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Latin American entertainment industry attracts international M&A investment
The live entertainment sector in Latin America is drawing strong interest from overseas investors.
Like many other industries in the region, the live entertainment sector is seeing increasing consolidation and a strong flow of cross-border M&A as both Latin American and U.S. groups seek to extend their reach in large markets such as Mexico, Brazil, Colombia and Argentina.
This is often achieved through acquisition of businesses involving high-profile tour promoters, in a world where personal relationships exert a significant influence.
Since entertainment companies tend to purchase the rights to take musicians and bands on tour across the region, this also gives them access to smaller Latin American countries at relatively low cost. This can make it more affordable for top artists to perform in less-populated countries and increase their popularity.
Live Nation deal shines spotlight on the sector
The acquisition by U.S. media giant Live Nation Group of a 51% stake in DF Entertainment, a major Argentinian concert promoter and festival producer, founded and owned by Diego Finkelstein, is just one example of this cross-border M&A trend.
The NASDAQ-listed U.S. business is a major sponsor of a wide range of live music shows and manages a number of top artist tours.
Live Nation Group was keen to partner with a Latin American entertainment company to access the vibrant Argentinian market, and benefits from DF Entertainment’s expertise and presence, which includes a number of venues in Buenos Aires.
Since the transaction, on which Nexia International member firm Abelovich, Polano & Asociados Nexia advised, the combined business has promoted a number of world-class concerts and shows in Latin America, including the Lollapalooza Music Festival in Argentina, Festival Asuncionico in Paraguay, and tours for artists including Sara Brightman, Phil Collins, Lenny Kravitz, Martin Garrix and Pearl Jam.
M&A challenges
One of the key challenges for any M&A deal in the sector is developing a robust plan prior to a deal that takes into account the corporate structure of the acquisition target and the tax implications of the sale. This requires a comprehensive due diligence process in order to protect the purchaser’s interest.
In some cases, the seller's existing company structure may need to be modified to meet the purchaser’s compliance requirements with regard to preventing money laundering, anti-corruption policies and effective internal controls, particularly if the buyer is a U.S.-listed company.
Finally, careful consideration should be given to international tax treaties in order to avoid double taxation.
For more information, contact:
Daniel Abelovich
Abelovich, Polano & Asociados Nexia, Argentina
T: +54 11 4312 8525
E: dabelovich@estabe.com.ar
Noemi Cohn
Abelovich, Polano & Asociados Nexia, Argentina
E: ncohn@estabe.com.ar
