How Valuation Gaps Are Being Bridged in Brazil

Valuation gaps remain one of the defining features of the Brazilian M&A market entering February 2026, but they are no longer best understood as simple signs of deadlock.¹² Sellers continue to anchor expectations in operating performance, strategic potential and precedents formed under easier financing conditions. Buyers, meanwhile, are underwriting transactions in a market where the Selic remains at 15.00%, leverage is expensive and the cost of getting future earnings wrong is much higher than before. Those are different starting points, and it is unsurprising that they produce tension.

What is more interesting is how the market is responding. Rather than allowing every disagreement on price to collapse a process, Brazilian transaction practice has increasingly shifted toward mechanisms that allocate uncertainty over time.¹ Chambers’ review of the market last year already identified earn-outs, vendor financing and greater reliance on private credit as central tools in a high-rate environment. This means the valuation debate is no longer confined to the headline number. It increasingly extends into how that number is paid, when it is paid and what must happen operationally for the full amount to be justified.

This is an important improvement in market maturity. Many valuation disputes are not true disagreements about whether value exists; they are disagreements about who should assume the risk of realizing that value.¹ A founder may believe, plausibly, that the business can support a higher price if revenue continues to expand, margins improve or a strategic agenda is executed well. A buyer may be equally justified in resisting full cash payment at closing if those outcomes remain contingent and the financing environment is punitive. Structured consideration is the bridge between those two positions. It allows the seller to participate in upside while preserving the buyer’s need for discipline.

The current rate environment makes this especially relevant. With the Selic still at 15.00% in early February, the disagreement between buyers and sellers is not just conceptual; it is embedded in the economics of financing.² The higher the discount rate, the harder it becomes to justify paying today for earnings that remain too uncertain or too far in the future. That is why staged consideration, deferred payments and contingent value mechanisms are appearing more frequently: they translate a single-period pricing dispute into a multi-period risk-sharing arrangement.

This also helps explain why Brazil’s M&A market has stayed active despite a challenging macro backdrop. Fresh commentary from early February confirms that the market remained resilient through 2025 even as rates stayed high, IPOs remained absent and broader uncertainty persisted.³ In that setting, M&A has had to absorb more of the burden of corporate repositioning, liquidity generation and strategic growth. When the need to transact remains real, counterparties become more willing to use structure to solve price disagreement rather than wait indefinitely for perfect conditions. That does not eliminate valuation gaps. It simply makes them more manageable.

None of this means every structured deal is a good deal. The increased use of earn-outs and deferred consideration only improves market outcomes when those mechanisms are designed well.¹ If milestone definitions are vague, incentives are poorly aligned or performance metrics can be distorted after signing, contingent mechanisms can create as many disputes as they solve. The same is true of vendor financing when it is used to postpone honest pricing conversations instead of supporting a sound thesis. The Brazilian market’s real progress lies not in using more structure per se, but in becoming more sophisticated about how structure is deployed.

On the sell-side, the lesson is practical. In the 2026 environment, defending value often means being prepared to stand behind part of that value through performance-based mechanisms.¹ That requires realistic assumptions, operational clarity and a willingness to treat deal structure as central rather than secondary. For buyers, the lesson is equally important: using the rate environment as a blanket excuse to reduce all prices is not a substitute for strategic conviction. The strongest acquirers are often those willing to protect downside intelligently while still paying for upside when it can be credibly measured.

For founder-led and family-owned businesses, this may actually widen the path to successful outcomes. A market that relies less on a single agreed number and more on smarter allocation of future performance can accommodate companies whose value story is compelling but not yet fully reflected in trailing figures.¹ That is particularly relevant when M&A is effectively replacing capital-markets liquidity as the main path to realization. The cost of capital may have made pricing more difficult, but it has also forced counterparties to become more inventive about bridging the gap between belief and certainty.

Taken together, Brazilian M&A is no longer negotiating value only in the present tense. The market is increasingly using structure to decide how much value is paid today, how much is paid later and under what conditions the difference becomes justified.¹² That is a sign of a market that is not frozen by disagreement, but maturing through it. In a high-rate, no-IPO environment, that may be one of the most important reasons transactions continue to get done.