Mergers and Acquisitions: Strategies for Global Expansion

Introduction

The Brazilian mergers and acquisitions (M&A) market has recorded significant activity in recent years. According to data from Transaction Track Record (TTR, 2025), the volume of operations involving Brazilian companies as foreign investment targets grew 23.4% between 2023 and 2025, totaling over US$ 38 billion in cross-border transactions. This scenario reflects the pursuit of international expansion by medium and large Brazilian companies, as well as foreign investor interest in the domestic market.

However, cross-border M&A operations present significant legal complexities. The diversity of legal systems, regulatory barriers, and cultural differences in business conduct require meticulous planning and specialized legal advisory. This article examines the fundamental strategies for preparing a company for international M&A operations, focusing on due diligence, contractual structuring, regulatory compliance, and corporate governance.

Foundations of International M&A Operations

International M&A operations can be structured in several ways, the most common being: (a) share deal, in which the acquirer purchases the quotas or shares of the target company; (b) asset deal, which involves the purchase of specific assets such as real estate, contracts, and intellectual property; and (c) merger, in which two or more companies consolidate into a new entity.

The choice between these modalities depends on factors such as the most favorable tax structure, liability allocation, and applicable sectoral regulation. In cross-border operations, it is common to use holding companies in jurisdictions with bilateral treaties to avoid double taxation, as guided by the OECD Model Tax Convention (OECD, 2017).

International Due Diligence

Due diligence is the most critical stage of any M&A operation. In international transactions, its scope must be even broader, including the analysis of legal, tax, labor, environmental, and regulatory risks in multiple jurisdictions. Silva and Costa (2024) highlight that international legal due diligence must encompass at least three dimensions: (a) the corporate legality of the target company, including verification of its incorporation, representation, and powers; (b) the contractual situation, analyzing commercial, financial, and intellectual property contracts; and (c) regulatory compliance, covering licenses, authorizations, and litigation history.

Due diligence must also investigate anti-corruption compliance aspects, especially in countries signatory to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Brazilian Anti-Corruption Law (Law No. 12,846/2013) imposes strict liability on companies for harmful acts against domestic or foreign public administration, making the assessment of the target company's integrity programs essential.

Contractual Protections and Guarantees

Share Purchase Agreements (SPA) in international operations must contain robust protection clauses for the acquirer. The main ones include: (a) representations and warranties, in which the seller affirms the truthfulness of information about the company; (b) indemnification, establishing liability for losses arising from contractual breaches or hidden liabilities; and (c) conditions precedent, which condition the closing of the operation on the fulfillment of specific requirements.

A relevant innovation in the Brazilian market is the use of escrow accounts and earn-out clauses as mechanisms for aligning interests between parties. Earn-out, in particular, allows part of the price to be tied to the achievement of future performance targets, reducing informational asymmetries (Martins & Oliveira, 2023).

Regulatory and Antitrust Aspects

M&A operations that may affect competition in the Brazilian market are subject to review by the Administrative Council for Economic Defense (CADE), under Law No. 12,529/2011. The Law requires prior notification of operations in which at least one of the involved groups has annual gross revenue exceeding R$ 750 million and the other, R$ 75 million. Failure to notify may result in fines of up to 60 million Tax Reference Units (UFIR).

In cross-border operations, the transaction is often subject to review by multiple competition authorities, requiring coordination between jurisdictions. CADE's Horizontal Merger Review Guide (2024) establishes criteria for assessing economic efficiencies and competitive risks. It is recommended to prepare an integrated regulatory filing schedule, considering the deadlines of each jurisdiction involved.

Post-Merger Corporate Governance

Post-merger integration (PMI) is frequently cited as the main determinant of M&A success. A study conducted by Harvard Business Review (Healy, Palepu & Ruback, 2022) indicates that approximately 70% to 90% of mergers and acquisitions fail to generate expected value, largely due to failures in cultural and operational integration.

Post-merger corporate governance should be structured on three pillars: (a) strategic alignment, with clear definition of objectives, performance metrics, and timelines; (b) harmonization of policies and procedures, including code of conduct, compliance, and risk management; and (c) organizational communication, essential for mitigating cultural conflicts and retaining key talent. The implementation of an integration committee, with representatives from both organizations, is a recommended practice in specialized literature (Gaughan, 2023).

Conclusion

International mergers and acquisitions represent significant opportunities for the expansion and strengthening of Brazilian companies in the global market. However, the success of these transactions depends on meticulous legal planning, comprehensive due diligence, and robust contractual structuring. Specialized legal advisory is indispensable for navigating the regulatory, tax, and corporate complexities inherent to cross-border operations, as well as for structuring the corporate governance necessary for post-merger integration.

Martinelli Advogados Associados, with its expertise in corporate law, M&A, and corporate governance, offers complete advisory at all stages of the process, from preliminary evaluation to post-operational integration, always focusing on legal security and value creation for its clients.

References

CADE — Administrative Council for Economic Defense. (2024). Horizontal Merger Review Guide. Brasília: CADE.

Gaughan, P. A. (2023). Mergers, Acquisitions, and Corporate Restructurings (8th ed.). Hoboken: Wiley.

Healy, P. M., Palepu, K. G., & Ruback, R. S. (2022). Does Corporate Performance Improve After Mergers? Harvard Business Review, 70(4), 135–144.

Martins, R., & Oliveira, F. (2023). Earn-Out Clauses in Brazilian M&A: Legal Perspectives and Market Practice. Revista de Direito Empresarial, 45(2), 112–138.

OECD. (2017). Model Tax Convention on Income and on Capital. Paris: OECD Publishing.

Silva, A. C., & Costa, L. M. (2024). International Legal Due Diligence: Challenges and Best Practices. Revista dos Tribunais, 1,045, 67–92.

TTR — Transaction Track Record. (2025). Latin America M&A Report 2025. São Paulo: TTR Data.

Brazil. Law No. 12,529, November 30, 2011. Structures the Brazilian Competition Defense System.

Brazil. Law No. 12,846, August 1, 2013. Provides for the administrative and civil liability of legal entities for acts against public administration.