Deal Points 2024 (Colombia)

On 17 October, in the framework of the III M&A Congress, the Mergers and Acquisitions Seminar of the Universidad de los Andes launched the report "Mergers and Acquisitions. Deal Points 2024 (Colombia)".

The study aims to contribute to the understanding of the dynamics and development of the M&A market; it could also serve as an input for negotiation. Periodic reports are expected.

This report is the result of the articulation between academia and practice. It would not have been possible without the generous and committed participation of the following firms: Baker McKenzie, Brigard Urrutia, Contexto Legal SA, Cuatrecasas, Dentons Cardenas & Cardenas, Garrigues, Gómez-Pinzón Abogados, Lloreda Camacho & Co, Martínez Quintero Mendoza González Laguado & De La Rosa, Muñoz Tamayo y Asociados, Philippi Prietocarrizosa Ferrero Du & Uría, Posse Herrera Ruiz - PHR Legal, RAD/DF and Serrano Martínez CMA.

Some of the findings are presented below:

Criterion: Type of transaction
Finding: The preferred vehicle was the SPA (72% of cases).

Criterion: Range of Operation
Findings: 80% of the transactions had an amount less than or equal to 200 billion pesos (US$46 million).

Criterion: Signing and Closing
Findings: 60% of transactions agreed to close within 6 months.

Criterion: Completion Account Mechanism
Finding: Completion Account Mechanism was adopted in 57% of transactions.

Criterion: Limit of Liability (Cap)
The limit of liability follows one of two paths: (i) between 5 and 20% of the amount of the transaction; or, (ii) higher than 50%.

Criterion: Liability Threshold (Basket)
Finding: Basket was included in 62% of the transactions. The Tipping Basket rule was followed (65% of transactions).
The threshold does not usually exceed 3% of the transaction amount (79% of cases); in 68% of transactions it did not exceed 2%.

Criterion: Event Liability Threshold (De Minimis)
Finding: The de minimis threshold was agreed in 48% of cases.
When agreed, the De Minimis usually does not exceed 5% of the Basket (66% of cases).

Criterion: Sandbagging
Finding: In 44% of the cases, silence was observed; in 43% of the cases, the pro-sandbagging rule was expressly adopted.

Criterion: Bringdown Condition
Findings: 77% of transactions included the bringdown condition as a condition precedent.

Criterion: Sole Remedy Clause
Finding: Single Remedy Clause was agreed in 57% of cases.

Criterion: MAC/MAE OUT
Finding: The MAC/MAE OUT clause was included in 78% of transactions.

Read the full report here

About Sergio Carreño Mendoza: PhD in Law from the Universitat Pompeu Fabra. Lawyer from the Universidad Externado de Colombia and Master in Liability Law from the same university. Professor at the Faculty of Law of the Universidad de los Andes, director of the Mergers and Acquisitions Seminar and Co-director of the Business and Entrepreneurship Legal Clinic. His research focuses on contract law, tort law, commercial law and M&A. He recently published two books entitled ‘Agreements of intent and the management of uncertainty in corporate acquisitions " and "Mergers and Acquisitions. Information asymmetry and uncertainty management".
E-mail: s.carrenom@uniandes.edu.co