Why are most transactions in Brazil concentrated in the technology sector?

The important role of technology in the economy leads to strategic M&As, market expansion, and increased competitiveness.

The mergers and acquisitions market in Brazil has matured significantly in recent years, with transactions increasing in volume, value, and complexity.

Similarly, an increase in cross-border M&As has been steadily continuing.

In the second quarter of 2024, 170 transactions were recorded between Brazilian companies and foreign ones.

A result 28% higher than the same period in 2023, totaling 132 transactions.

Brazil's strong performance in the M&A landscape makes its economy increasingly attractive to the international market.

In this context, the sector that has been standing out the most is technology.

According to the Ministry of Economy, in 2023 the country recorded an impressive revenue of R$ 754.9 billion in the technology sector, corresponding to nearly 7% of the national GDP of R$ 10.9 trillion, solidifying it as the main driver of transactions in the Brazilian market.

Such data not only highlights the dynamism of the sector, which continues to grow not only in numbers but also in relevance and innovation.

Brazilian startups have excelled in developing local solutions with global impact, technological autonomy, resilience, and creativity.

The acquisition of startups and technology companies, when carried out strategically, brings a range of opportunities for a business:

1. Market expansion: acquiring a technology company allows businesses to expand their operations into new markets and niches. In Brazil, this is particularly significant due to regional diversity. Moreover, local startups often have an established presence in specific markets, providing acquiring companies with a solid and ready foundation for growth.
2. Acquisition of new technologies: integrating advanced technologies developed by Brazilian startups, such as artificial intelligence, big data, and automation solutions, enables acquiring companies to achieve a leap in innovation. This can accelerate product development, enhance internal processes, and create competitive advantages in a globalized market.
3. Accelerated growth: acquiring a technology company reduces the time and costs involved in developing solutions from scratch. Additionally, it allows the acquiring company to harness the talent and technical expertise of the acquired company's team, enhancing its innovation and execution capabilities.
4. Portfolio diversification: acquiring technology companies enables more traditional businesses to diversify their product and service offerings. For instance, a company in the financial sector may acquire a fintech to incorporate digital solutions into its portfolio and better meet the demands of connected consumers.

Acquisitions in the technology sector often bring operational synergies and provide access to networks of clients and strategic partners.

In the case of Brazil, with its growing market, these advantages make it a powerful attraction for both local and international investors.

The rise in transactions within Brazil's technology sector reflects the vital role of technology in transforming various aspects of society and the economy, from enhancing process efficiency to directly impacting job creation and sustainable growth.

These factors make the Brazilian market particularly attractive to both domestic and international investors.

Regional diversity, combined with a growing innovation ecosystem, ensures opportunities for expansion and development.

Moreover, acquisitions in the sector provide opportunities for the rapid integration of new technologies, expansion into new markets, and enhanced global competitiveness.

By investing in technology, companies not only keep up with market changes but also position themselves strategically to lead the next wave of economic transformation.

Want to know how to maximize opportunities in the technology market and ensure the best market value in your transactions?

The team of experts at Upside Investment provides tailored consulting services to turn innovation into results for your business.