2023-04-28 23:00:11
Brazil is still experiencing a period in which startups and other companies in the innovation sector seek to adapt to a new reality that can be understood as a “post-winter of startups”.
The segment should not return to the acceleration of the period of the Covid-19 pandemic, which led to a boom in the sector, but some factors may lead to believe that the M&As market may return to growth in 2023.
According to Fernando Trota, CEO of Triven, a company specialized in backoffice services for startups and companies with identity with the innovation sector, mergers and acquisitions have already started to heat up again from the second quarter of 2022 and, in a scenario of global economic volatility – such as the war between Russia and Ukraine and inflation – European and American entrepreneurs were forced to find suppliers in new markets.
“This search by major players for acquisitions of startups in more “neutral” markets on the world stage can be strategic for Brazilian companies. In addition to the geopolitical factor, the lower transaction values are also attractive and open up space for sectors such as the Internet, Software & IT Services and Health to stand out in M&A operations”, opines Fernando.
A survey by the economic news website Bloomberg recorded that the number of transactions in the Brazilian M&A market reached 1,130 last year – down from previous years. According to Fernando, many deals may have been postponed to 2023, due to the unstable political and economic scenario. However, if there is more stability, the market tends to warm up again.
“The expectation is that around R$60 billion will be transacted, according to more conservative views – it could reach figures of R$100 billion. The results of the investments will depend on the external dynamics (which are currently experiencing a recession), inflation, the consequences of the war in Ukraine and the Brazilian interest rate. So, two important factors for this recovery to be confirmed are the reduction in interest rates and fiscal stability”, adds the CEO.
The expectation of specialists around IPOs (that is, the debut of companies on the Stock Exchange) is for new openings from April and May, more slowly, depending on the stabilization of interest rates and inflation.
Fernando points out that, in comparison, the perspective for Wall Street, for example, is of new openings only from the second half. “The recent collapse of the SVB Financial Group has investors more cautious given the sector’s momentary vulnerability. The IPO in Brazil, in turn, should positively influence the volume of mergers and acquisitions. This is because, with more companies capitalizing their funds with IPOs, there is a growing trend of directing investments towards growth strategies through acquisitions”, observes Triven’s CEO.
house in order
Keeping financial, accounting, fiscal and tax management up to date is a fundamental point for startups that want to take advantage of opportunities in the M&A market, emphasizes Fernando.
“In addition to buyers being very careful when choosing startups, they cannot take a risk because of the entire political-economic scenario already mentioned. To pass on this trust and be able to take advantage of M&A opportunities, having good financial management at the startup helps attract buyers and facilitates getting closer to them”, he adds.
The CEO points out that it is necessary to convey credibility to investors through a solid structure of corporate governance; have an updated strategic plan integrated into the annual budget; prepare performance indicators and reliable financial reports, supporting decision-making through efficient controllership; and present business plans, financial organization, results and quarterly and annual statements.
Source: Press office
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