The Technology M&A Review: Mexico
The technology M&A market in Mexico has seen an uptick in recent years resulting from updated legislation that has provided for a clearer and more defined set of rules; the country's neighbouring location to the United States (one of the world's largest consumer markets), and several other benefits that are briefly described below. In general, the country is open to foreign investment in all but a few sectors.
Technology M&A transactions generally follow the same regulatory framework as most industry sectors, such as, inter alia, the automotive and consumer goods sectors. As such, the Mexican economy:
- is significantly open to foreign investments;
- has no restrictions for the outbound transfer of currencies;
- has a strategic geographical location; and
- has the largest number of free trade agreements in place of any country in the world,2 which places Mexico in a privileged position.
Among the free trade agreements entered into by Mexico, three represent access to the three largest free trade zones in the world:
- the United States–Mexico–Canada Agreement (USMCA) between Mexico, the United States and Canada;
- the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP) between Mexico, Canada and several Pacific countries such as Australia and Japan; and
- the Economic Partnership, Political Cooperation and Cooperation Agreement (known as the Global Agreement) between Mexico and the European Union.
The technology sector has been one of the leading industries driving the transactional market in Mexico in recent years. This is largely the result of a combination of two major and recent elements: first, new laws and regulations have been passed and enacted, such as the Fintech Law and its regulations, which helped pave the way for new investments in technology companies (particularly financial technology and ancillary industries), as well as providing legal clarity and certainty to foreign market participants; and second, important investments were made by large multinational entities in Mexico seeking to expand their operations, enter into an increasingly sophisticated market or, in some instances, initiate a foothold and base of operations to expand into the rest of Latin America (generally speaking, Spanish-speaking countries).
In recent years Mexico has been host to companies such as Amazon and MercadoLibre (to name only two), both of which have significantly increased their operations in Mexico mainly through substantial capital investments, the acquisition and expansion of infrastructure, as well as through an array of joint ventures and similar strategies.
While there has been a significant amount of private equity, venture capital and smaller-scale M&A technology transactions (particularly involving startups and fintech companies), large-scale transactions in the M&A technology sector remained few and far between in 2019 and 2020. The few large-scale transactions involving the technology sector have mainly been the result of entities choosing to consolidate their presence, while slowing down M&A activity as a natural result of corporate actions adopted from foreign parent companies, whose actions and decision making has mostly been centred in the United States, while the ongoing covid-19 pandemic and economic fluctuations have largely resulted in Mexico and Latin America focusing transactions being kept on the back burner.
Year in review
As a benchmark and starting point, it is important to recall that although 2019 was reasonably stable from an M&A activity perspective in Mexico, M&A activity as a whole had been suffering a decline in volume during the past few years. The decrease in volume was the result of a worldwide economic stagnancy, erratic public policies of major powers, populist governmental agendas, tit-for-tat disputes between the United States and, among others, China, and now the ongoing covid-19 pandemic, which undoubtedly has had a deep and still not fully understood impact on both day-to-day business operations and on the decision-making capacity and risk aversion of companies thinking of undertaking large-scale or relevant transactions in Mexico. The above particularities have had an effect on all local business sectors and industries. On the other hand, the actual monetary value of M&A transactions in 2019 and, in part also during 2020, was strong in the region, mainly as a result of megadeals in North America. Notwithstanding the foregoing, 2021 technology-related M&A transactions have not only been notably resilient to the economic effects of the pandemic, but have in fact led the M&A market to record or near-record levels in the United States and Europe.3 To be clear, however, there has been a slight decrease in the actual number of M&A transactions in the second half of the year, although value has increased significantly.4 For the Mexican technology M&A market in particular, and excluding transactions such as private equity investments (of which there have been a significant number) and the startup industry (which has also seen a relevant amount of seed investment as well as private equity transactions), large-scale M&A technology transactions have kept a low-profile in what would strictly be considered as purely M&A transactions (noting that Big Tech companies such as Amazon and Mercado Libre have kept their investment policies and made major announcements of increased presence in the country and the region mostly resulting from capital investments, and not M&A) and this trend is expected to carry on through 2021 while the economy recovers and governmental policy becomes clearer.
On the upside, Mexico, the United States and Canada recently enacted the USMCA, which should help rekindle the economies of all three countries and promote investments in Mexico from large foreign technology players seeking to either enter into or expand operations in the market, and to use it as a staging ground for expansion into Latin America and other countries, as well as to avoid, among other things, direct tariffs or contingencies stemming from the US–China trade war.
Legal and regulatory framework
The main laws regulating the M&A market at large touch upon all areas of business law, from company incorporations and transfers of ownership, including securities, antitrust and competition, general business and business transactions, data privacy, tax laws and the protection of intellectual property. Focused on the technology sector, the recently enacted Fintech Law needs to be considered for fintech transactions.
Under the main regulatory framework, investors should keep the following legislation in mind, mentioned in no particular order:
- the General Law of Commercial Companies;
- the Federal Tax Code;
- the Income Tax Law, together with the applicable treaties to avoid the double taxation entered by Mexico;
- the Negotiable Instruments and Credit Transactions Law;
- the Federal Economic Competition Law;
- the Code of Commerce;
- the Securities Markets Law;
- the Intellectual Property Law;
- the Federal Law to Prevent and Identify Transactions with Illegal Resources;
- the Federal Labour Law; and
- the Data Privacy Law.
In addition to the Mexican laws described above, and perhaps even more relevant for foreign technology companies operating in Mexico or exploring the possibility of doing so, the industry also falls under the umbrella of several free trade agreements to which Mexico is a party. The most relevant that Mexico and the technology companies established in the country are subject to and heavily vested in are the USMCA as described above, the TPP to some degree (which involves, besides Canada and Mexico, a host of countries with varying degrees of interest in the technology sector) and also the Global Agreement with the European Union, where technology companies also abound.
When talking about M&A transactions involving technology companies, the general expectation is for technology companies to be subject to minor oversight from regulatory bodies (except for the telecoms sector, which is regulated and overseen by the Federal Telecommunications Institute, and fintech companies, which are subject to oversight by the Ministry of Economy). As such, transfers of equity or shares representing an ownership interest in a target entity are, strictly speaking, a straightforward affair similar to that found in other industry sectors.
However, because of the wide array of activities carried out by technology companies, investors and market players should keep in mind, inter alia, the following items that are discussed later in this chapter: intellectual property, data privacy, and labour and employment matters.
Technology companies and potential investors or acquirers should also be aware that Mexican law requires that transactions that reach certain thresholds are approved by the Federal Competition Commission or the Federal Telcommunications Institute, depending on the activities of the parties involved in the transaction. The Commission and the Institute have the authority (and have in fact been known to enforce it) to require that transactions be subject to pre-closing divestments, such as the requirement made to Disney to divest the Mexican branch of Fox Sports during 2019 to 2021, or even prohibit certain players from completing an acquisition, as was the case with the planned purchase of CornerShop by Walmart de México during 2019.
Key transactional issues
i Company structures
Generally speaking, foreign technology companies coming into Mexico are set up as private companies and either as stock companies (SAs) or limited liability companies (SRLs). In practice, however, both types of entities have the same prerequisites for incorporation, which are easily achieved. Further, both vehicles grant investors the same level of protection (shielding investors from liability), are allowed to enter into the same businesses and are not distinguishable for local tax purposes.
SAs have certain practical benefits, as the shares that represent ownership in said entities are freely negotiable subject only to specific restrictions that may exist in the bylaws of a target entity, or any possible shareholders' agreement. SA vehicles also allow for shareholders to enter into shareholder agreements, which are not otherwise regulated for SRL entities. In contrast, a transfer of ownership of equity quotas representing ownership in an SRL requires a majority approval from the existing partners of the target entity.
On the other hand, however, minority holders in SAs have more statutory rights than those in an SRL, which may also result in bottlenecks when engaging in an M&A scenario: among other minority rights, as little as 25 per cent of the shares are allowed to challenge and suspend resolutions adopted by the majority.
Public company M&A transactions are few in the country and are considerably more complicated, as they require public filings and potentially public tender offers depending on the amount of shares being acquired. Given the relatively short period of time during which technology companies have been active in the country to a relevant degree, most technology M&A transactions in Mexico involve private unlisted companies that have no such requirements.
ii Deal structures
Although each technology M&A transaction has its own specific background affecting what type of transfer structures or mechanisms are ideal, in Mexico M&A transactions (and especially those seeking a complete change of control) are usually structured as share purchases. The evident advantage of this approach is that private market share purchases are generally less complex that structuring mergers, acquiring assets or issuing tender offers.
The standard share purchase of technology companies is supported by investors or buyers betting on the future of the relevant companies and the underlying technology asset (software, applications, services, etc.) as well as in the management group that has steered the company to the place that resulted in it being an interesting investment or acquisition target. Using these basic points, a straightforward majority share transfer would result in an automatic change of control of a company, without involving pre-closing divestments or carve-outs. In other words, technology sector companies are generally built and operated around the technological assets created or owned by said company, and do not tend to require significant pre-transfer carve-outs or divestments, or significant non-technological assets such as, inter alia, real estate, that may result in a different acquisition structure being more convenient.
iii Acquisition agreement terms
Generally speaking, technology M&A transactions differ from those in other industries in terms of the protections and indemnities extended to buyers. Given that usually the value of a transaction revolves around just a few technology assets, and that the nature of said assets inherently requires certain specialised considerations, buyers and sellers can generally expect to see transfer agreements placing special emphasis on the following:
- Consideration: usually consideration is mainly set in cash, which would be disbursed in tranches subject to certain milestones to be met by the acquired company as of closing (such as achieving certain operating income). In addition, a portion of the consideration may be subject to retention or hold-back mechanisms, depending on the complexity of a transactions and sophistication of the parties involved.
- Representations and warranties: as mentioned above, when negotiating a technology M&A transaction, it is customary to find specific representations and warranties addressing, among other items, full title of the underlying technology assets, the absence of third-party claims either actual or threatened, full compliance with the data privacy laws applicable to both buyer and seller, including proper handling of all required consents from end-users when applicable, title and validity over all IP rights claimed by the seller, compliance with applicable specific tax obligations and compliance with the Fintech Law (if applicable). Of course, these are in addition to customary representations and warranties usually found in traditional M&A transactions.
- Closing conditions: specific closing conditions for technology M&A transactions are generally negotiated depending on the underlying technology asset. As such, it is usual to encounter closing conditions relating to:
- the proper filing and renewal of all IP rights for a reasonable period time;
- updating all data usage consents; and
- the delivery of certificates certifying that the seller and the target are in full compliance with the representations and warranties negotiated for the transaction at hand.
- Governmental approval: a part of the closing conditions that requires special attention is the approval of the Federal Competition Commission of the Telecommunications Federal Institute. As mentioned above, the Commission and the Institute have been known to outright prohibit certain M&A transactions when it is thought that a market participant would acquire substantial market power that may either restrict competition or have a negative impact on consumers. This condition is of special interest to outside counsel, as reviews and filings made by them greatly influence the decision-making process of the authorities, and may result in additional closing conditions set by the government that may ultimately affect the value of a transaction as a whole (e.g., divestments or business separations).
- Indemnification and survival: because of the nature of technology M&A transactions, parties may expect indemnification clauses heavily centred on the technology assets, and also heavily tailored to protect the buyer, and for the seller to indemnify the buyer and target against any and all issues and damage that may arise specifically from any dispute or claim over the IP rights held by the target as well as underlying asset itself. These clauses generally involve indemnification as of a certain pre-closing period that usually goes hand in hand with the applicable legal prescription terms for matters such as data handling, IP rights and registrations.
Financing for Mexican M&A transactions in the technology sector varies depending on the size of the target company and the assigned value of the underlying asset. However, because of the general and relative size of Mexican technology companies and the average 'young age' of the involved companies, parties involved may generally expect to be self-financed rather than relying on third-party financing. Special attention must be considered from a tax perspective, as there are important limitations and requirements. For example, debt pushdown is not commonly accepted by tax authorities.
However, because of the constantly changing technology sector landscape, the types of financing and proportions thereof vary significantly from target to target and also depend on the economic cycle. By way of example, the covid-19 pandemic and ensuing economic crisis has lowered banking interest rates significantly, so buyers may be more prone to finance their M&A transactions through bank debt.
v Tax and accounting
Mexico taxes residents following a worldwide income rule. The corporate tax rate is 30 per cent that is applicable to the result of the income obtained minus authorised deductions. To apply deductions, formal requirements and specific limitations should be considered.
The federal Income Tax Law sets capital gain tax for all holders of shares or equity in a Mexican entity, which tax is triggered upon the transfer of said shares or equity. The general income tax payable by foreign tax residents upon any transfer of shares or equity is 25 per cent over the gross transaction price, or choose to pay using a 35 per cent rate over capital gains (i.e., the spread between the acquisition cost and sale cost). The choice of which rate to apply rests on the seller, who may need to meet certain formal requirements to be able to obtain the 35 per cent capital gains rate.
Having said that, Mexico has approximately 60 tax treaties with several jurisdictions around the world, including the US and the EU. Although not all tax treaties are equal, a significant amount contain provisions allowing foreign participants to either decrease the tax payable as a capital gain in Mexico or, in some cases, altogether eliminate said tax. Among other things, for example, the US–Mexico tax treaty allows US residents to trigger an exemption participation clause with which a US-based seller of Mexican equity (to exemplify) would not be required to pay income tax as long as its position in the target entity was below 25 per cent and certain additional formal requirements are met.
In most if not all cases, benefits stemming from a tax treaty are subject to local formal requirements that, if not fully met, will render the requested benefit inapplicable.
In addition to the aforementioned exemptions, Mexican law allows for some corporate reorganisations to be achieved on a tax-free basis when certain formal requirements are met. This is relevant for the M&A industry as a whole, as it permits companies to rearrange themselves prior to a potential transfer or sale of a particular line of business that may have previously been working together with another separate business.
Tax treaties include important relief on the applicable taxes according to local regulations, to avoid the double taxation on payments that are considered income from source of wealth in the country. Mexican accounting standards (its Financial Information Rules) are published by the Mexican Counsel of Financial Information Rules and are largely based on international accounting standards rather than the US counterpart, the US generally accepted accounting principles.
vi Cross-border issues
As mentioned in the initial sections of this chapter, Mexico is generally considered to be an open country for receiving foreign investments. Market participants may expect little to no restrictions when doing business in the country.
Foreign market participants should be wary, however, of the changing political landscape, populist governmental policy, a relatively high degree of bureaucracy and foreign currency exchange rates that may swing significantly during a short period of time.
Mexican entities with foreign investments are required to include what is known as a 'Calvo' clause in their articles of incorporation. The purpose of a Calvo clause is to clearly state that foreign investors agree to consider themselves as nationals with regard to the property owned by their local entity and waive their right to seek assistance from their own government as regards assets held by the Mexican entity. This is more a historic legacy of foreign invasions in the nineteenth century than anything else, but foreign investors should be made aware of its existence.
Mexico provides a broad spectrum of IP protection, which should be checked and examined in M&A transactions. Such IP rights include copyrights, trademarks, trade names and slogans, patents, utility models, industrial designs, geographic indications and trade secrets. The key laws protecting IP in Mexico are the Federal Copyright Law, which sets forth the rules for the protection of copyright and related rights (neighbouring rights) as well as the reservation of rights; and the Federal Law for the Protection of Industrial Property (Federal IP Law) governing trademarks, trade names and slogans, patents, industrial designs, utility models, trade secrets and geographic indications.
The Federal Copyright Law as well as the Federal IP Law have been extensively reformed in 2020. These reforms aimed to improve Mexico's IP protection, in particular, in light of the terms agreed under the USMCA. The general objective was – and still is – to make Mexican IP law fit for the challenges of business and developments in the IP environment reflected by new technological trends. Likewise, the reforms simplified several procedures before the Mexican Institute of Industrial Property and introduced stronger and more effective measures against the infringement of IP rights.
Mexico is also member of the World Intellectual Property Organization (WIPO), and is party to various agreements, treaties and declarations protecting IP rights, such as:
- the Agreement on Trade-Related Aspects of Intellectual Property Rights Related to Commerce;
- the Bern Convention for the protection of literary and artistic works;
- the Hague Agreement governing the international registration of industrial designs;
- the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration;
- the Locarno Agreement establishing an International Classification for Industrial Designs;
- the Paris Convention for the Protection of Industrial Property;
- the Madrid Protocol for the International Registration of Marks;
- the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, 2001;
- the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, 2013;
- the Patent Cooperation Treaty;
- the Strasbourg Agreement Concerning the International Patent Classification, 2001;
- the Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks, 2001; and
- the WIPO Copyright Treaty.
Because IP rights often form part of the most valuable assets of a company, especially in technology companies, it is of paramount importance to take adequate measures to ensure that the respective rights are properly protected. M&A transactions involving IP rights should therefore make sure that a company's key IP rights owned in Mexico, such as copyrights, trademarks, patents and trade secrets, are valid and enforceable.
Mexican law is highly protective of employees. In fact, the freedom to work is enshrined in Articles 5 and 123 of the Constitution, while the Federal Labour Law regulates the relationship between employer and worker. Further, the USMCA includes new protections for employees, including freedom of unionisation (freedom to choose whether to belong to a union), and a guarantee that trade unions will have a free and open democracy when choosing their representatives.
The above considerations are relevant, as post-employment restrictive covenants are usually non-enforceable from a labour law perspective. This has resulted in situations where non-compete agreements, or no-poach agreements, are challenged in Mexican courts as being contrary to the constitutional freedom to work. Unlike other jurisdictions, Mexican labour courts cannot issue injunctions or cease and desist orders that may prevent an employer from hiring an individual or an individual from accepting employment from a company. Having said that, M&A participants will find such provisions widely negotiated within the transfer agreements, and special emphasis is placed on achieving the right level of consideration for the parties agreeing to no-competition, which consideration greatly helps in making an agreement pass judicial scrutiny, among other key elements. These restrictive covenants are typically formalised in an agreement from a commercial or intellectual property law standpoint, including certain judicial criterion; however, there is always an inherent risk that former employees may challenge such obligations.
Although Mexican courts are generally willing to interpret restrictive covenants, they will not sever or revise them to make them enforceable. If a restrictive covenant is declared void (as violating the right of freedom of work), the compensation paid in exchange for such covenant must be repaid to the employer.
On the matter of IP rights, the applicable Intellectual Property Law allows for employment agreements to include special provisions making it clear that all IP developed by any employee during his or her employment, or using employer-provided materials, belongs exclusively to the employer. As such, standard employment agreements general contain a waiver of rights from an employee in favour of his or her employer. If an employee has access to trade secrets by virtue of his or her work, employment, function, position, the practice of his or her profession or the conduct of business, and has been warned about the confidentiality of such trade secrets, the employee will be required to maintain the confidentiality of such trade secrets unless there is justified cause for revealing them, or the employee has the permission of the employer to reveal them. An employee who breaches confidentiality obligations may be liable for damage or, as disclosing trade secrets may amount to a criminal offence, imprisonment or fines.
Given that Mexican labour law is quite employee-oriented, it is common for companies, in all industries, to find themselves in litigation procedures with former employees. It has been common practice for former employees to take action against their former employers, seeking restitution either for unjustified dismissal or claiming additional dues from their employer. Employment relationships in Mexico are governed by the job stability principle, which consists of the right of employees to keep their job as long as there are no legal grounds for termination justifying a dismissal. This is distinguishable from the labour system in other jurisdictions, where employment-at-will is the general rule.
As subcontracting and outsourcing of personnel has been outlawed in Mexico since mid-April 2021, only specialised services (outside the client's core business) can be subcontracted to third parties, provided that certain requirements are met, including the Labour Ministry's approval to act as a specialised service provider. This reform triggers not only employment risks but also critical tax, social security and even criminal liabilities in case of non-compliance. Companies in M&A deals should be mindful in reviewing the labour structure of their targets, as it was typical to see a large group of subcontracted personnel to third parties under the former subcontracting rules, including core or key employees within the organisation.
If personal data is processed and shared in a transaction, its protection must be guaranteed in compliance with data protection laws. Mexican data protection rules cover only human beings. The data protection legal framework includes:
- the Federal Law of Personal Data Held by Private Parties;
- the Regulation of the Federal Law of Personal Data Held by Private Parties; and
- the Guidelines for Privacy Notices.
Such rules are related, but have a different hierarchy.
Transferring personal data (domestically or cross-border) is commonly the first type of data processing in a transaction. For that reason, attention should be paid to the data transfer section in the relevant privacy notice. The privacy notice is the document that the data controller makes available to the data subjects before processing their personal data.
As a general rule, data transfers are subject to the consent of individuals unless an exception applies. Such exceptions apply when the transfer is:
- permitted by law or an international treaty signed by Mexico;
- needed for certain medical and sanitary purposes;
- made to companies under the same group of the data controller;
- needed as part of a contract between the data controller and a third party in favour of the data subject; or
- needed or legally required to protect the public interest or to exercise a right during a judicial process.
A transaction is not likely to qualify for an exception to consent for the data transfer. Thus, consent must be previously obtained. The consent does not need to be obtained for that specific transaction, but for the specific purpose. The privacy notice must include a clause indicating whether the data subject consents to the transfer; the type of consent required (implicit, explicit, or written and explicit) depends on the personal data transferred (general, financial or sensitive).
Finally, when carrying out the privacy and data protection due diligence before a transaction takes place, previous personal data breaches should be carefully analysed because they may entail potential risks of administrative sanctions (i.e., fines) imposed by the Data Protection Authority.
Although technology companies do not receive automatic subsidies or incentives per se, manufacturers of technological products such as computer parts, phones and computers may be able to obtain certain incentives, including tax privileges, if they operate under an IMMEX programme, under which a Mexican entity engages in the manufacturing of goods for exportation purposes, importing parts and raw materials on a temporary basis. Usually, the IMMEX programme is structured around a principal, which is the foreign entity based in a country with which Mexico has a tax treaty in place, which contracts the manufacturing process to a wholly owned local subsidiary.
The most notable advantage to operating under the above-mentioned structure is the ability to temporarily import parts or raw materials without import duties, as well as expedited VAT refunds under certain circumstances.
In addition, the government has put in place sectoral promotion programmes under which the relevant entities may reduce their most favoured nation import duties.
Further to the programmes mentioned above, some states, such as Jalisco, Guanajuato, Sonora and Yucatan, have specific policies in place tailored to attract investors.
In addition to standard due diligence reviews applicable for traditional M&A transactions, when negotiating a technology M&A transaction, buyers in Mexico generally seek an in-depth review of all rights and title to the underlying technology asset. It is customary to request that the seller deliver true and accurate copies of all IP-related information, including dates and jurisdictions in which the IP has been registered, and the level of protection granted in said jurisdiction. To further solidify the buyer's position, sellers are usually required to provide legal opinions from outside counsel as to the accuracy and validity of the IP property that is the subject matter of an M&A transaction.
The nature of a technological asset may result in certain restrictions for the due diligence process, such as competition restraints resulting in a buyer being legally restricted from directly reviewing certain types of information, including client lists and end-user personal data stored by the target company. This situation sometimes requires specialised 'clean rooms' to be made available to outside counsel of the buyer, who will in turn review the sensitive information and provide a report to the buyer that contains general recommendations and status reports without sharing potentially protected data that may otherwise result in an undue commercial advantage for the buyer.
Such due diligence requires close collaboration between counsel to each party, as a lack of clear communication may result in misleading or inaccurate disclosures being made by a seller, which may ultimately affect the value of a transaction or the closing itself.
Being among the more sophisticated players in the M&A scene, technology transactions usually provide for arbitration as the preferred dispute resolution mechanism. Mexican law allows for parties to decide upon an ad hoc arbitration set of rules, or to subject themselves to pre-defined rules and institutions such as UNCITRAL, ICC, AAA, ICDR or LCIA. Arbitration allows both buyers and sellers to bring any dispute before a specialised arbitral tribunal that usually has at least one member specialised in the underlying technological asset.
Election for an arbitration clause and the drafting thereof vary largely from transaction to transaction under several factors such as costs, language, choice of law, forum, expertise in the subject matter, efficiency, speed and flexibility.
Finally, Mexican courts are required to enforce foreign judgments that are properly issued by their local authority, as long as said judgments are not contrary to Mexican law. The same principle applies for arbitral awards, which only require a formal recognition from local courts before being enforceable.
As mentioned at the beginning of this chapter, the Mexican technology M&A sector is currently in a state of relative calm, in line with most transactional practices in the majority of industries. However, there is a wide expectation that the worldwide increase in technology M&A transaction mega-deals will eventually have an impact in Mexico and will result in a higher volume in transactions as a whole.
While technology M&A players remained somewhat on standby throughout the year and into the first quarter of 2021 while more clear market signals appear, it is also becoming increasingly clear that Mexico is positioning itself as a safe haven of sorts for these industry participants as an alternative for companies reconsidering their status in China and other parts of the world, and also as a major geographic player with the benefits of neighbouring the United States and having an undisputed array of international agreements in place that ultimately benefit foreign and local entities seeking to either expand into new markets, or those seeking to lower manufacturing and employment costs within their organisation. The notable high-tech manufacturing industry in Mexico will also undoubtedly attract key players.
1 Juan Francisco Torres Landa Ruffo is a partner, Pablo Corcuera Bain, Valentina Schmid and Ana Rumualdo are senior associates, Francisco Palmero Rivera Cambas is counsel and Regina Torrero Ordaz is an associate at Hogan Lovells.