An M&A dance in Colombia after the pandemic

by Elkin Salazar

The business world has always been an environment where companies seek to grow, expand, and maximise their opportunities. In this context, mergers and acquisitions (M&A) have played a crucial role in the evolution of the Colombian economy. However, since the advent of the Covid-19 pandemic in 2020, a new scenario has emerged that may significantly impact the M&A landscape in Colombia.

In this article, we will explore how this process has evolved in the country after the pandemic.

Prior to the pandemic, M&A in Colombia showed a growing trend. Large national and international companies saw the country as an attractive destination to invest and expand their operations. However, with the outbreak of Covid-19, the situation changed drastically. Restrictions and economic uncertainty created a challenging environment for companies, which led to a pause in many M&A negotiations.

However, as the saying goes – life goes on, and so did the business world. As vaccination progressed and Covid outbreaks began to be controlled, companies resumed their expansion plans and search for synergies. This led to a reactivation of M&A in Colombia, albeit with some notable transformations.

First, there has been a surge in digital M&A. The pandemic accelerated the need for digitisation across all sectors, leading to a particular interest in technology companies and startups. Companies realised the importance of adapting to new business models and seizing opportunities in the virtual world. This has generated a proliferation of acquisitions of startups and innovative companies in areas such as e-commerce, financial technology, and artificial intelligence.

Second, M&A has undergone changes in investment strategies. Prior to the pandemic, companies tended to look primarily at expanding geographically or at accessing new markets. However, after Covid, the focus has shifted to risk diversification and business resilience. Companies are looking to strengthen their supply chains, improve their resilience, and diversify their revenue streams. This has translated into mergers and acquisitions between companies in different sectors to achieve greater robustness in times of uncertainty.

M&A in Colombia has evolved post-pandemic in a challenging and exciting way. While Covid-19 generated a temporary pause in negotiations, the business world has demonstrated its resilience and adaptability. Digital mergers and acquisitions have gained momentum, as have investment strategies geared toward resilience and risk diversification.

With all this in mind, it seems that M&A in Colombia will continue to be a dance in constant motion, where companies will seek to seize opportunities and face challenges with enthusiasm. Ultimately, the pandemic has shown that the business world is like a game of chess – there are always surprising and strategic moves ahead.

Elkin Salazar is a Partner with OCH Group, in charge of the development of financial planning strategies, financial evaluation of projects, corporate financial consulting, supporting our clients' senior management in banking relationships, in M&A transactions, and asset valuation. Elkin has more than 30 years of experience.