Key Takeaways
- • Squire Patton Boggs argues that most value impairments and failed investments in Latin America stem from governance shortcomings, underestimated regulatory risk, unrealistic valuation assumptions and post-closing compliance issues rather than flawed investment theses.
- • The firm contends that valuation cannot be separated from legal and regulatory analysis, and that legal and regulatory factors often influence value as much as financial performance.
- • Governance deficiencies, particularly in founder-led and family-owned businesses, are described as one of the most underestimated risks in Latin American private capital transactions.
- • Compliance has shifted from a defensive exercise to a value driver, with mature anti-money laundering, anti-corruption and sanctions frameworks linked to greater access to capital and more favorable financing terms.
- • Family offices, which often compete with institutional private equity firms, are advised to prioritize governance protections, exit rights and dispute-preparedness alongside longer-horizon strategic objectives.
Summary
Squire Patton Boggs, in a Family Office Insights piece, says Latin America continues to attract family offices, private equity sponsors and strategic investors seeking growth and portfolio diversification in markets that remain underpenetrated relative to developed economies. Opportunities are cited across infrastructure, energy, technology, agribusiness, financial services, logistics, healthcare and family-owned businesses pursuing growth capital, liquidity or succession solutions. The firm notes that increased regulatory scrutiny, geopolitical uncertainty and fluctuating economic conditions have made cross-border investing more complex.
According to the article, many significant value impairments and disputes arise not from flawed theses or adverse markets but from governance gaps, underestimated regulatory risks, unrealistic valuation assumptions and compliance issues emerging after capital is deployed. The authors illustrate integrated diligence with a hypothetical logistics acquisition, where issues such as expiring government contracts, third-party intermediaries in higher-risk jurisdictions, permit transfer restrictions, related-party transactions and unapproved regulatory assumptions could collectively affect value even though each might not derail a deal on its own.
On valuation, the firm argues that financial models often assume uninterrupted operations and regulatory approvals that legal diligence may contradict, potentially creating a "false sense of precision." It advises that value be considered as a range shaped by risk, uncertainty and governance quality. The article also flags currency volatility, tax policy changes, capital controls and political transitions as factors that can materially affect returns and exit strategies.
For family offices, the article notes longer holding periods and objectives such as wealth preservation and intergenerational planning. It warns that trust-based relationships can lead investors to underweight governance mechanisms, documentation and exit protections. The firm cites cases in which minority investors discovered their influence over dividend policy, compensation or related-party matters was more limited than expected. On compliance, it says lenders, buyers and regulators increasingly scrutinize anti-corruption controls, beneficial ownership transparency and sanctions exposure earlier in deal processes, with deficiencies often leading to price adjustments or abandoned transactions. The article closes by emphasizing dispute preparedness, including enforcement and jurisdictional considerations, as an overlooked element of cross-border investing.
According to the article, many significant value impairments and disputes arise not from flawed theses or adverse markets but from governance gaps, underestimated regulatory risks, unrealistic valuation assumptions and compliance issues emerging after capital is deployed. The authors illustrate integrated diligence with a hypothetical logistics acquisition, where issues such as expiring government contracts, third-party intermediaries in higher-risk jurisdictions, permit transfer restrictions, related-party transactions and unapproved regulatory assumptions could collectively affect value even though each might not derail a deal on its own.
On valuation, the firm argues that financial models often assume uninterrupted operations and regulatory approvals that legal diligence may contradict, potentially creating a "false sense of precision." It advises that value be considered as a range shaped by risk, uncertainty and governance quality. The article also flags currency volatility, tax policy changes, capital controls and political transitions as factors that can materially affect returns and exit strategies.
For family offices, the article notes longer holding periods and objectives such as wealth preservation and intergenerational planning. It warns that trust-based relationships can lead investors to underweight governance mechanisms, documentation and exit protections. The firm cites cases in which minority investors discovered their influence over dividend policy, compensation or related-party matters was more limited than expected. On compliance, it says lenders, buyers and regulators increasingly scrutinize anti-corruption controls, beneficial ownership transparency and sanctions exposure earlier in deal processes, with deficiencies often leading to price adjustments or abandoned transactions. The article closes by emphasizing dispute preparedness, including enforcement and jurisdictional considerations, as an overlooked element of cross-border investing.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.