The result is that while Mexican executives are cautiously optimistic about the future, some are pressing the pause button on dealmaking. They want to determine how the trade policies of the new government and the new United States-Mexico-Canada Agreement (USMCA), will impact corporations in Mexico before they move forward with acquisition plans.
In fact, 44% of Mexican executives expect to pursue M&A in the next 12 months, versus 76% six months ago. That level of deal intentions is in line with global intentions, which sits at 46%. Although dealmaking expectations have fallen, confidence in M&A markets remains high, with 89% of Mexican executives seeing the global M&A market as improving and 67% expecting things to improve locally over the next 12 months. Anticipated deal pipelines and completions also underpin a strong M&A outlook.
With more than half of Mexican respondents citing shifting trade policies and political uncertainties as the biggest risk to M&A, companies are increasing the frequency of their portfolio reviews, with divestitures as their primary focus. In particular, private equity (PE) is driving a different dynamic. Entering the market flush with capital, PE firms are pushing the Mexican companies they invest in to undertake regular portfolio reviews to identify opportunities to redeploy capital and free up cash to make the companies more resilient and less affected by ongoing uncertainty.