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Anastasiia Borzykh - Individual Problem Analysis 

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Anastasiia Borzykh - Individual Problem Analysis 

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-Finance Department: 1) Conduct valuations using worksheets, 2) evaluate which

countries are best suited for M&A under different scenarios, 3) determine which

scenario’s outcome to use for deciding the country, and 4) need to identify additional

economic indicators to consider

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2) Evaluate which countries are best suited for M&A under different scenarios

we need to compare Brazil and Chile under different business scenarios to see which country is better for the M&A. For example, if Anam Electronics wants to grow quickly and reach a large number of customers, Brazil might be better because it has a bigger population and a large economy.

but if the company is more focused on low risk and a stable business environment, then Chile could be the better option. Chile has a reputation for strong institutions, lower corruption, and easier business laws, which can make the M&A process smoother.

3) determine which scenario’s outcome to use for deciding the country

we have to decide which scenario fits Anam’s goal the most. If our company wants to go for fast expansion, even if it comes with some risks, we might go with Brazil. But if the goal is to enter a market carefully and with more control, then Chile might be the better choice. We need to choose the scenario that matches Anam’s long-term strategy and what they care about more either speed or safety.

4) need to identify additional economic indicators to consider after looking at each scenario

we should also add more economic indicators to make a better decision. Things like inflation rates, exchange rate stability, political stability, ease of doing business, labor costs, and even consumer behavior are important.

These indicators help us understand if the country is really ready for foreign investment and if it’s a good place for a Korean company like Anam to succeed. Looking at these extra details will help us choose the country that not only looks good on the surface but is actually a smart, long-term decision for the company.

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BrazilvsChile

PV (Base Case) 7.83 8.97

PV (Optimistic Scenario) 9.52 11.24

WACC (Optimistic) 13.02% 14.00%

Terminal Growth Rate 1.2% 1.15%

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Chile offers higher valuation potential in both the base and optimistic cases, suggesting better financial return despite slightly higher WACC. Therefore, from a purely financial perspective, Chile is the more attractive M&A target.

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Optimistic Scenario:

Chile: Strong performance and high PV

Brazil: weak performance, ga attractive

Pessimistic Scenario:

Chile still maintains good value, resilience: even in wors case

Brazil becomes risky

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the real world r unsure/uncertain, better to use pessimistic or more conservative or base case is better in M&A decisions

Under the M&A principle -> chile is better for m&a

*its a strategy that focuses on anticipating worst-case scenarios and ensuring the deal's robustness, even in the face of unfavorable conditions

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Inflation:

Brazil: Tamed after 2022-2023 volatility (~4.0%), Central Bank easing rates.

Chile: Stabilized (~3.5%), Central Bank shifting to pro-growth policy.

GDP Growth:

Brazil: Moderate rebound (~2.5% in 2025), driven by services and agriculture.

Chile: Slower (~1.8%), copper prices volatile but recovering.

Currency: Chilean peso (CLP) more stable relative to BRL.

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Brazil:

Higher total labor costs due to mandatory benefits, severance costs, and complex labor regulations.

Social security, FGTS (severance fund), and 13th salary (bonus month) add up quickly.

Difficulties in termination without legal risk increase cost of HR management.

However, larger talent pool, especially in tech and agribusiness.

Chile:

Lower and more transparent labor costs, with simpler hiring/firing procedures.

Social security contributions are more modest.

Attractive for companies wanting leaner HR structures or outsourcing operations.

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Rationale on Chiles Strengths and Brazil Weakness

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Rationale on Chiles Strengths and Brazil Weakness

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Chile: HIGHER VALUATION -> Better ROI

Chile -> Open trade policies, stable econ and politics (a good politics climate compare to brazil)

Brazil: Currency volatility -> uncertain, finance risk risen

Brazil: Politics: too unpredictable, does not really shows a good governance

Even tho brazil has a bigger market, but scale means nothin if the money we invest loses vaklue due to inflation and corruption risk. Chile give us the oppurtunity to grow safer. Brazil carries too many risks that reduce our valuation. If we want to grow profitably and sustainably, Chile is the better option

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1.

Trade Agreement Advantage

Chile has signed more Free Trade Agreements (FTAs) than almost any other country in Latin America — including with the EU, US, China, and CPTPP.

This means lower tariffs, easier cross-border operations, and greater global access for a post-M&A entity.

2.

Digital and Tech Infrastructure

Chile has superior digital connectivity and infrastructure, with higher internet penetration, better cybersecurity frameworks, and active government support for digital transformation.

Brazil is improving but still lags in digital access and rural internet coverage.

3.

M&A Track Record and Regulatory Clarity

Chile has a cleaner history of successful foreign M&A with relatively clear rules and procedures.

Brazil’s antitrust authority (CADE) can be slower and less predictable, with risk of delays or rejections in merger approvals.

4.

Energy Reliability and Costs

Chile has heavily invested in renewables, leading to more stable and lower-cost energy in the medium term.

Brazil is still vulnerable to hydropower shortages and energy rationing, affecting industrial operations.