MEXICO: An Introduction to Corporate/M&A: Highly Regarded

Mexico continues to be a vital hub for corporate transactions, mergers and acquisitions (M&A), and private equity (PE) activity in Latin America, driven by its robust economic foundation, strategic geographic location and its integration into global markets. The country’s position as a key player in industries such as manufacturing, automotive, energy, technology and financial services ensures that it has remained at the forefront of business development in the region. Mexico’s growing prominence as a manufacturing base, its status as a point of entry to both the Unites States and Latin America and its evolving regulatory environment, all contribute to a dynamic and increasingly complex M&A market. The M&A market faces its share of challenges, including political shifts in Mexico and abroad, regulatory changes and economic uncertainties; however, the long-term outlook for M&A and corporate activity remains highly positive, supported by a wide range of new opportunities, particularly in the PE space.

Economic Landscape and Corporate Activity

As the second-largest economy in Latin America, Mexico is a key player in the global arena. It benefits from its proximity to the United States and its vigorous trade relationship under the US-Mexico-Canada Agreement (USMCA). Mexico’s role as a manufacturing and export hub, particularly in the automotive, electronics and industrial goods sectors, has led to it attracting significant foreign investment from businesses seeking to expand their presence in Mexico to tap into regional supply chains. With continued efforts to diversify the Mexican economy, Mexico presents great opportunities for corporate acquisitions.

In 2025, the outlook for Mexico’s M&A market is optimistic, driven by steady economic growth, resilience in the wake of COVID-19 and expanding cross-border trade, regardless of uncertainty over possible future trade tariffs. Corporate transactions are gaining traction across various sectors, including technology, healthcare, consumer goods, tourism and energy. As both domestic and international players look to capitalise on the country’s expanding middle class and growing consumer base, the M&A environment remains vibrant.

Mexico’s flourishing PE sector has also seen significant growth. Increasingly, PE funds are active in providing both capital and financing. These funds have become a critical source of capital and financing for mid-market transactions, which have witnessed a surge in activity over recent years, particularly in sectors such as tech, healthcare, infrastructure and renewable energy.

Legislative and Regulatory Developments

The legal framework surrounding M&A transactions in Mexico has evolved in recent years, with both positive implications and challenges for dealmakers.

In response to global trends, the securities legislation was amended to increase transparency, strengthen corporate governance and improve investor confidence in public M&A deals. These amendments:

• introduced a simplified registration process to facilitate access by mid-size companies to the stock exchanges;
• provided greater flexibility in the capital structure of listed companies;
• implemented preventive measures against hostile takeovers (poison pills);
• promote sustainability and gender equity in issuers (ESG); and
• imposed greater responsibility for regulatory compliance to underwriters and stock exchanges.

The energy sector remains subject to significant regulatory change. Recent reforms under the administration of President Claudia Sheinbaum focused on strengthening the government’s role in the sector, while offering opportunities for private investors. These reforms allow the Mexican State to perform oil and hydrocarbon exploration and extraction activities through assignments with PEMEX or contracts with private entities, and they grant exclusive strategic area status to all activities carried out by state-owned entities in the energy sector, transforming PEMEX to a public company. In the power sector, the Federal Electricity Commission (CFE) also changed its legal nature by becoming a public company, with a priority access to generation of electricity that is supplied into the grid. Power transmission and distribution, as well as basic supply, will be exclusive activities of the CFE, while the private sector may participate in power generation only through certain forms, which present abundant investing opportunities for the private sector.

Reforms to foreign investment and anti-money laundering regulations were designed to tighten the oversight of cross-border financial transactions, requiring M&A participants to be more diligent in assessing the legal and financial health of potential targets, and ensuring compliance with the regulatory framework.

Relevant for the structuring of M&A deals, the Federal Economic Competition Commission, which is the regulator most active in investigation procedures for both anticompetitive practices and market issues, has intensified its regulatory scrutiny of transactions that may lead to market concentration.

Political Factors and Market Dynamics

At the beginning of her administration, President Sheinbaum faces a year of political risk, marked by challenges to the business environment, democratic governance and bilateral relations with the United States.Despite these challenges, Mexico remains a top destination for foreign investment with solid macroeconomic institutions, wide trade arrangements and a diversified manufacturing base connected to global value chains.

Key Hurdles and How to Overcome Them

While considering and assessing M&A opportunities within the Mexican market, investors must carefully navigate certain hurdles. Companies involved in M&A activity must be prepared for compliance obligations, particularly regarding antitrust, foreign investment, anti-money laundering and sector-specific restrictions (especially in energy, electricity and telecommunications).

Political risk also remains a key consideration. As the government continues to assert control over the energy and electricity sectors, M&A professionals must be prepared for a landscape that could affect deal structures, valuations and timelines in order to navigate an atmosphere where investors need to conduct detailed risk assessments before committing to large-scale deals.

Engaging local legal and financial advisors who have deep expertise in the Mexican market is crucial. Strategic planning, thorough due diligence and proactive engagement with regulators can mitigate many of these risks. Flexibility in deal structuring, including the use of debt financing options, can also prove effective in overcoming market uncertainty.

Positive Outlook

The outlook for M&A and corporate activity in Mexico is positive. The country’s strong economic fundamentals and strategic location within global trade networks point to a bright future for businesses seeking to expand or invest in the region. The M&A market is increasingly characterised by innovation, with new industries such as renewable energy and technology playing a more prominent role in shaping transaction trends. PE funds are providing significant capital and expertise, facilitating high-growth transactions and helping companies scale in Mexico’s increasingly competitive environment.

While there are regulatory and political hurdles to navigate, businesses that approach the market strategically and with the right expertise are well-positioned to succeed.

Mexico remains and will continue to be one of the most dynamic M&A markets in Latin America. A combination of regulatory modernisation, growing private equity investment and an optimistic economic outlook provides a compelling environment for corporate transactions.