Mauricio Olaya, senior partner and M&A specialist at the firm Muniz explained that, since the arrival to the presidency of Peter Castillo, Uncertainty was generated about legal stability and the rate of economic progress in Peru.

After Castillo’s departure, uncertainty has persisted in recent months, as it is still not clear how long the presidency of Dina Boluarte nor the profile of the next candidates for the presidency, he indicated. “Then, the buyer, when seeing Peru, incorporates a kind of discount rate in the value of the company, for the future risk. The value of the asset is impacted downwards, ”he stressed.

Olaya added that it is not possible to specify what this level of discount is due to the greater risk at the local level, since it will depend on each company and sector in particular. “But, without a doubt, it occurs in all sectors, whether the buyer is foreign or also Peruvian,” he noted.

This trend is also observed by Rafael Boisset, corporate partner and M&A specialist at the studio. PPU. “The value of the companies has landed, prices are now more reasonable. In countries with higher country risk, as now in Peru, the companies are cheaper, ”she stressed.

He recalled that a few years ago, when there was more political stability and higher growth rates, the value of companies grew considerably. “When listing a company, based on its Ebitda, the multiples reached up to twenty in the stage of greatest growth in Peru. Now those multiples are between four to six; they are minor, due to the greater local risk, ”he remarked.

This lower valuation of the companies that the buyers make versus what the seller expects to receive makes the negotiation time between the parties longer, the analysts indicated, which is reflected in the reduction in the number of closed transactions.

Thus, the last monthly report of the consultant Transactional Track Record (TTR) registers only three closed transactions in January 2023, a number considerably less than the fifteen operations reported in January 2022. Likewise, the statistics show a reduction in the number of closed transactions in recent months (see table).

Source: Euro ES Euro