The Collapse of Cross-Border Mergers in Emerging Markets: A Post-Mortem of the 2019 LATAM Consolidation Wave

Abstract

This study investigates why 78 % of large cross-border mergers in Latin America failed within three years despite favorable macroeconomic conditions. Using a mixed-methods design combining event-history analysis of 214 deals (2015-2022) with 42 semi-structured interviews of C-suite executives, we identify three dominant failure trajectories: regulatory backlash (43 %), cultural integration fatigue (31 %), and liquidity over-estimation (26 %). Regulatory backlash emerged when host governments retroactively imposed capital controls that invalidated synergy models. Cultural integration fatigue surfaced in firms that underestimated linguistic and power-distance mismatches, leading to knowledge-transfer bottlenecks. Liquidity over-estimation occurred when acquirers relied on pro-forma cash-flow projections that ignored post-merger covenant restrictions. The paper contributes a configurational model that links macro-institutional shocks to micro-behavioral misalignment, offering a predictive risk dashboard now piloted by two regional development banks. Practical implications include a pre-closing stress-test protocol now adopted by Colombia’s stock exchange.