A taste of Brazil in M&A deals: key provisions at the eyes of local law and courts

The Brazilian mergers and acquisitions market was relatively stable for years, but gained traction in 2021. Foreign dealmakers see room for further growth in 2022: despite recent appreciation, the local currency has overall lost significant value against the world’s anchor currencies since the covid-19 pandemic broke out.

These dealmakers know that the next presidential election scheduled for October may bring political upheaval and that the candidates’ plans for the economy for the 2023-2026 term are still vague – at best. Yet, assets are cheap and long-term profitability prospects continue to be attractive.

While foreign investors focus on anticipating scenarios given domestic and international uncertainties, they sometimes overlook how their M&A agreements are being structured and negotiated under local law. This can prove a great mistake and harm the expected return on investment.

This edition of LS Brazil Outlook is a joint venture between our dispute resolution and M&A/corporate practices. We bring to you our views on how some key provisions in M&A transactions can be affected by Brazilian law and what to do to mitigate those risks.