M&A in Latin America: Why 7 out of 10 deals fail to create value
- Apr 7
- 3 min read
On paper, almost all acquisitions look flawless. The business case promises cost synergies, revenue growth, and new capabilities. The presentations convince boards and shareholders. But the reality is different: seven out of ten deals fail to create shareholder value in the first three years (Harvard Business Review).
In Latin America, where markets are more volatile, institutions are more fragile, and capabilities are more heterogeneous, the risk is even greater. What destroys value is not the ambition to grow through acquisitions, but the gap between what the Excel spreadsheet promises and what happens during integration.
The illusion of financial synergies
In almost every deal, the Excel sheet adds up. Savings on procurement, logistics efficiencies, and back-office economies of scale are projected. The problem is that integration rarely plays out as anticipated. McKinsey estimates that 50% of calculated synergies are cut in half during integration.
Why does this happen? Because financial assumptions ignore human and organizational frictions: the loss of critical talent, resistance to change, technological difficulties, or simple team fatigue. The first lesson is clear: the financial deal only works if the organization is prepared to handle the complexity of the integration.
Integrating Culture from Day One
In mergers, culture is often treated as a soft issue. And yet, it is what destroys value the fastest. MIT Sloan has shown that companies that actively manage cultural integration from day one double the likelihood of the deal’s success.
People don’t leave because of the organizational chart; they leave because they lose confidence in leadership or feel that their identity and skills won’t have a place in the new organization.
Successful integration begins with a clear purpose, consistent messaging, and concrete symbols that both cultures are respected and combined.
The worst thing management can do is declare that “there are not two cultures, just one new one” and let internal politics fill the void.
An Effective Integration Management Office
Integrations fail when they are managed as ad hoc meetings scattered across different departments. Companies that succeed in capturing value establish an Integration Management Office (IMO) with clear leadership, progress metrics, and real decision-making authority.
According to BCG, deals that create a formal IMO triple the likelihood of realizing projected synergies. This isn’t about extra bureaucracy, but about having an “owner” of the integration who is taken just as seriously as a CFO or COO. Without that central hub, integration becomes a collection of scattered good intentions.
The business case must be dynamic, not static
Another recurring mistake is treating the business case as a closed document at the time of the deal. The reality is that everything changes: inflation assumptions, interest rates, regulations, exchange rates. When the business case is left frozen, teams pursue unrealistic goals, and energy is spent defending numbers instead of capturing value.
The best practice is to review it every six months, adjust assumptions, correct deviations, and reassign priorities. In an environment as volatile as Latin America’s, flexibility is a matter of survival, not a luxury.
The regional factor: volatility and resilience
Conducting M&A in Latin America requires an extra level of preparation.
Economic volatility can completely derail an integration plan. Political uncertainty introduces unexpected regulatory risks. The diversity of capabilities means that integrating systems or processes that appear similar on paper becomes a major technical challenge.
This does not mean that acquisitions are impossible or not worth pursuing. It means they require greater rigor and, above all, greater humility: understanding that the complexity lies not in closing the deal, but in managing the integration in an environment that can change from one quarter to the next.
The main question
Deals don’t fail in Excel. They fail in culture, governance, and the discipline of integration. The board should ask itself an uncomfortable question before approving any acquisition:
Are we as prepared to integrate as we are to negotiate?
Because the evidence is clear: success lies not in the contract that is signed, but in the ability to turn that promise into tangible results.
About the author
Ricardo Sonneborn is a partner at SummaPartners and has more than 20 years of experience in strategic consulting and corporate finance.