TTR: How would you describe the current situation of the players in the transactional market in Mexico in this “new reality”?
Players in the transactional market have continued to become more and more sophisticated and specialized. Their expectation and need for equally sophisticated and specialized legal advice comes hand in hand and was not affected by the COVID-19 pandemic, actually quite the opposite. This makes our work more challenging and forces us to be up-to-speed in terms of what is going on in the market and be more creative and think out of the box when it comes to structuring and coming up with solutions to our clients’ needs.
One sector that has seen increased specialization and sophistication is the venture capital sector, where venture capital funds have been making increasingly large investments in early stage companies and start-ups. This has resulted in a very dynamic and competitive venture capital scene.
We have also seen Mexican players take a more “global” approach with respect to their personnel. It is not unusual to find yourself working for a Mexican company but dealing with executives from all over the world, which as we pointed out before, created more competition and raises the bar in terms of quality.
TTR: What are the most relevant drivers for consolidating the M&A market in Mexico and Latin America, over the medium and long term?
We are optimistic that the M&A market in the region will continue to consolidate in the medium and long term, despite the sharp contrasts between countries in the region.
In the case of Mexico, the political uncertainty has undoubtedly affected certain sectors, but in general the M&A markets and players have shown their resilience and remained strong.
Despite the uncertainty, we have seen an increase in the interest of foreign players to invest and acquire Mexican companies. Evidence of this trend is the venture capital sector, which as mentioned above has been very active and is expected to remain that way.
TTR: As one of the leading M&A legal advisors in the Mexican market, according to our TTR ranking, How has Mijares, Angoitia, Cortés y Fuentes handled the current crisis in terms of advising clients and What opportunities has the company identified in the past months through the current situation in the country?
We must say that the COVID-19 pandemic did not really affect substantively the way we advise our clients. Throughout 2020 and 2021 we have continued to work seamlessly on all types of M&A transactions, and learned to close some of the most complex deals remotely. People just learned to interact without face-to-face meetings. Of course, certain sectors have seen M&A activity slow down during the pandemic, and others have faced regulatory uncertainty that has driven M&A activity to seek sectors less affected. As a firm, we have been able to adapt to this change in focus and have been able to transition with our clients towards the more active sectors in the market.
TTR: In which sectors might international investors find the biggest opportunities in Mexico in 2022? Why?
We see Education, Financial Services, specifically Fintech companies, TMT, and Manufacturing, as some of the sectors which have been more active in terms of M&A activity and which will likely continue to provide the biggest opportunities in 2022.
Likewise, we certainly expect venture capital to continue be very active in Mexico in 2022.
TTR: What is the outlook for the Mexican technology sector in 2022?
The Mexican tech sector is one of the sectors that is exhibiting an upward trajectory in terms of competitiveness and consolidation. We expect to see this trend continue into 2022. Since the adoption of the fintech law, in 2018, a lot of players have sought to enter the market and secure a license to operate as a financial technology institution. These licenses have been issued in the past year and a half. We believe that once the focus of companies shifts from procuring their licenses to growing their business, the sector will start to become more consolidated. We expect to see increased M&A activity in this sector in the coming year.
TTR: What will Mijares, Angoitia, Cortés y Fuentes’ main challenges be in terms of M&A deals in Mexico during 2022?
As a service firm in an increasingly competitive market, we believe one of our greatest challenges is to attract the best talent to become part of our team, and to make sure we keep our staff motivated. Having a talented team ensures that clients continue to seek our services for purposes of assisting them in transactions that are only growing in complexity. We see this as a virtuous circle, where the quality of our talent attracts new clients and keeps existing clients satisfied, while the level of transactions we are involved in helps us attract and keep the best and brightest talent out there. Keeping this cycle going is one of the major challenges faced by the firm.
Source: TTR Transactional Track Record