Buying companies: What kind of companies does foreign investment return to?

As a result of the trap that multinational corporations are in today to shift dividends abroad, the market has merger and acquisition of companies (merger and acquisition) I grew up in Argentina 50% compared to the first quarter of 2021.

According to the data you collected KPMGin the first quarter of the year 20 transactions for Arrived to 2,032 million USD.

according to Andrea Otezathe partner responsible for Deal advice KPMG Argentina, “Transactions in the Technology Sector Continue driving activity by 45% of all operations.

For the specialist, “These are companies that have an export profile, or a regional presence, and that is the case It managed to attract the attention of international players“.

In terms of the origin of buyers, this quarter shows an unusual picture with 80% of operations carried out by overseas buyers. “This was particularly in the tech sector because 90% of cases are international buyers. It is a change of direction observed in 2020 and 2021 with the leading role of national investors.”

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Why is the buying and selling of companies increasing?

Limited access to foreign exchange is a major factor for multinational companies. “Companies of international companies located in the country that have limited access to the foreign exchange market to pay dividends to parent companies, and accumulate cashare more actively involved in transactions as a means of utilizing idle capital, which is otherwise subject to devaluation and/or inflation risk”, in this sense Federico Daz Asconaga, president KPMG Argentina Company.

In the first quarter of the year, international companies showed particular interest in technology companies of Argentine origin, followed by companies related to energy, natural resources, science and health.

Based on KPMG data, it is not surprising to see a very low percentage of transactions where both the buyer and seller are local.

The level of discount rates and inherent risk in the Argentine market leads to very low market valuations of companies, a situation that is usually not checked by local sellers who prefer to take risks while waiting for better selling conditions.

In short, The specific weight of transactions in the quarter with international buyers is not the result of greater interest from foreign companies but the almost disappearance of domestic operations.

In any case, KPMG Argentina analysis indicates that there is a higher level of due diligence In progress, it is expected that a recovery in M&A activity in Argentina can be seen in the coming quarters.

What happens with buying and selling companies in the world

Records merger and acquisition activity in the world in the first quarter of the year fall in 27% of the trend of the past three quarters The product of the uncertainty caused by The conflict between Russia and Ukraine.

The impact occurs mainly in Europe with a 40% decrease, while the US was less affected with a 10% decrease compared to the last quarter.

The uncertainty arising from the conflict between Russia and Ukraine, along with the restrictive measures taken by central banks around the world to control inflation, affected the valuation of companies and delayed the closing of transactions.

The Latin American market maintains a constant volume of activity quarter by quarter, With the first period in 2022 maintaining the record volumes observed since the last quarter of 2020.