International legal implications of mergers and acquisitions in Mexico

by Prof Sergio Guerrero Rosas

The extraordinary industrial and commercial development of the last century is based on the extent of economies, the integration of production processes, and the business interaction of related companies. The conjunction of these factors gives rise to an economic phenomenon that could be summed up as: the greater the accumulation of resources, the greater the profits; and the greater the profits, the greater the accumulation of resources. Consequently, it is not surprising that modern business people increasingly pursue the integration and concentration of their companies.

The unification and consolidation of businesses bring more control over the life of companies, and opens up the possibility of new businesses or the fortification of an already established business. Therefore, mergers in forums such as the Mexican market are an excellent instrument to reorganise the business strategies of business people in our country, due to the fact that there are companies not in operation that still represent a fiscal cost as they continue to have informative obligations to the tax authorities.

Another issue of great relevance in Mexico is the acquisition of companies. This situation may be of great interest to foreign investors because there are many companies in Mexico that are called “paper companies”, meaning they are duly incorporated, have tax IDs and bank accounts, but do not trade in the Mexican market. This situation could be attractive for investors because they can purchase a company that already has certain documentation which could speed up commercialisation in the country, as compared to the incorporation of a new company which would take more time in procedures before the tax authorities and would be subject to the whims of a slow financial bureaucracy.

Foreign investment is attractive in the Mexican market, because of its geographical position, its closeness to the US and Canada, its proximity to the Panama Canal and the maritime entrance to both the Atlantic and Pacific Oceans. Mexican cities such as Guadalajara, Monterrey, Puebla, Aguascalientes, and Leon have high foreign investments in electronics manufacturing, automotive, steel, and technology development companies. These investments have benefited from the implementation of strategic mergers and acquisitions models provided by Mexican law, which represent a useful tool in the prevention and mitigation of tax, legal, labour, environmental, and corporate compliance risks.

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M&A M&A Mergers & Acquisitions Mexico Guerrero y Santana