M&A appetite wanes as Mexican companies wait for more certainty across the geopolitical landscape
Given the emphasis on digital transformation, it is unsurprising that digital strategy and technology alignment are also the top drivers of M&A strategy. Overall, however, M&A intentions among Mexican executives are significantly lower than their global peers, with 37% of Mexican executives expecting their company to pursue M&A in the next 12 months. That compares with 47% of global executives and is below the 10-year 52% average for Mexican executives. Further, 63% of Mexican executives anticipate a slowdown in M&A activity over the coming year. In part, Mexican companies may be taking a wait-and-see approach in the lead up to Mexico’s mid-term elections later in 2021.
Geopolitical challenges may also be playing a role in M&A activity, with 79% of Mexican executives saying they have held back or deferred planned investment until they have a clearer and picture of the geopolitical landscape. Lower M&A intentions within Mexico create opportunities for international investors looking to enter Mexican markets. Although new regulatory policies may limit investment in utilities, markets across most sectors in Mexico are ripe for foreign investment. Mexican companies anticipate growth and opportunities over the next three years closer to home (77%), with four of the top five investment destinations being in Latin America.
Mexican companies build resilience in an uncertain world
Although the COVID-19 pandemic arguably has created the greatest disruption for companies over the past year, disruptive forces will continue to challenge businesses and economies long after the pandemic has faded. Through their strategy and portfolio reviews, and in ramping up investment in digital transformation, technology and digital capabilities, Mexican companies can build resilience and agility to compete in an uncertain world.