MEXICO: An introduction to Corporate/M&A

It Comes as No Surprise, a Tale as Old as Time: Mexico is Wild

2025 kicked off in the midst of economic and political unpredictability.

Internally, this wildness has been driven by the continuation of the so-called fourth transformation of Mexico (the first three being wars: independence, liberal reform and revolution). Externally, it is led by factors such as the incipient US federal administration and the ever-changing threats of trade wars that would disrupt global economies, but particularly economies intertwined with the USA, such as ours. As we write these lines, US tariffs on incoming goods from the rest of the world have gone into effect, and whilst Mexico is still in a privileged position to set up shop and do business almost anywhere in the world, the rules of the game have changed drastically, with the cost to be paid still being unknown.

Although 2024 reported 7% fewer M&A transactions than in 2023, their aggregate value rose by 22%. The first couple of months of 2025 seem to paint a bleak picture for M&A, as both transactions and their value decreased by approximately 50% compared to 2024 – this, despite the first quarter of 2024 having been the slowest of that year. Perhaps reflecting broader uncertainty, the sector that has seen the greatest decline in 2025 is private equity. This reflects the impact of economic and political uncertainty at both local and international levels. Factors such as the US government transition, new trade policies, and market volatility are shaping a landscape in which companies must rethink their investment and expansion strategies.

This should in no way cast Mexico as an “arid sun-land” for M&A transactions. On the contrary, we anticipate that the economic turmoil brought by changes in foreign trade rules can reveal opportunities for M&A transactions in both domestic and cross-border markets. We also consider that the USA and Spain will continue being the most relevant horizons when it comes to either inbound or outbound deals, as it happened during 2024. But we have to closely watch our friends in several countries throughout the world (particularly those from Asia) that in recent years have gained positions and seem to be determined to expand their business operations in Mexico.

Rebirth of the judiciary

Perhaps the greatest change to the Mexican legal landscape is the revamping of the judicial system, which in essence will be cleansed at all levels, with a vast number of judges, magistrates and even justices, at local and federal levels being replaced entirely. We do not consider that this will have a relevant impact on M&A, but we do consider that it may strongly impact the choice of alternative dispute resolution mechanisms, either within Mexico or abroad, over Mexican courts.

Competition integration

The Mexican Federal Antitrust Commission is set to disappear, with its functions being transferred to an organ of the federal executive branch. Also, the federal law on the matter is set to be amended to, among others, lower the thresholds for notifying transactions, as well as to detail requirements and limits of non-compete agreements, which up until this point were based only on criteria of the mentioned Commission. Although this will impact the M&A market, we deem that it will do so in a positive way, as it will bring certainty to economic agents in several aspects.

Unexpected tax revenue

The Mexican federal tax authority seems to have an unexpectedly large war chest. During 2024, the Mexican federal government collected almost 5% more taxes than in 2023, without increasing tax rates or creating new taxes. Similar growth has been seen in previous years also without imposing new tax burdens. Sustained government spending will require this efficiency in tax collection to continue, but no increases to corporate tax or creation of new taxes are foreseen.

Conclusion

While 2025 presents ongoing uncertainty, one thing remains clear: the market, like individuals, rarely follows a predictable path, so we welcome this year’s challenges with open arms, seeking to continue learning lessons and further developing the M&A market in Mexico. In this context, nearshoring remains one of the most relevant opportunities for Mexico’s M&A market reactivation. Globalisation continues to shift to regionalisation. Despite the decline in transactions in the beginning of 2025, the country remains an attractive destination for companies looking to relocate operations, leverage their strategic position, and capitalise on the benefits of the USMCA. As a result, there is no better combination than nearshoring and friendshoring. Mexico offers this by having international treaties and business agreements with nearly 100 countries, in addition to its worldwide strategic location.

Despite the challenging landscape, Mexico’s mergers and acquisitions market has proven resilient during periods of uncertainty. Companies with well-defined strategies, a focus on high-growth sectors, and a clear understanding of the regulatory environment will be well-positioned to capitalise on emerging opportunities. The key lies in adaptability and the ability to anticipate changes in Mexico’s and its main trading partners’ economic and trade policies. Even with its own internal challenges, Mexico has a clear competitive advantage to grow its strategic participation in the global M&A market, both as a recipient and generator of investment. Turbulent times are a great opportunity for savvy and brave investors who know how to read the market and take advantage of the underlying opportunities.

Throughout this overview, we have included bits and pieces from the poem “The Call of the Wild”, by Robert W. Service, which is precisely how we feel about the corporate and M&A markets in Mexico for the remainder of 2025. This period keeps us on the edge of unpredictability, echoing the poem’s spirit, which concludes:

But can’t you hear the Wild? It’s calling you.

Let us probe the silent places, let us seek what luck betide us;

Let us journey to a lonely land I know.

There’s a whisper on the night-wind,

there’s a star agleam to guide us,

And the Wild is calling, calling… let us go.