As deal activity shows signs of rebounding in 2025, investors are bracing for an increase in M&A-related disputes globally, and Latin America is no exception. It appears to be leading the trend.
According to Berkeley Research Group’s latest M&A Disputes Outlook, more than 80% of investors and legal experts surveyed expect the volume and value of disputes in Latin America to rise this year. The reasons are hardly surprising to anyone following the news. According to Alejandro Martinolich, a BRG associate director based in Buenos Aires, persistent political and economic uncertainty in Brazil and Mexico, the region’s two largest economies, contributes to investor anxiety, making it more difficult to price and structure deals with confidence.
“With highly valuable assets and continuous political and regulatory changes, not to mention macroeconomic uncertainty, Latin America has ideal conditions for a dispute,” said Martinolich. And he’s right. The region has seen volatility in both the Mexican peso and the Brazilian real, partly due to concerns over tariff threats and unpredictable government decisions.
What’s Driving the Disputes?
According to the BRG survey, financial and operational performance issues are the most common flashpoints, followed closely by foreign exchange volatility. Deal terms such as put and call options, redemption rights, and other contract provisions aimed at managing uncertainty often become contentious when the operating environment deteriorates or projections go unmet.
Notably, it’s not the billion-dollar megadeals that are fueling this trend. It’s the smaller transactions, the ones under $50 million, that are seeing the sharpest rise in disputes, likely because these deals often lack the deep due diligence, legal firepower, and sophisticated structuring of larger transactions.
Why Investors Are Structuring Deals to Avoid Local Jurisdictions
Considering these conditions, sophisticated investors now structure their deals to avoid having disputes resolved in the operating country altogether. Instead of relying on local courts in Brazil, Mexico, or other Latin American nations where litigation is often lengthy and sometimes unpredictable and subject to local political winds, investors increasingly route dispute resolution through corporate structures based in the United States or other common law jurisdictions like the U.K. or Singapore. Why?
- Speed and Predictability: Courts in common law jurisdictions are known to be quicker and more transparent than their Latin American counterparts. Common law systems, like those in the United States and the U.K., are based on judicial precedents. More importantly, common law generally provides quicker remedies to the parties in equity and law, and this can be faster than relying on codified laws.
- Higher Legal Costs as a Deterrent: The expense of litigating in the United States can act as a powerful deterrent against frivolous lawsuits. Courts can impose sanctions, fines, and payment of the other party’s expenses and attorney fees on parties who file frivolous claims or engage in abusive litigation practices.
- Perceived Fairness: Investors believe they’ll receive a more balanced hearing in jurisdictions where judges and arbitrators are less likely to be influenced by local politics or pressure.
A Global Trend with Local Nuances
Latin America is part of a larger global uptick in disputes, as seen in BRG’s wider survey of 200+ financial and legal professionals. Globally, several sectors including fintech, real estate, and energy are expected to see a rise in litigation, driven by shifting regulations and deal terms that no longer align with evolving realities.
In the United States, regulatory shifts such as rollbacks of Biden-era clean energy incentives by the current administration would have rippling effects leading to disputes over valuations and government support.
Bottom Line
Latin America remains a region of opportunity with compelling valuations, rising markets, and untapped assets. However, it also comes with particular dispute risks. Dealmakers operating in Latin America have to be especially diligent in crafting precise and adaptable contracts that can withstand economic shocks, currency swings, and regulatory unpredictability to reduce the likelihood of post-transaction disputes. Ultimately, for dealmakers, the solution is not to avoid the region but to structure smarter, recognizing and anticipating instability and making sure any dispute that does arise plays out on their home turf, or at least on more neutral ground.