tions, including the ownership and management of rural land, businesses located along international bor - ders, and companies engaged in the publication of newspapers, magazines or the operation of radio and television networks. It is also market practice to condition closing on the maintenance of agreed financial covenants or the absence of events materially adverse to the value of the business between signing and closing. In smaller or less complex transactions, some of these conditions may be simplified or dispensed with, whereas in larger or strategic deals they are consid - ered standard and effectively mandatory. As to timing, CADE typically clears fast-track merger filings within approximately 15–20 days and ordinary- track filings in around 94 days, based on recent aver - ages. These benchmarks are often used when nego - tiating the long-stop date. 6.5 “Hell or High Water” Undertakings There is a clear distinction between merger control conditions and conditions tied to foreign investment or highly regulated sectors. “Hell or high water” obli - gations tend to be more cautiously negotiated where sectoral or foreign investment constraints may require divestitures or burdensome remedies. For EU related deals, note that EU member states’ foreign direct investment (FDI) screening is distinct from the FSR. The FSR requires notification and standstill for con - centrations only when EU thresholds are met (includ - ing at least one party with EUR500 million or more of EU turnover, and the parties having received EUR50 million or more in foreign financial contributions over
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