Why Latin America Is Leading International ETA
Of the 15 known positive exits in the 2024 IESE International Search Fund Study, 10 are in Latin America. Mexico alone accounts for seven — more than the United Kingdom, Spain, Germany, and the rest of Europe combined. This is not an accident. It reflects a confluence of structural factors that have made LatAm — and Mexico specifically — the most fertile international ETA market in the world.
Mexico: The International Search Fund Capital
Mexico's dominance in international ETA exits comes from three compounding advantages:
Proximity to the US ecosystem. Mexican searchers can access US-trained legal advisors, US-based search fund investors familiar with the Mexican market, and a deal advisory community shaped by decades of cross-border M&A. The cultural and geographic proximity to the US reduces the learning curve for US investors and makes financing conversations significantly easier.
Favorable acquisition multiples. Mexican small businesses — particularly in B2B services, industrial services, logistics, and distribution — trade at multiples that remain below US equivalents: typically 3–4.5x EBITDA in most sectors. The market has not yet been bid up by competitive search fund activity, which means entry economics are meaningfully more attractive than the US.
A functioning M&A ecosystem. Mexico City, Monterrey, and Guadalajara have developed M&A legal and advisory ecosystems sophisticated enough to execute institutional-quality transactions. Quality of earnings, legal diligence, and deal structuring can be executed at a level comparable to US mid-market deals — a capability that is not present in most other LatAm markets.
The Financing Gap in Mexico
Mexico has no SBA equivalent. Acquisition financing requires a larger equity contribution (typically 25–35% of purchase price), seller notes that are more structural than supplemental, or access to Mexican banking credit — which is available but at rates and terms that are less favorable than US SBA debt. This financing gap is the primary structural challenge for Mexican searchers and the primary reason deals are structured with larger equity rounds.
Brazil: Large Market, Complex Execution
Brazil is the largest economy in Latin America and has significant ETA potential — millions of family-owned businesses, a growing entrepreneurial culture, and a large population of MBA-educated professionals with search fund training. One exit in the IESE dataset understates the actual activity, as Brazil has a number of searchers in active processes.
The execution challenges in Brazil are real: complex tax and regulatory environment, multiple tax regimes that affect deal structure, labor laws that require specific legal structuring for acquisitions, and a legal process that can add significant timeline to close. Brazil-focused searchers typically work with local M&A legal advisors who specialize in acquisition transactions — a non-negotiable given the regulatory complexity.
The currency risk is also a meaningful investor consideration. BRL-denominated returns converting to USD create exposure that pure US-market investors need to evaluate explicitly.
Colombia: An Emerging Market Worth Watching
Colombia has developed a meaningful search fund ecosystem over the past five years, driven partly by IESE's influence through Inalde Business School (affiliated with IESE, based in Bogotá) and the broader growth of the Latin American ETA community. Bogotá-based searchers targeting B2B services, technology-enabled services, and healthcare have found a market with improving business formalization, growing familiarity with institutional M&A, and multiples that remain favorable.
The political and macroeconomic environment requires monitoring — Colombia's regulatory environment has shifted, and currency volatility creates real investor risk. Searchers who can structure seller notes and earnouts in USD where possible reduce investor currency exposure meaningfully.
Chile: Sophisticated but Small
Chile has one exit in the IESE dataset and a disproportionately developed M&A ecosystem relative to its size. Santiago is home to sophisticated legal and financial advisory firms, and Chilean business owners in certain sectors are familiar with institutional M&A processes. The challenge is market depth: Chile's small business market is simply smaller than Mexico or Brazil, limiting the universe of quality acquisition targets.
Argentina: High Potential, High Risk
Argentina has enormous potential — a large, educated population, many sophisticated business owners, and historically favorable acquisition economics. The macroeconomic environment (persistent inflation, currency controls, regulatory unpredictability) has made it structurally challenging for investors to back Argentine acquisitions. Searchers operating in Argentina typically structure deals with significant seller notes in USD and conservative debt structures that assume further currency deterioration.
What LatAm Searchers Need from Investors
Latin American searchers need investors who understand the structural differences from US deals: larger equity contributions, complex financing structures, currency considerations, and longer legal timelines. Investors who expect US deal timelines and US deal structures in LatAm markets will consistently be disappointed. Those who adjust expectations and work with experienced local advisors find that the economics — lower entry multiples, motivated sellers, growing economies — can produce excellent outcomes.
Mayfaire Row actively evaluates LatAm deals, particularly in Mexico and Colombia, where we have relevant market knowledge and established advisor relationships.
*Sources: IESE Business School International Search Fund Center, "2024 International Search Fund Study"; Inalde Business School ETA program data; regional M&A market analysis. Regional activity share estimates based on IESE dataset composition.*