Colombian lawyers reporting up to 100% increase in M&A work
Lawyers highlight substantial activity in finance, insurance, oil and gas, healthcare and utilities industries despite uncertainty about new government’s economic policy
M&A activity in Colombia has been relatively strong in the first half of 2018 with most major law firms reporting an increase in transactional work during the period. Indeed, some firms have recorded a 100 per cent rise in M&A activity this year. Claudia Barrero, Bogotá-based partner at Philippi Prietocarrizosa, Ferrero DU & Uría – which, according to Mergermarket, has been the second most active law firm in Latin American M&A this year – says: “There is clearly significant appetite for Colombian targets and a perception of stability regarding our legal institutions.” Barrero, whose firm handled 16 deals in Latin America in the first half of the year (up from 14 in the same period the previous year), notes an increase in M&A activity in the internet and retail sectors in Colombia. “These are going to be the most promising sectors in Colombia in the coming year,” she says, adding that there is expectation that general M&A activity will grow in the second half of the year now the new government is in place – President Iván Duque, who took over in August 2018, is perceived as business-friendly.
Sergio Michelsen, a partner at Brigard & Urrutía in Colombia – which has handled twice as many M&A deals in the first half of this year compared to last year (it has been instructed on 12 deals with a total value of $660 million) – says there has been substantial activity in the finance and insurance sectors, as well as in the oil and gas, healthcare and utilities industries despite uncertainty about the economic policies of the incoming government. “Now that the presidential election has passed, and a business-friendly agenda has been announced by the new government, we expect deal activity to increase,” he says.
Anti-corruption strategies
While there has been an increase in M&A activity in Colombia involving Asian investors, most international buyers come from the US and Europe, says Brigard & Urrutia partner Jaime Robledo. “Interestingly, we are also seeing M&A activity involving intra-Latin American investment,” he adds. “In our case, we have worked on acquisitions with Chilean and Mexican counterparts.”
Due diligence related to corruption, as well as the development of anti-corruption strategies will become increasingly important in M&A transactions, according to Felipe Quintero, partner at DLA Piper Martínez Beltrán in Bogotá. Meanwhile, Michelsen points out that law firms are already starting to develop specialised practices that deal exclusively with these issues, with clients becoming much more demanding when it comes to compliance-related due diligence, particularly in relation to public sector and infrastructure-related deals.
Cross-border deals
There will be more multi-jurisdictional and cross-border deals in Colombia as the country remains an attractive market for multinational companies in sectors such as technology, consumer, financial services and agroindustry, says Quintero. “Colombian companies will continue to make acquisitions abroad, principally in Central America and other countries in the Pacific Alliance,” he adds.
The way M&A deals are conducted will begin to change as law firms make greater use of artificial intelligence and machine learning tools when conducting due diligence, Quintero adds. Meanwhile, Barrero says legal technology will facilitate more efficiency and precision in M&A deals. He continues: “In the future, junior teams might be leaner as artificial intelligence kicks-in but we expect that the value that human experience and judgement add will remain.”
