EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera, Daniel Leiva and Raquel Santos, Torres Legal
Torres Legal #4312, El Salvador CA Calle Cuscatlán Colonia Escalón San Salvador CP, 1101 El Salvador Tel: +503 2538 6300 Email: contact@torres.legal Web: www.torres.legal
1. Market Trends 1.1 Technology M&A Market
1.2 Key Trends The key trends in El Salvador in the last 12 months are as follows: • increased foreign investment – new business models have led to an increase in interest in El Salvador’s technology M&A market from foreign investors; • focus on technology – there is growing demand for tech-driven solutions and services; • regulatory changes – evolving regulations and gov- ernment policies, including the adoption of Bitcoin as legal tender, are shaping the M&A landscape and encouraging new investment opportunities; • collaborative ventures – investors are seeking new business opportunities with local actors to take advantage of the emerging market; and • tokenisation – as a financial instrument in El Salvador, tokenisation offers innovative opportuni- ties for enhancing liquidity and enabling fractional ownership of assets, where converting physical assets into digital tokens on a blockchain facili- tates secure transactions and broadens access to investment opportunities for a wider range of investors; and • capital formation reforms – recent enactments introducing the Investment Banks Law and the Private Alternative Investment Funds Law (the “PAIF Law”; Ley de Fondos de Inversión Privados Alternativos ) broaden the pool of sophisticated capital and are expected to support tech-focused deal-making, including transactions involving digi- tal assets.
In El Salvador, the technology M&A market has been growing exponentially over the past year. This is due to the current commitment to modernisation and the implementation of new technologies in El Salvador’s financial market. Several factors have contributed to this boom, among which new technology adoption and favourable regulations can be highlighted, which in turn has led to foreign investment and an expanding start-up market. The Salvadoran technology M&A market aligns with global trends of moderate recovery in deal activity, driven by private equity liquidity, digital infrastruc- ture, software as a service (SaaS), cybersecurity and AI adoption. These global drivers are mirrored locally, where fintech and start-up ecosystems continue to expand. The combination of new data protection and cybersecurity legislation and active foreign investment incentives is fostering an increasingly sophisticated environment for cross-border M&A transactions. Recent reforms promoting sophisticated investor par- ticipation and private fund creation are expected to further strengthen deal activity in the technology and fintech sectors.
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