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Updated: Apr 30


Christ the Redeemer

The Brazilian M&A (mergers and acquisitions) market has emerged with relevance on the global stage, driven by the country's large and growing consumer base, economic reforms and strategic geographic location. This article provides a brief overview of the Brazilian M&A scenario, highlighting its main characteristics and recent trends.


Rising Market:

After a period of economic instability, the Brazilian M&A market has witnessed a remarkable recovery. This resurgence is attributed to several factors, including:


  • Government reforms: The implementation of labor and pension reforms has instilled greater confidence in the country's economic prospects, attracting national and foreign investors.

  • Large domestic market: With a population of more than 220 million, and a GDP of more than 1.6 trillion dollars, Brazil has a vast consumer base, making it an attractive target for companies looking for expansion opportunities.

  • Strategic location: Located in South America, Brazil serves as a gateway to other Latin American markets, further expanding its attractiveness for strategic acquisitions.

Main Players and Trends:


  • Foreign investors: Although domestic companies are actively involved in M&A activity, foreign investors maintain a significant presence, contributing almost 40% of transactions. This demonstrates international confidence in the Brazilian market.

  • Private Equity and Venture Capital: Private equity and venture capital funds play a crucial role in the M&A scenario: In 2022 they invested more than R$50 billion in Brazil; VCs (considering investments in technology verticals) significantly outperformed PEs.

  • Change of Focus: Traditionally, M&A activity in Brazil focused mainly on deals that aimed to achieve economies of scale (scale deals) . However, there is a growing trend of transactions where companies acquire businesses that complement their existing operations and expand their market reach (scope deals).

Regional and Sectoral Scenario:


  • Geographic concentration: The Southeast region, encompassing São Paulo and Rio de Janeiro, remains the center of M&A activity, housing the majority of large companies and financial institutions. However, other regions are also witnessing an increase in business flow, such as Paraná, Espirito Santo, Rio Grande do Sul and Mato Grosso.

  • Sector diversity: While the M&A market thrives across sectors, technology, retail and energy (including oil and gas) consistently rank among the most active, reflecting their growth potential and strategic importance.

Perspectives:

M&A activity in Brazil in the first half of 2023 reached a volume of 661 transactions, representing a drop of 11.8% compared to the same period in 2022.


The Brazilian M&A market is expected to continue its upward trajectory, driven by a combination of positive economic indicators, ongoing reforms and a growing appetite for strategic acquisitions. However, navigating the complexities of the legal and regulatory framework remains crucial for successful M&A transactions in Brazil.


By understanding the dynamics and trends that shape the Brazilian M&A scenario, both national and foreign investors can capitalize on the interesting opportunities that this market presents.

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Discover why hiring a valuation for your ophthalmology clinic can be beneficial in the current mergers and acquisitions market.


Ophthalmological Clinic

In recent years, the mergers and acquisitions market has shown significant growth in the ophthalmology clinic sector . In this context, it is essential that ophthalmologists understand the importance of carrying out a valuation in their clinics. In this text, we will explore the reasons why hiring a valuation at this time can be beneficial for ophthalmologists.


What is a valuation?


Before we understand the benefits of hiring a valuation, it is important to understand the concept. Valuation is a financial assessment that seeks to determine the fair value of a company. In the case of ophthalmology clinics, a valuation is essential to calculate the value of the business, considering aspects such as assets, liabilities, income and expenses.


Why hire a valuation?


The main reason for hiring a valuation is to obtain an accurate assessment of the value of the ophthalmology clinic. This is essential for both owners looking to sell the business and those looking to expand or attract investors. With a valuation in hand, ophthalmologists can make strategic decisions based on concrete data .


Identify growth opportunities


In addition to determining the current value of the clinic, a valuation also allows you to identify growth opportunities. By analyzing assets, liabilities and revenue, it is possible to identify areas where the clinic can improve its operational efficiency, increase profitability or expand its services. This information is valuable for making strategic decisions and seeking maximum growth potential.


Attract investors and strategic partners


With a valuation in hand, ophthalmologists have a reliable and well-founded document to present to potential investors or strategic partners. These stakeholders often require an accurate assessment of the practice's value before considering any negotiations. By providing a complete and detailed valuation, ophthalmologists increase their chances of attracting investment or establishing beneficial partnerships.


Prepare for mergers and acquisitions


In the mergers and acquisitions market, a valuation is a fundamental requirement. When eye clinic owners want to sell or merge their business, it is essential to have an up-to-date and reliable valuation. This document allows you to establish a fair price for the clinic and facilitates negotiations with potential buyers. Additionally, a complete valuation increases transparency and trust during the sales process.


Want to know more about mergers and acquisitions in the ophthalmology market?



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Updated: Apr 30

Check the main trends, transformations and how to prepare for future years



hospital


The healthcare sector has been going through a strong consolidation process in recent years. Since 2003, there have been 817 deals, placing the segment among the ten most transacted in the period, demonstrating a great appetite for mergers and acquisitions (M&A - Mergers and Acquisitions) . In recent years, around 500 transactions have been carried out in the sector, which together generated a turnover of almost R$90 billion (US$18 billion). Of this volume, around 90% were closed by ten consolidating groups — Rede D'Or, Intermédica, Dasa, DaVita, Hapvida, Fleury, Oncoclínicas, Sabin, Viveo and Hermes Pardini.


In 2022, companies in the healthcare sector, which include hospitals, clinical analysis laboratories and chemical and pharmaceutical companies, carried out 53 M&A operations across the country, according to data from KPMG. Despite a performance 36% lower than that observed in 2021, one of the main transactions ever carried out in Brazil was in this sector: the merger of Rede D'Or (RDOR3) and SulAmérica Seguros, generating a business valued at US$3.1 billion (or around R$15 billion).


What is the health market scenario?


Despite this relevant volume of transactions, the health market still maintains similar characteristics, with a concentration of health plan customers in a small group of operators and a hospital market that is still fragmented.


In 2021, around 75% of medical insurance users were from the Unimed, Hapvida, Bradesco, Amil or SulAmérica system. Furthermore, in some smaller areas there are still smaller operators with local relevance that could be targets for consolidation. In these areas, the hospital market is even more fragmented. According to BR Finance, around 130 hospitals (with more than 50 beds), located in cities with more than 200 thousand inhabitants, have already been acquired by large groups, but there are another 280 with these same characteristics still under the control of their founders.


In parallel, there is ongoing consolidation in the market for medical specialties such as ophthalmology, orthopedics, nephrology and reproduction. This movement began around 2015, but accelerated during the pandemic. In the ophthalmology segment alone, 30 transactions have been closed since 2021, the equivalent of one deal per month, according to a survey by Rio de Janeiro consultancy B2R.


The consolidation is led by private equity managers Pátria, which has already purchased at least 20 assets in the area, followed by XP, with around 15 deals closed. There are more than 5,000 ophthalmological clinics and hospitals in the country, indicating there is still room for growth.


What are the challenges in the healthcare sector?


Health is not a market that competes for the customer, it disputes the availability of providing the service to the population, since in this segment of the economy technology and services generate their own demand (Roemer's Law of Health Economics). However, many of the sector's challenges are:


● Due to its high investment cost, with high prices for equipment and

maintenance;


● Availability of professionals.


The use of artificial intelligence and remote reports are some of the trends that should boost it, with emphasis on advances in “healthtechs”.


In this panorama of mergers and acquisitions in the healthcare sector, the active role of private equity funds with experience in the healthcare sector stands out, such as Pátria, which invests in companies such as Dasa and Alliar; Vinci Partners, with investments in Cura; and Crescera Capital, with a history of investing in the healthcare sector, including Hospital Care, Hospital Vera Cruz and Hospital Baía Sul, among others.


How can we help?


In this sense, Cornerstone Partners is able, through the experience and experience of its professionals, to support healthcare entrepreneurs at all levels, in specialized consultancy services, valuation and advisory services for mergers and acquisitions , in the search for improving their governance. and analysis of business opportunities in the current scenario.




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