BRAZIL Trends and Developments Contributed by: Mauro Cesar Leschziner and Diana Pacifico Henne, Machado Meyer
created difficulties for private equity funds to divest. Brazilian capital markets transactions, which are usually an alternative for private equity funds to exit their investments, have significantly decreased in the past years, resulting in a reduc - tion of exit strategies for private equity deals. Despite these challenges, M&A activity has already showed early signs of growth in 2025. PWC Brazil reported 99 M&A transactions in the country in January 2025, an increase of 16% when compared to the same period of 2024. The majority of such transactions are local, involv - ing Brazilian entities acquiring other entities in Brazil. PWC Brazil expects the number of M&A transactions in the country in 2025 to be higher than the number of M&A transactions in 2023 by 10% to 20%, mainly driven by strategic acquisi - tions and restructuring opportunities. In addition, certain market specialists believe that the new policies adopted by the president of the United States, Donald Trump, affecting, to date, mainly Canada, China and Mexico, will cause companies to re-evaluate their business plans. For instance, Japanese companies are already contemplating alternatives for Chinese suppliers, which may increase their interest in expanding operations in Brazil. Notwithstanding the foregoing, in view of Brazil’s slow economic growth, high interest rate and the ongoing tax reform, local M&A will probably still represent most of the transactions in Brazil in 2025. Main sectors Following the reduction of M&A activity in Brazil during the COVID-19 pandemic, it has experi - enced a gradual recovery, especially in the fol - lowing sectors.
• Technology: As digital transformation and artificial intelligence are rapidly evolving, tech start-ups and fintechs are attractive acquisi - tion targets. Start-ups specialising in AI, cloud computing, cybersecurity and fintech solu - tions are attracting the attention of investors. • Banks and insurance companies: Digital banks and insurance firms are also expanding through acquisitions. Changes to the Brazil - ian regulatory framework regarding financial services, such as open market and the new payment system called PIX, are also creating M&A opportunities in this industry. • Energy and infrastructure: Renewable energy projects, particularly solar and wind, are also under the radar of foreign and local investors. Concessions and privatisation projects involv - ing transportation, airports and sanitation are also being closely monitored by investors seeking opportunities to invest in infrastruc - ture in Brazil. • Healthcare: The healthcare sector continues to be the subject of consolidation, including for efficiency purposes. Such sectors are expected to continue attracting the attention of potential investors and keeping the M&A market busy. Additionally, high interest rates and Brazilian economic conditions are likely to lead to more companies facing reorganisation. As a result, M&A transactions involving distressed assets, as well as companies seeking to sell non-core businesses are also expected to rise. Tax Reform One of the main priorities of the Brazilian con - gress in the past years was the Brazilian con - sumption tax reform, which, after years of debate, was approved in December 2023, through the issuance of the Constitutional Amendment No
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