The authors of this article take a tour around the private capital and family offices sector in Latin America.
The following article explores the wealth management terrain
of Latin America, which is a topic this news service has covered
recently
here. The authors are Emil R Infante and Antonio
Pereira from Squire Patton
Boggs, a law firm, and
GlassRatner Advisory & Capital Group, respectively. (More on
the authors below the article.) The editors are pleased to share
this material, and we hope it starts conversations. To comment,
email the editors at tom.burroughes@wealthbriefing.com
and amanda.cheesley@clearviewpublishing.com
Latin America”s evolving investment
landscape
Latin America continues to attract family offices, private equity
sponsors and strategic investors seeking growth opportunities,
access to critical industries and portfolio diversification in
markets that remain underpenetrated relative to more developed
economies. In recent years, family offices, private equity
sponsors and high net worth individuals have shown renewed
interest in the region, driven by opportunities in
infrastructure, energy, technology, agribusiness, financial
services and special situations.
At the same time, increased regulatory scrutiny, geopolitical
uncertainty, evolving compliance requirements and fluctuating
economic conditions have made cross-border investing more complex
than ever. Successful investors recognise that identifying a
promising opportunity is only one component of a successful
transaction. Equally important is understanding how legal,
regulatory, financial and valuation considerations intersect
throughout the investment lifecycle. (1)
Based on our observations across numerous cross-border
transactions, many of the most significant value impairments,
disputes and failed investments in Latin America do not arise
from flawed investment theses or adverse market conditions.
Rather, they stem from governance shortcomings, regulatory risks
that were underestimated during diligence, unrealistic valuation
assumptions, or compliance issues that emerged after capital had
been deployed. Investors who successfully navigate the region
understand that execution risk can be just as important as
investment risk.
The new Latin American investment landscape
Today’s investment environment differs significantly from what
existed a decade ago. Governments throughout the region have
strengthened anti-money laundering regimes, enhanced financial
regulatory oversight and increased transparency requirements.
International sanctions programs, anti-corruption enforcement and
beneficial ownership disclosure obligations have also become
increasingly important considerations for investors operating
across borders. (2, 3, 4)
Recent investment activity across Mexico, Brazil, Colombia, Chile
and other markets demonstrates that sophisticated investors
remain willing to commit substantial capital despite heightened
regulatory scrutiny and geopolitical uncertainty. Opportunities
continue to emerge across infrastructure, renewable energy,
technology, logistics, healthcare and family-owned businesses
seeking growth capital, liquidity solutions or
succession-planning alternatives.
The question is rarely whether opportunities exist; rather, it is
whether investors have adequately evaluated the legal,
regulatory, governance and valuation risks associated with those
opportunities.
Technology startups throughout Latin America continue to attract
significant capital. Infrastructure projects require substantial
private investment. Family-owned businesses are increasingly
considering strategic partnerships, recapitalisations and
succession driven transactions.
While opportunities remain abundant, the margin for error has
narrowed considerably.
Beyond traditional due diligence
Many investors approach diligence as a checklist exercise. Legal
counsel reviews contracts, accountants analyse financial
statements and compliance teams evaluate regulatory issues.
However, the most successful transactions involve integrated
diligence that considers legal, financial, operational and
strategic risks simultaneously.
Although confidentiality obligations preclude discussion of
specific engagements, we have observed transactions in which
unresolved licensing issues, shareholder disputes, regulatory
deficiencies or customer concentration risks materially affected
valuation and deal structure despite strong underlying financial
performance. In some cases, risks that appeared manageable during
diligence later became central drivers of post-closing disputes,
purchase price adjustments or value impairment.
Consider a hypothetical family office evaluating an acquisition
of a successful logistics company operating in multiple Latin
American jurisdictions.
Initial financial statements suggest strong profitability and
attractive growth prospects. Traditional diligence may focus on
revenue validation, customer concentration and tax
compliance.
A deeper review, however, might reveal several hidden issues:
— Key revenue streams depend on government contracts
nearing expiration;
— Significant operations rely on third-party
intermediaries operating in higher-risk jurisdictions;
— Certain permits and licenses have transfer
restrictions;
— Related-party transactions materially impact reported
earnings; and
— Expansion projections assume regulatory approvals not
yet obtained.
Individually, none of these issues may derail the transaction.
Collectively, they could materially affect value and risk.
The lesson is straightforward: valuation and legal analysis
should not occur in separate silos.
Valuation is more than mathematics
The findings uncovered during diligence often become the primary
drivers of value. As a result, valuation analysis cannot be
separated from the legal and regulatory realities surrounding a
transaction.
One of the most common misconceptions in cross-border
transactions is that valuation is simply a financial exercise.
Legal and regulatory factors frequently influence value as much
as financial performance. (5, 6)
Across many cross-border engagements, we frequently observe a
disconnect between financial models and legal realities.
Financial projections may assume uninterrupted operations,
regulatory approvals or stable contractual relationships, while
legal diligence identifies risks that could materially alter
future cash flows. A valuation that does not adequately
incorporate those risks may create a false sense of
precision.
For example, a business operating in a highly regulated industry
may appear attractive based on historical earnings. However,
pending regulatory changes, compliance deficiencies or unresolved
licensing issues can significantly affect future cash flows and
investor returns.
Similarly, ownership disputes, shareholder conflicts, sanctions
exposure, unresolved litigation and uncertain contractual rights
can reduce value even when underlying business operations remain
strong.
We often advise clients that value should not be viewed as a
single number. Rather, value exists within a range influenced by
risk, uncertainty, governance quality and future
expectations. (6, 7)
This principle becomes particularly important when investors
enter unfamiliar jurisdictions or industries where local legal
frameworks and regulatory environments may differ substantially
from those in the US.
Currency and political risk considerations
In addition to legal, regulatory and operational concerns,
investors should carefully evaluate currency exposure and
political risk when structuring Latin American investments.
Exchange rate volatility, changes in tax policy, capital
controls, shifts in regulatory priorities and political
transitions can materially affect projected returns and
investment outcomes.
Sophisticated investors increasingly incorporate these factors
into their valuation analyses and transaction structures through
appropriate risk adjustments, scenario analyses, contingency
planning and contractual protections. While such risks are not
unique to Latin America, they often play a more prominent role in
investment decision-making and can significantly influence both
value and exit strategies.
Family offices face unique challenges
Family offices have become increasingly sophisticated investors,
often competing directly with institutional private equity
firms.
Unlike traditional private equity funds, family offices
frequently invest with longer holding periods and broader
objectives. Wealth preservation, family legacy, strategic
relationships and intergenerational planning often influence
investment decisions alongside financial returns.
Family offices also possess strategic advantages that
differentiate them from many institutional investors. Their
longer investment horizons, greater flexibility and relationship
driven approach can create opportunities that traditional
financial sponsors may overlook. At the same time, those same
characteristics can sometimes lead investors to place greater
emphasis on trust and relationships than on governance
mechanisms, documentation and exit protections.
In our view, governance deficiencies remain one of the most
underestimated risks in Latin American private capital
transactions, particularly in founder led and family owned
businesses where informal decision-making structures may not
align with investors’ expectations.
We have seen situations in which minority investors entered
otherwise attractive businesses without adequate governance
protections, only to discover years later that their ability to
influence material business decisions was significantly more
limited than anticipated.
Disputes may emerge regarding dividend policies, management
compensation, related-party transactions, strategic direction or
future capital requirements. Although the investment itself may
remain profitable, the investor’s practical ability to protect
its interests can become constrained. The result is not
necessarily a failed investment, but it may become a
significantly less attractive one.
Robust governance provisions, dispute-resolution mechanisms, exit
rights and information rights remain critical regardless of how
promising an opportunity appears at closing.
Compliance is now a value driver
Historically, many investors viewed compliance primarily as a
defensive exercise designed to avoid penalties. Increasingly,
compliance has become a value driver.
Over the past several years, compliance related issues have moved
from the periphery of transactions to the centre of investment
discussions. Questions involving anti-corruption controls,
beneficial ownership transparency, sanctions exposure and
anti-money laundering procedures are now receiving attention from
investors, lenders, regulators and counterparties much earlier in
the investment process than was common a decade ago.
Institutional investors, lenders, strategic buyers and regulators
are placing greater emphasis on transparency, governance,
anti-corruption controls, sanctions compliance and anti-money
laundering procedures. (2, 3, 4, 8)
Companies that demonstrate mature compliance frameworks often
benefit from:
— Greater access to capital;
— More favourable financing terms;
— Broader strategic buyer interest;
— Reduced transaction friction; and
— Enhanced enterprise value.
Conversely, compliance deficiencies discovered during a sale
frequently lead to purchase-price adjustments, indemnity demands,
extended diligence periods or abandonment of proposed
transactions.
Sophisticated investors increasingly treat compliance assessment
as a core component of value creation rather than a post-closing
administrative requirement.
Preparing for disputes before they occur
One of the most overlooked areas in cross-border investing is
dispute preparedness.
Most investors focus on how to complete a transaction. Relatively
few devote equal attention to what happens if the relationship
deteriorates.
Many cross-border disputes reveal that the most significant
challenges are not necessarily related to the merits of a claim.
Enforcement considerations, jurisdictional limitations, local
legal requirements and practical business realities often have a
substantial impact on outcomes. Investors who address these
issues at the outset frequently place themselves in a far
stronger position should disagreements arise later.
Cross-border disputes can be expensive, time consuming and
operationally disruptive. Jurisdictional issues, enforcement
challenges, language barriers and differing legal traditions can
complicate outcomes.
Accordingly, investors should consider several issues before
closing:
— What law governs the transaction?
— Where will disputes be resolved?
— Is arbitration preferable to litigation?
— Can judgments or awards be enforced effectively?
— Are shareholder protections adequate?
— How will damages be measured if disputes arise?
Addressing these questions in advance often proves substantially
less expensive than resolving conflicts after they emerge.
Looking ahead
Latin America will likely remain a significant destination for
private capital in the years ahead. The region offers substantial
opportunities across both traditional and emerging sectors.
Successful investors, however, will increasingly distinguish
themselves not by their willingness to assume risk, but by their
ability to understand and manage it.
Legal, regulatory, compliance and valuation considerations are no
longer separate workstreams. They form an integrated framework
that shapes investment outcomes from origination through
exit.
For family offices, private equity sponsors, financial
institutions and strategic investors, the most successful
transactions will be those that combine thoughtful legal
structuring, rigorous financial analysis, disciplined compliance
practices and realistic valuation assumptions.
Our experience suggests that the most successful investors in
Latin America are not necessarily those willing to assume the
greatest risk, nor those capable of moving the fastest. Rather,
they are the investors who combine disciplined underwriting,
rigorous diligence, realistic valuation assumptions and
thoughtful legal structuring with a clear understanding of the
region’s unique opportunities and challenges. As investment
environments become increasingly complex, the ability to ask the
right questions before capital is deployed may prove to be one of
the most valuable competitive advantages of all.
Footnotes
1. The views expressed herein are informed by the authors’
combined experience advising clients on legal, regulatory,
financial, valuation and dispute-related matters arising in
cross-border investments and transactions throughout Latin
America.
2. US Department of Justice and US Securities and Exchange
Commission, A Resource Guide to the US Foreign Corrupt Practices
Act (2d edition 2020).
3. Financial Action Task Force (FATF), International
Standards on Combating Money Laundering and the Financing of
Terrorism and Proliferation (FATF Recommendations).
4. US Department of the Treasury, Office of Foreign Assets
Control, Sanctions Programs and Country Information.
5. International Bar Association, Corporate Governance and
Cross-Border Investment Guidance.
6. American Society of Appraisers, Business Valuation
Standards.
7. International Valuation Standards Council, International
Valuation Standards (latest edition).
8. Organisation for Economic Co-operation and Development
(OECD), Foreign Bribery Report: An Analysis of the Crime of
Bribery of Foreign Public Officials (2014).
The authors
Emil R Infante is a partner in the financial services
practice of Squire Patton Boggs LLP in the US. His practice
focuses on banking and finance, securities regulation, private
equity, mergers and acquisitions, fund formation, financial
regulatory matters, and cross-border business transactions. He
regularly represents family offices and ultra-high net worth
individuals and families in connection with private investments,
succession planning initiatives, governance structures,
cross-border asset holdings, and strategic business
transactions.
Antonio Pereira is a senior managing director at GlassRatner
Advisory & Capital Group, LLC, where he advises clients on
business valuation, forensic accounting, economic damages,
litigation support, international arbitration, complex financial
disputes, cross-border transactions, mergers and acquisitions,
and corporate finance matters. He has significant experience
working with private equity firms, venture capital, and family
offices, providing strategic advice on acquisitions, investments,
financial due diligence, valuation issues, dispute resolution,
and value creation initiatives across a range of industries.
Disclaimer
This article is provided for informational purposes only and
does not constitute legal, tax, investment, valuation, accounting
or other professional advice. Readers should consult qualified
advisors regarding their specific circumstances.
Leave a comment