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

Mexico continues to be a vital hub for corporate transactions and mergers and acquisitions (M&A) in Latin America, driven by its strong economic fundamentals, strategic geographic location and deep integration into global markets. Over the past few years, Mexico has experienced significant legal, economic and political developments that have shaped the M&A landscape. The country’s growing prominence as a manufacturing base, its status as a gateway to the US and Latin America, and its evolving regulatory environment all contribute to a dynamic and increasingly complex M&A market. While opportunities abound, navigating this landscape presents unique challenges.

Economic Landscape and Corporate Activity

Mexico’s economy is the second largest in Latin America and remains a key player in international trade, especially in sectors such as manufacturing, automotive, energy and technology. The US–Mexico–Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) in 2020, continues to shape cross-border trade dynamics, offering a stable framework for businesses engaging in mergers, acquisitions and joint ventures. Additionally, the economic recovery following the COVID-19 pandemic has bolstered investor confidence, with a growing number of both foreign and domestic M&A deals in the country. The review of the USMCA in 2026 will be a key factor for Mexican growth and stability for the coming years.

The Mexican economy showed resilience despite global headwinds in 2025, demonstrating moderate growth rates and a stable fiscal environment. In 2026, prospects remain optimistic, with the government’s focus on infrastructure projects, manufacturing and digital transformation offering new avenues for M&A activity. Mexico’s proximity to the United States, combined with a competitive labour market and relatively low-cost operations, continues to attract multinational corporations seeking to expand or optimise their operations in North America.

In 2025, M&A activity in Mexico remained steady, particularly in sectors such as energy, fintech, e-commerce and consumer goods. Strategic alliances and acquisitions in the energy sector are especially noteworthy, as both private and state players continue to assess opportunities arising from Mexico’s energy reforms. However, the country’s evolving energy policy remains a point of contention and requires close monitoring by investors and legal professionals, as regulatory changes can significantly impact deal structures and valuations.

Legislative and Regulatory Developments

Legal and regulatory factors play a pivotal role in shaping M&A activity in Mexico. The Mexican government has made significant strides in updating its legal framework to foster a more transparent and competitive business environment, but challenges persist. The recent modifications to the Mexican Securities Market Law (Ley del Mercado de Valores) and the reforms to corporate governance rules have made corporate transactions more efficient, but also more complicated for foreign investors. These changes have introduced stricter disclosure and reporting obligations for companies involved in public M&A transactions, increasing the need for comprehensive due diligence and legal compliance.

Furthermore, in 2023, the Mexican government introduced new antitrust regulations aimed at increasing scrutiny over market concentrations. The Federal Economic Competition Commission (COFECE) has taken a more proactive role in reviewing M&A transactions, particularly in sectors that could impact competition or consumer welfare. While these measures are intended to promote a more competitive market, they have added an additional layer of complexity for dealmakers, requiring more in-depth analysis of potential antitrust risks and hurdles.

For international investors, the energy sector remains subject to significant regulatory change. Despite ongoing reforms designed to attract private investment, particularly in renewable energy, the administration of President Andrés Manuel López Obrador (AMLO) focused on strengthening the state’s role in the sector. Nevertheless, President Claudia Sheinbaum has recently begun to move to a more sustainable energy approach, in which renewable energy is again back in the conversation. The political and legal uncertainty in this space has led to increased caution from investors, as potential hurdles related to government intervention, regulatory approval processes, and compliance can delay or complicate deals.

One critical area of focus is the reform to the foreign investment law and anti-money laundering regulations, which are designed to tighten the oversight of cross-border financial transactions. These laws impact due diligence processes, requiring M&A participants to be more diligent in assessing the legal and financial health of potential targets, and ensuring compliance with evolving foreign investment laws.

Political Factors and Market Dynamics

Mexico’s political landscape plays a significant role in shaping the M&A environment. President López Obrador’s “Fourth Transformation” (Cuarta Transformación) agenda has introduced a wave of political reforms aimed at reducing inequality and promoting social justice. While this agenda has led to improvements in some areas, it has also created uncertainty in key industries, particularly in energy, telecommunications and agriculture.

The Mexican government’s emphasis on increasing control over the country’s energy sector, for instance, has led to contentious disputes between foreign investors and state-owned entities. This has had direct implications for M&A deals, particularly in the energy sector, as companies weigh the political risk against potential returns. The government’s nationalistic policies may also affect foreign investment in other sectors, especially in industries where state ownership or control is a priority.

While political risk is an ongoing concern for foreign investors, it is not necessarily a barrier to M&A activity. Many international players continue to view Mexico as a prime location for expansion due to its strategic position in global supply chains and its favorable trade relationships. However, dealmakers must be prepared to navigate a political climate where legal, regulatory and policy changes can occur rapidly and have a profound impact on business operations.

Key Hurdles and How to Overcome Them

Despite the opportunities presented by the Mexican market, M&A transactions face significant challenges. One of the primary hurdles is the complexity of the regulatory landscape. Legal professionals and investors must navigate a patchwork of federal and state regulations that can vary depending on the sector, the size of the transaction and whether the target is a public or private entity. The necessity of complying with antitrust laws, anti-money laundering requirements and foreign investment restrictions adds another layer of complexity.

Moreover, political uncertainty remains a constant challenge. Investors must carefully evaluate the political climate and its potential impact on the profitability of a deal, particularly when state involvement in key sectors is a concern.

In navigating these hurdles, working with experienced legal and financial advisers is critical. Careful due diligence and detailed risk analysis are essential in identifying potential pitfalls early in the deal-making process. Furthermore, adopting a flexible and strategic approach to structuring deals, including considering alternative dispute resolution mechanisms and regulatory approval pathways, can mitigate risks and ensure that transactions move forward smoothly.

Conclusion

Mexico remains a robust and promising market for M&A activity in Latin America. The combination of its favourable trade agreements, competitive workforce and growing digital economy positions it as a key destination for international investment. However, the legal, regulatory and political dynamics of the country present both challenges and opportunities for dealmakers. Companies seeking to engage in M&A transactions must navigate an evolving landscape, balancing the need for regulatory compliance with the desire to capitalise on market potential. With careful planning and strategic guidance, these hurdles can be overcome, and Mexico’s M&A market will continue to grow in significance.