In Mexico, 1H25 M&A volumes are down 17% over 1H24, a trend that began in 2023. In addition to the global economic environment of uncertainty, there are several other factors at play in Mexico. Mexico-specific uncertainty includes tariffs, judicial and regulatory reforms, USMCA

review, security, and energy & infrastructure availability. In addition, the first year of a Sexenio, or Mexican Presidential term, typically sees reduced deal activity. However, despite all this uncertainty there were 55 M&A deals in Mexico in 2025 in 1H25. If the status quo simply remains (and we have reasons to believe the pace could pick up), 2025 Mexican M&A activity could be on pace with 2024.

Issuers: Waiting for the Right Moment

Many Mexican companies are hoping to refinance or obtain new capital in a declining-rate environment. These Companies have prepared their materials and are simply waiting for the right moment to access the market. In response to tariffs specifically, we note that many Mexican issuers are evaluating how tariffs could affect their businesses before pulling the trigger on M&A or expansion plans. This mirrors the trend we are seeing in the US, with 30% of companies putting deals on hold or revisiting deals in response to tariffs.

Strategic Growth Continues to Drive Financing Activity

Megadeals over USD 10Bn hit a record high in 1H25, primarily associated with strategic investments in AI and technology. Minority investments have allowed investors to diversify their risks while still preserving capital for major strategic undertakings. In a survey of over 700 corporate and financial sponsors, 40% indicated that strategic growth will be the primary factor driving M&A activity in 2025. As companies reconsider global issues such as supply chain, Mexico could become a strategic cornerstone for some investors.

Investors are Paying More Attention to Latin America

Foreign investors are increasingly turning their attention to Mexico, recognizing its strategic location, macroeconomic stability, and growing role in nearshoring efforts. In 2025, interest in Mexican assets has risen as global capital seeks safer, more resilient markets closer to the United States. The Mexican peso has appreciated 13% YTD against the U.S. dollar, reflecting investor confidence and outperforming major equity indices in the U.S. This momentum presents a timely opportunity for capital deployment into Mexico’s expanding industrial and infrastructure base. While challenges remain, the overall outlook is one of cautious optimism as investors position themselves to participate in Mexico’s long-term growth story.

Attracting New Foreign Investors

The promise of nearshoring remains on the radar of many international investors, but the money has not yet followed. Foreign Direct Investment in Mexico was a record USD 36.9 Bn in 2024 (up 2% from USD 36.1Bn in 2023), while global FDI declined by 8%. Most investment was directed to the automotive, aerospace, telecom, financial services and electronics sectors, and took the form of a reinvestment of profits. Only 10% of FDI was directed to new investment. In fact, new FDI in Mexico declined 34% from 2023, and was at the lowest levels since 1993. Nearshoring continues to attract growing interest from international investors, with early capital flows signaling long-term potential. In 2024, Mexico received a record USD 36.9 billion in FDI—up 2% from 2023—despite an 8% global decline. Most investment focused on key sectors like automotive, aerospace, and electronics, mainly through reinvestment of profits. New FDI accounted for 10% of the total, suggesting significant room for future growth as confidence deepens.

Developing an Investment Climate in Southern Mexico

In addition to Mexico City and the State of Mexico, most of the FDI in Mexico continues to be concentrated in the northern states of Baja California, Nuevo León, and Chihuahua. The Plan México calls for aggressive expansion of infrastructure and technology development. Given the government’s deficit position and desire to reduce it, financing from the private sector is necessary for the plan to achieve its goals. To attract FDI, projects will need to be well-structured with the right frameworks that lay the foundation for private sector investment, including energy availability and security concerns which need to be addressed.

Navigate a New Judicial and Regulatory Framework

Government-imposed changes to energy contracts during the AMLO administration left many international investors in Mexico concerned. Current and proposed regulatory and legal changes may similarly give international investors pause as they compare the risk-reward equation against other jurisdictions that are easier to navigate. In addition to the new judicial reform, the abolition of regulators COFECE (the Federal Economic Competition Commission) and IFT (the telecommunications regulator), could hinder financing activity, as investors wait to see how the successor agency, Agencia Nacional para la Competencia y el Bienestar Económico, which falls under the Executive Branch, will take shape. The review of the USMCA in 2026 – likely followed by a renegotiation, and ongoing tariff negotiations could create additional deal inertia.

Despite these challenges, good deals are getting financed. Investors are tuned into several indicators that will create fertile ground for financial transactions in Mexico: nearshoring; the massive demand for energy that will require international know-how; and the sheer interdependence on the United States that should uplift Mexico’s economy.

How Deals are Getting Financed

Sources of Financing: Capital Markets