A little more than a year has passed since the populist Mexican President Andrés Manuel López Obrador—frequently referred to as AMLO—was elected in a landslide victory. Since then, fears of political risk and U.S. threats to restrict and hamper trade have persisted, inhibiting investment and clouding the outlook for economic growth in Mexico.

For lawyers, this has meant a slowdown in some profitable work, such as deal activity, but an increase in advisory work as Mexicans look to sell assets at home and abroad.

“I would describe the anxiety that I’m seeing inside the C-suite, in the boardroom, as the highest I’ve seen since probably around the Tequila Crisis in the mid-1990s,” said Jones Day partner Michael McGuinness, referring to the financial crisis sparked by the sudden devaluation of the peso. That crisis led to hyperinflation, thousands losing their homes, banks collapsing and, eventually, a $50 billion bailout orchestrated by the International Monetary Fund.

Sliding confidence more recently has resulted in a marked decline in merger and acquisition activity.

According to Transactional Track Record, which tracks M&A transactions, 125 Mexican deals with a combined reported value of $15.5 billion have been made in the 12 months through June 2019—the year following López Obrador’s sweeping July 1, 2018, electoral win. That’s down from 184 transactions that had a combined reported value of $34.5 billion in the 12 months leading up to the election.

The drop-off came amid ongoing unease related to trade relations—even though Mexico has already agreed to the terms of a new North American free trade agreement, the USMCA. Canada and the U.S. still must ratify the agreement, however, and as recently as June, U.S. President Donald Trump was threatening to slap a 25% tariff on all Mexican imports (...).

Source: The American Lawyer - United States