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Latin American family business owners look to M&A for growth

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Latin American ultra-high net worth (UHNW) business executives are keen on opportunities for mergers and acquisitions, with many likely to pursue deals in the short-term, according to a new report from Campden Wealth Research, in partnership with Morgan Stanley.

The newly published “Risk & Return in Latin America” finds that 56 per cent of executives surveyed perceive merger and acquisition (M&A) opportunities in Latin America to be excellent or very good; with 43 per cent extremely or very likely to pursue opportunities in the next 12 months.

Interestingly, their attitudes are more positive about opportunities inside LatAm than outside the region.

Interest in M&A is driven in part by a generational dynamic in which the family principal, generally the patriarch, is reaching retirement age with no succession interest among his children, the survey finds, as well as by opportunities linked to outflows of foreign direct investment.

“This is to our knowledge the first survey of its kind,” says John Moore, Head of Latin America for Morgan Stanley. “It finds that successful family business owners see themselves as uniquely positioned versus international competitors to grow within the region. They wish to do so via mergers and acquisitions, and also are seeking advice on opportunities in private equity, venture capital and joint ventures.”

Business leaders are looking to expand despite a muted economic outlook for the region and the perception of significant risks. Risks perceived as extremely or very important include personal/business reputation (93 per cent), political/country risk (89 per cent), capital risk (84 per cent), inflation rate risk (81 per cent) and family succession (81 per cent).

Our survey found that heads of family businesses are actively seeking to improve their ability to manage the risks they can control. However, they also perceive a cultural change in the region, with younger generations increasingly educated to international standards and looking to pursue sustainable businesses. We found a growing interest in philanthropy among UHNW families, notably in education, healthcare and the environment,” says Dominic Samuelson, Chief Executive Officer, Campden Wealth.

In wealth management, 41 per cent of survey respondents list wealth preservation as a key objective, followed by 30 per cent citing growth. The family executives would like access to more expertise in foreign exchange risk and knowledge of offshore funds, as well as in lending and capital markets activity.

“These family executives are being called upon to both preserve family wealth as the primary family decision-maker, while simultaneously growing their business as the corporate manager. Outside advisors can provide a valuable service by helping to manage the conflict inherent in these dual responsibilities,” said James Jesse, Head of International Wealth Management at Morgan Stanley.

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