Acquisition Finance 2026 Comparisons

The Brazilian acquisition finance market remains predominantly bank-driven, with a strong presence of large domestic banks, although it has been progressively diversifying as the Brazilian capital markets develop and credit funds expand.

Local Banks

The main providers of acquisition financing are large Brazilian banks. The domestic banking sector has historically been concentrated, although concentration has been gradually decreasing. In domestic transactions, Bank Credit Notes (Cédulas de Crédito Bancário – “CCBs”), issued pursuant to Law No 10,931/2004, are widely used. Their standardised form and enforceability make them the preferred instrument in both bilateral and syndicated financing. In capital markets-oriented structures, bonds (“debentures”) are also often used.

Loan agreements may also be used, but are less common in structured transactions, especially because CCBs, as enforceable instruments, offer greater ease of enforcement and secondary market negotiability.

International Banks

As seen, the cost of capital in the domestic market often leads players seeking substantial funding to access international financial markets. Financing involving foreign banks is typically documented through term loan agreements or credit facility agreements, frequently governed by New York or English law. In larger transactions, syndicated loans co-ordinated by a lead arranger are common. In general, these transactions involve greater documentary complexity and higher execution costs, reflecting the multiple counsel, agents and financial institutions typically involved. As a result, they are usually better suited to larger or more sophisticated transactions, where scale and structuring benefits outweigh the additional complexity and cost.

Capital Markets

As an alternative to bank financing, companies may fund acquisitions by tapping the capital markets and issuing securities to the investing public. In Brazil, this route has gained relevance in recent years, particularly through the issuance of equity and debt instruments. Brazil’s domestic corporate debt market has expanded rapidly – the outstanding balance of debentures and commercial notes grew over 24% in 2024 alone, and corporate bond financing as a share of GDP has tripled over the last decade, driven in significant part by incentivised infrastructure debentures under Law No 12,431/2011. The consolidation of the public offerings framework under Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) Resolution No 160 has further supported this growth by streamlining the automatic registration route for offerings to professional investors. In addition to the domestic market, larger Brazilian companies may also access the international markets through the issuance of bonds or notes abroad, typically under New York law.

Private Credit Market

In recent years, Brazil has also seen the gradual expansion of the private credit market, with increased activity from private credit funds, FIDCs (Fundos de Investimento em Direitos Creditórios) and other structured vehicles with mandates to originate or acquire credit exposures. Although these direct lenders and debt funds have not (yet) achieved the same structural relevance observed in the US and European markets – where private credit has replaced banks in a significant portion of mid-market leveraged buyout (LBO) financing – they have been gaining traction in Brazil, particularly in middle-market transactions and private equity-sponsored deals, where more flexible and tailored financing solutions are required.

The Brazilian acquisition finance market shows different dynamics between transactions led by strategic buyers (corporate) and those sponsored by private equity (LBO), both in terms of structure and leverage.

Corporate buyouts carried out by strategic buyers – industrial companies or business groups pursuing expansion, consolidation or vertical integration – represent a significant share of M&A activity in Brazil. In these transactions, leverage levels tend to be more conservative, reflecting the acquirer’s focus on preserving its credit profile and maintaining financial metrics typically monitored by the market and rating agencies. Debt is usually raised at the level of the acquiring company (rather than through a dedicated acquisition vehicle) and forms part of its broader corporate capital structure, often combined with internal cash and/or existing credit lines.

By contrast, classic highly leveraged buyouts are less common and are often structured more conservatively in Brazil. This is largely due to:

• the historically high cost of domestic funding;
• exchange-rate volatility in cross-border structures;
• the comparatively higher friction and timing constraints associated with accessing certain debt capital markets instruments; and
• corporate law constraints that, in practice, require careful analysis of corporate benefit and creditor protection whenever the target (or its subsidiaries) is asked to provide upstream guarantees or security to support acquisition debt.

The cost of domestic funding is anchored to the Selic rate, which is the Central Bank of Brazil’s benchmark overnight rate, set by the Monetary Policy Committee (Comitê de Política Monetária – COPOM) every 45 days, and serves as the reference for pricing credit across the Brazilian financial system. After a tightening cycle that raised the Selic rate by 450 basis points between September 2024 and June 2025, the base rate stood at 15.00% for nine months – the highest level since 2006. The COPOM began an easing cycle in March 2026, with market expectations pointing to gradual reductions over the year. Even so, the elevated cost of credit continues to constrain leverage in acquisition structures and incentivise the use of capital markets instruments and offshore financing.

As a result, private equity-sponsored deals frequently rely on hybrid structures, staged security packages and post-closing reorganisations, rather than the full suite of target-level collateral typically seen in more mature leveraged finance markets.

When financing is provided by a Brazilian financial institution to a Brazilian borrower, the finance documentation will typically be governed by Brazilian law. The same applies to issuances in the Brazilian capital markets – such as debentures or commercial papers – which are necessarily subject to Brazilian law and to CVM regulation.

In transactions involving foreign lenders, offshore bond issuances or other cross-border structures, it is common for the main finance documents to be governed by foreign law, most often New York or English law.

Notwithstanding the choice of a foreign governing law for the finance documents, certain matters remain mandatorily subject to Brazilian law. In particular, security interests over assets located in Brazil (including shares of Brazilian companies, real estate, receivables and operational assets) must be governed by Brazilian law; enforcement of security over assets located in Brazil is subject to Brazilian procedural law; and corporate law requirements applicable to approvals, the grant of security and the assessment of the company’s corporate interest are governed by Brazilian Corporate Law.

Loan Market Association (LMA) and Loan Syndications and Trading Association (LSTA) templates are not widely used as a formal market standard in Brazil, as the Brazilian lending market does not rely on a homogeneous or institutionalised set of facility agreements comparable to the European or US leveraged finance frameworks.

In purely domestic financing, lenders typically use internal precedents developed by the main financial institutions active in the local market. While these precedents often incorporate concepts commonly found in LMA-style documentation – such as financial covenants, events of default, material adverse effect clauses and agent/security agent mechanics – they are tailored to Brazilian law requirements and market practice. Likewise, transactions structured through the Brazilian capital markets (such as debenture issuances) follow documentation patterns shaped by local practice and by the requirements of the Brazilian Corporate Law and CVM regulation, rather than LMA documentation as such.

That said, LMA or LSTA-based documentation is frequently used in Brazil-related transactions in which:

• the finance documents are governed by foreign law (most commonly English or New York law);
• there is an international syndicate of lenders involved;
• the sponsor or the relevant group is foreign; and/or
• a material portion of the debt is structured offshore. In these cases, the core financing documents will often be based on LMA or LSTA precedents, with local-law “workstreams” (and tailored provisions) to address Brazilian-law security creation, perfection/registration and enforcement requirements.

It is common in Brazil-related financing – particularly where foreign lenders or parties are involved – for the transaction documents to be drafted in a foreign language (most often English), with only the key documents being translated to Portuguese. This is because to produce effects in Brazil (including in court or before registries), foreign documents typically must be apostilled (or, where applicable, legalised) under the Hague Apostille framework and accompanied by a Portuguese sworn translation prepared in Brazil. Such sworn translations are issued by a Brazilian sworn translator and have public faith under Brazilian law (Law No 14,195/2021, Article 27, Section 1).

In acquisition finance transactions in Brazil, it is market practice for legal opinions to form part of the closing deliverables, particularly in cross-border deals. These opinions should be distinguished from broader advisory or dispute-related legal memoranda; they are formal closing opinions, typically delivered by the borrower’s counsel and, where relevant, by Brazilian local counsel in charge of the local-law security package, with a view to providing lenders with comfort on the validity and enforceability of the transaction.

In structured financings, legal opinions commonly cover:

• the borrower’s due incorporation and good standing;
• due corporate authorisations for the execution and performance of the finance documents;
• the validity, binding effect and enforceability of the finance documents under Brazilian law;
• the valid creation of the security interests and, where applicable, confirmation that effectiveness against third parties depends on proper perfection/registration with the competent registries; and
• confirmation that the transaction does not violate mandatory provisions of Brazilian law.

In Brazil, senior loans remain the core layer of acquisition indebtedness and are most commonly structured through bilateral or syndicated bank facilities. In practice, these facilities are often documented by means of a credit note (CCB) (for CCBs, see 1.1 Major Lender-Side Players). In some transactions, senior debt may also be raised through the issuance of debentures, particularly where the parties seek to access a broader investor base or adopt a more capital market-oriented structure. In such cases, Brazilian Corporate Law provides for the appointment of a debenture holders’ trustee, which plays an important role in the collective representation of creditors.

Although the concept of senior debt is functionally similar to that found in other jurisdictions, Brazilian acquisition financing tends to involve fewer tranches. The capital structure is therefore often centred on a single senior facility, or on a limited number of senior facilities ranking in parallel, rather than on a highly layered structure combining multiple classes of debt. When different creditor groups co-exist, priority is typically organised through the finance documents, the relevant collateral package and, where appropriate, an intercreditor agreement governing subordination, voting, payment waterfalls and the co-ordination of enforcement.

From a structural standpoint, debt is commonly incurred at the acquisition-vehicle or holding-company level. The initial collateral package will often consist of upstream security, especially share pledges over the acquisition vehicle or the target, assignments of receivables, fiduciary transfers and other security interests over relevant assets. This reflects, in part, Brazilian Corporate Law constraints on the provision of guarantees or collateral by the target or its subsidiaries in the absence of a proper corporate benefit. As a result, upstream and downstream support must be assessed carefully in light of directors’ duties, related-party concerns and capital maintenance principles.

In transactions involving debentures or multiple creditors, enforcement and collateral management may be entrusted to a collateral agent, a role formally introduced into Brazilian law by Law No 14,711/2023 (Marco Legal das Garantias).

Insolvency considerations are also particularly relevant to the structuring of senior loans in Brazil. In distressed scenarios, the nature of the collateral may materially affect the creditor’s position, especially in light of the differentiated treatment of fiduciary security structures under Brazilian insolvency law and recurring litigation over whether certain assets or cash flows are deemed essential to the debtor’s business and should therefore remain shielded from immediate enforcement. This makes collateral selection a central aspect of acquisition finance structuring.

In Brazil, classic multi-layered acquisition finance structures combining senior, mezzanine and deeply subordinated debt are less common than in some other jurisdictions. When a mezzanine layer is used, it is typically achieved through contractually subordinated instruments rather than through a standardised market product. In practice, this may include subordinated or structurally junior debentures, shareholder loans, or other hybrid instruments designed to sit between senior bank debt and equity.

If the investor seeks greater economic upside, the mezzanine function may also be combined with equity-linked features, most commonly through convertible debentures or subscription rights. These instruments are often used to replicate some of the economic features of mezzanine capital without reproducing the more rigid layered structures found in other markets. Brazilian Corporate Law also permits redeemable preferred shares, which may in some cases serve an equity-proximate financing function, although they are not a direct substitute for mezzanine debt.

A “pure” payment-in-kind (PIK) loan – ie, capitalisation of interest instead of current cash pay – is relatively rare in the local market and, when considered, requires caution due to constraints and ongoing debate around interest capitalisation outside the Brazilian Financial System. In any case, the intended subordination must be aligned with the insolvency regime, particularly with regard to whether intercreditor provisions seeking to reorder priorities beyond the statutory ranking will remain valid and effective vis-à-vis third parties in a distress scenario.

A bridge loan is short-term credit designed to ensure funds are available at the time of the acquisition closing, with a contractually contemplated replacement by longer-term financing. In Brazil, the equivalent function is performed through short-term bank debt and, increasingly, through commercial notes, particularly where the contemplated take-out is a debentures issuance. In those cases, the key legal variable is whether the replacement funding can be arranged within the transaction timetable. The automatic registration procedure under CVM Resolution No 160, combined with firm underwriting or subscription commitments, is therefore critical to mitigating refinancing risk.

In Brazil, the functional equivalent of bonds in acquisition finance is generally the issuance of debentures. Although less common than bank debt, debentures may be used to fund acquisitions either on a standalone basis or, more often, as part of a broader financing structure, including as a take-out for short-term bank or bridge debt. In practice, these transactions are frequently placed with a limited group of professional or institutional investors, rather than with a broad and liquid secondary market.

The main transaction document is the indenture, which governs the rights of debenture holders, events of default, covenants and, where applicable, conversion or early redemption mechanics. Under Brazilian law, debentures may be secured, floating-charge, unsecured or subordinated. If the issuance is secured, the structure will usually involve a debenture holders’ trustee and, where appropriate, a collateral agent to manage the security package and enforcement dynamics.

In Brazil, private placement structures may be used to raise medium- to long-term acquisition debt from a limited group of investors, typically without the broader distribution dynamics of a widely marketed public offering. When debt is raised alongside other creditor layers, subordination, enforcement co-ordination and transfer restrictions are usually addressed in the financing documents and, where appropriate, in an intercreditor agreement.

In regulatory terms, the structure depends on the offering perimeter. Offerings directed at professional or qualified investors may be structured under the framework of CVM Resolution No 160, including automatic registration procedures in eligible cases, taking into account the investor categories defined by CVM Resolution No 30. As a functional equivalent to loan notes, Brazilian transactions more commonly rely on deferred consideration agreed in the Stock Purchase Agreement (SPA) itself or on a separate debt instrument issued in favour of the seller, which may, depending on the case, include a commercial note.

Asset-based financing involves credit whose availability fluctuates by reference to the value of eligible current assets, primarily receivables and inventory. Its legal architecture combines a revolving facility with a borrowing-base style availability test and a package of security interests over collateral and cash-flow controls that give the lender priority and allow it to retain collections once agreed triggers are hit. In multi-creditor structures, priority is often allocated by asset class, with co-ordination through an intercreditor agreement.

In Brazil, the functional equivalent usually relies on fiduciary assignment of receivables and, where relevant, fiduciary ownership of inventory, typically combined with escrow accounts and cash flow-retention mechanisms. With regard to shared collateral pools and multiple creditors, Law No 14,711/2023 strengthened the scope for centralised administration and co-ordinated security enforcement, including through a collateral agent, reducing operational friction in these structures. Credit rights investment funds may also serve a similar purpose where institutional funding and operational segregation of the collateral pool are required.

Three specific legal points tend to be decisive. First, the relevant security interests must be properly created and, where applicable, perfected by filing/registration so as to be valid and effective vis-à-vis third parties, with particular attention to registration formalities and the identifiability of the receivables pool. Second, in a distress scenario, the treatment of fiduciary ownership in judicial restructuring is a key risk-driver, although cash flow-retention measures may be challenged on “essentiality” grounds. Third, inventory-based collateral requires an effective monitoring and information regime; in the absence of that, the collateral loses economic substance, and the financing becomes materially weaker.

Under Brazilian law, intercreditor agreements are not expressly regulated in general terms. Under the principle of private autonomy, lenders to a common borrower may regulate among themselves the respective rights and remedies arising out of the financing arrangement.

Intercreditor agreements must satisfy the general validity requirements for contracts under Article 104 of the Brazilian Civil Code and are subject to the enhanced freedom-of-contract principles applicable to business agreements under Article 421-A of the Brazilian Civil Code – including deference to the risk allocation agreed by the parties and the exceptional nature of judicial contractual revision.

Although intercreditor agreements have become more common among Brazilian lenders, they remain more prevalent in the United States and Europe. In this context, such agreements and similar contractual structures may occasionally be reviewed by Brazilian courts, particularly in judicial reorganisation proceedings involving foreign lenders participating in leveraged transactions.

In addition, following the express regulation of debtor-in-possession (DIP) financing under Brazilian insolvency law, intercreditor agreements have become a useful private ordering tool to grant priority to new-money claims over pre-existing claims, as well as to regulate the use of debtor assets previously pledged or otherwise encumbered in favour of existing creditors in connection with such financing.

In hybrid bank/bond structures – where senior bank debt and debentures co-exist in the capital structure – the intercreditor agreement must co-ordinate two distinct creditor constituencies. The bank lenders typically act through a common agent, while the debenture holders are represented by a trustee and, if applicable, a collateral agent. The intercreditor agreement addresses the allocation of collateral proceeds between these groups, standstill and enforcement co-ordination, voting thresholds for acceleration and restructuring, and the waterfall for application of recoveries. The introduction of the collateral agent figure by Law No 14,711/2023 has provided greater legal certainty for these arrangements, although the Brazilian market’s experience with complex multi-tranche intercreditor structures remains limited compared to more mature leveraged finance markets.

Hedge counterparties tend to play a limited role in Brazilian acquisition finance and are far less prominent than in more heavily structured leveraged finance markets. In practice, their participation is generally confined to more sophisticated transactions, especially those involving institutional investors, cross-border financing or borrowers exposed to foreign exchange, interest rate or commodity risk. They remain uncommon in ordinary domestic transactions, particularly in light of the comparatively limited use of hedging instruments and the costs associated with such arrangements.

Security interests under Brazilian law are accessory to the secured obligation and are typically characterised by

• the right of follow-up (right of sequela) – ie, the ability to pursue the collateral in the hands of third parties; and
• priority, meaning the right to be paid ahead of unsecured creditors out of the proceeds of the collateral. Brazilian law allows a broad range of assets to be taken as collateral, with shares/quotas, receivables, bank accounts, real estate and high-value movable assets being among the most common in acquisition finance transactions.

Shares may be taken as security by way of a pledge or, more commonly, a fiduciary transfer of ownership, with perfection typically requiring proper annotation in the company’s corporate books and records. Receivables are also widely used as collateral – particularly when the borrower’s cash flow is central to the credit analysis – and are usually secured through a fiduciary assignment of receivables, under which the lender holds fiduciary title to the relevant credit rights until the secured obligations are discharged. Bank accounts are commonly secured through a fiduciary assignment of the borrower’s credit rights against the account bank, frequently combined with lock-up or controlled account arrangements that allow contractual blocking mechanisms or cash sweeps upon an event of default. It should also be noted that a company may not take its own shares as collateral, except in the limited circumstance of securing the management of its administrators (Brazilian Corporate Law, Article 30, Section 3).

Other assets may also serve as security. Movable assets – including machinery, equipment, vehicles and aircraft – may be secured by pledge or fiduciary transfer of ownership, with registration required before the relevant authority when the asset is subject to a specific registry. Inventory may be secured by commercial pledge or fiduciary transfer depending on the structure of the transaction. Intellectual property rights, such as trade marks, patents, industrial designs and copyrights, may likewise be secured by pledge or fiduciary assignment/transfer of rights, with effectiveness against third parties generally requiring registration with the competent authority.

In addition to security, Brazilian M&A transactions (more often than pure financings) frequently rely on contractual risk-allocation mechanisms, such as holdbacks and escrow accounts. These structures ring-fence or defer part of the purchase price as protection against post-closing liabilities, but do not, strictly speaking, constitute security interests. Parties may also rely on contractual self-help mechanisms – such as withholding rights and set-off – to manage post-closing adjustments and indemnity exposures.

Earn-out mechanisms – under which a portion of the purchase price is contingent on the target's post-closing performance – are also common in Brazilian M&A and function as a form of quasi-financing, reducing the buyer’s upfront capital requirement. Although earn-outs are not financing instruments in the strict sense, they interact with acquisition finance structures in important ways: lenders will typically seek to ring-fence earn-out liabilities, restrict the conditions under which they become payable, and ensure that earn-out payments are subordinated to debt service.

The constitution of securities requires written form and compliance with specific requirements.

Agreements establishing in rem security interests must expressly indicate the amount of the secured credit, the payment term, the applicable interest rate (if any), and a clear identification of the asset granted as collateral (Brazilian Civil Code, Article 1,424), failing which the validity of the security may be compromised. In the case of fiduciary transfer of real estate, the agreement must include, among other elements, the amount of the debt (or its maximum limit), the term and conditions for payment, the interest rate, a description of the property and provisions governing the consolidation of ownership in favour of the creditor (Law No 9,514/1997, Article 24). In fiduciary transfers of movable assets, the agreement must indicate the amount of the debt or its estimated value, the place and date of payment, the applicable interest rate and a description of the asset (Brazilian Civil Code, Article 1,362).

Once the relevant security document has been validly executed, perfection and third-party effectiveness generally depend on registration with the competent registry, which varies according to the nature of the collateral. Brazil does not operate a single, unified collateral registry; rather, the registration route depends on the asset involved. Accordingly, the key issues at this stage are the competent registry, the effects of registration in relation to enforceability and priority, and any additional filings or updates required to preserve perfection over time.

Depending on the security type, this may involve registration with the Real Estate Registry, the Registry of Deeds and Documents, the Civil Registry of Legal Entities or other specific registries, and priority will generally be determined by the timing and regularity of such registration.

The granting of upstream security is not prohibited under Brazilian law, nor does it constitute, by itself, an unlawful related-party transaction. However, it is subject to relevant limitations, due to the potential for abusive practices that may harm the guarantor company, its creditors and minority shareholders. For this reason, many by-laws and corporate governance practices establish specific safeguards for related-party transactions, such as review by independent directors or specialised committees.

In any event, transactions of this nature must comply with arm’s-length standards and principles of commutativity, in order to demonstrate that no undue benefit is granted to the controlling shareholder or the acquirer to the detriment of the guarantor company. Failure to observe these standards may expose directors and controlling shareholders to liability under Brazilian Corporate Law.

Brazilian law does not contain a general prohibition on financial assistance equivalent to Sections 677 to 683 of the UK Companies Act 2006. Accordingly, there is no statutory provision expressly prohibiting a company from providing financial assistance for the acquisition of its own shares or the shares of its parent company.

However, the absence of a formal prohibition does not imply unrestricted freedom. The structure of Brazilian Corporate Law imposes significant functional limitations for transactions between related companies, particularly through:

• the protection of share capital;
• the rules governing dealings in a company’s own shares; and
• the fiduciary duties of directors and controlling shareholders.

More specifically, with respect to the acquisition of its own shares, Article 30 of the Brazilian Corporate Law provides that a company may not trade in its own shares except in the circumstances expressly permitted by law and, even then, only up to the limit of available profits and reserves. Structures that directly or indirectly use corporate funds to facilitate the acquisition of the company’s own shares outside these limits may be regarded as violating the capital maintenance regime, potentially giving rise to liability for the parties involved. In addition, transactions involving the acquisition of shares of a parent company must comply with the rules applicable to related-party transactions (see 5.4 Restrictions on Upstream Security).

The granting of guarantees in acquisition finance transactions, particularly between a subsidiary and its controlling shareholder, must, under Brazilian law, comply with the parameters established by the directors’ duty of care, the prohibition of abuse of control power, the protection of share capital, the corporate interest, the requirement of commutativity of the transaction, and the rules governing insolvency.

In this context, directors must demonstrate that the transaction serves the guarantor company’s own interest and does not result in an undue transfer of value exclusively benefiting the controlling shareholder or the economic group. The group’s interest alone is not sufficient to justify the transaction. If the guarantee is granted under inequitable conditions or to the detriment of the company, liability may arise under Articles 153 to 155 and 117 of the Brazilian Corporate Law.

Additionally, structures that lead to asset-stripping or to an indirect return of capital may be invalidated in light of the rules protecting share capital. In an insolvency scenario, guarantees granted to the detriment of creditors or within a period close to the company’s financial distress may be challenged pursuant to Law No 11,101/2005.

In publicly held companies, scrutiny is more stringent, and compliance with the regulations of the Brazilian Securities and Exchange Commission (CVM) may be required, including with respect to disclosure obligations and the treatment of related-party transactions.

The enforcement of security interests in Brazil depends on the nature of the collateral and the type of security structure adopted. As a general rule, the relevant security must be validly created and, where applicable, perfected through registration with the competent public registry in order to be enforceable against third parties and to establish priority among creditors. The appropriate registry will depend on the nature of the underlying asset (see 5.3 Registration Process).

The method of enforcement varies according to the security interest involved. Traditional security interests, such as pledges and mortgages, have historically been enforced primarily through judicial proceedings, although mortgages may now, in certain cases, also be enforced extrajudicially. By contrast, fiduciary security structures widely used in financing transactions generally allow for more efficient enforcement mechanisms, often outside court, as expressly authorised by law. These structures may enable the secured creditor to consolidate title over the asset or to appropriate the proceeds of assigned receivables in satisfaction of the secured obligations.

More broadly, Brazilian law has progressively moved towards facilitating out-of-court enforcement and reducing the transactional costs traditionally associated with credit recovery. This trend was reinforced by Law No 14,711/2023 (the so-called Legal Framework for Collateral), which expanded and refined extrajudicial enforcement mechanisms for certain types of collateral. That said, the courts remain the ultimate forum for disputes involving the enforcement of a security.

Brazilian law generally prohibits pactum commissorium. Article 1,428 of the Brazilian Civil Code provides that a creditor may not automatically appropriate pledged, antichretic or mortgaged collateral upon default. Fiduciary security structures, however, operate differently, since title is transferred to the creditor on a fiduciary basis from the outset; this is precisely why they are often regarded as affording stronger protection in enforcement scenarios.

Enforcement may also be affected by insolvency proceedings. In judicial reorganisation and bankruptcy, enforcement remedies are generally subject to the effects of the insolvency regime, including the stay period. However, creditors holding fiduciary security interests benefit from enhanced protection, since the relevant assets are generally excluded from the debtor’s estate for restructuring purposes, subject in practice to recurring litigation over whether certain assets are deemed essential to the debtor’s business.

The most common personal guarantees in Brazilian acquisition finance are the suretyship (fiança), by which a third party undertakes to answer for the debtor's obligations if the debtor fails to perform (Brazilian Civil Code, Article 818), and the aval, by which a person guarantees payment of a negotiable instrument with direct and joint liability. Insurance bonds (seguro-garantia) and bank guarantees(fiança bancária) are also commonly used. Intragroup guarantees – from shareholders or other group companies – are frequently used in practice and have the advantage of avoiding the transaction costs associated with third-party guarantees.

See 5.4 Restrictions on Upstream Security and 5.6 Other Restrictions.

Under Brazilian law, there is no requirement to charge a fee for the provision of a guarantee. However, in cross-border intragroup structures, the absence of a guarantee fee may trigger transfer pricing adjustments under the arm's-length principle (Law No 14,596/2023, effective since 1 January 2024, and IN RFB 2,161/2023). This is particularly relevant in acquisition finance structures involving upstream or cross-stream guarantees granted by Brazilian subsidiaries in favour of foreign parent or affiliate borrowers.

Brazilian law does not recognise a general equitable subordination doctrine that allows courts to reorder claims based on inequitable conduct. However, certain mechanisms partially address similar concerns. Claims held by shareholders and former managers are statutorily subordinated pursuant to Article 83, VIII, b of Law No 11,101/2005. In addition, the bankruptcy estate may pursue civil liability claims against shareholders and directors (Article 82 of Law No 11,101/2005), and courts may pierce the corporate veil under Article 82-A of Law No 11,101/2005 and Article 50 of the Brazilian Civil Code. These mechanisms do not operate as equitable subordination in the US sense but may address abusive insider conduct preceding insolvency.

Brazilian insolvency law provides for claw-back mechanisms under which certain pre-bankruptcy transactions may be avoided or declared ineffective against the bankruptcy estate, giving rise to restitution obligations. These are mechanisms of strict restitution – that is, they operate without the imposition of a monetary penalty on the counterparty.

Some of these rules render certain payments and onerous acts ineffective against the bankruptcy estate, even where the beneficiary counterparty neither acted fraudulently nor had prior knowledge of the financial distress that ultimately led to bankruptcy (Law No 11,101/2005, Article 129). Among the most relevant examples are:

• the payment of debts not yet due by the debtor during the suspect period preceding bankruptcy;
• the payment, during the suspect period, of due and payable debts in a manner other than that provided for in the relevant contract;
• the creation of an in rem security interest or retention right in respect of a pre-existing debt during the suspect period;
• gratuitous transactions carried out within the two years preceding the bankruptcy order; and
• the sale or transfer of an establishment to the illegitimate detriment of the debtor’s creditors.

In addition, Article 130 of Law No 11,101/2005 allows acts that are detrimental to the debtor’s creditors to be revoked where they were carried out with fraudulent intent and caused harm to the debtor’s estate.

Furthermore, the parties may rely on private autonomy to agree upon contractual claw-back provisions, which are more commonly structured for the benefit of the lender. Accordingly, breach by the borrower of obligations under the credit agreement, failure to meet specific performance targets, or even the occurrence of events that adversely affect the attractiveness of the investment may trigger the recovery of amounts previously disbursed under the loan. Where the borrower has engaged in fraud or negligence, the claw-back mechanism may also incorporate a punitive element.

Stamp taxes, as they exist in some common-law jurisdictions, where they are a significant tax and a requirement for the registration of documents and valid transfer of ownership, do not exist in Brazil. However, a tax that can be quite significant in acquisition finance transactions is the Tax on Financial Transactions (Imposto sobre Operações Financeiras – IOF).

The IOF is a federal tax provided for in Article 153, V, of the Federal Constitution, with its main rules set forth in Decree No 6,306/2007. The tax is levied on insurance and credit transactions, foreign exchange transactions, and transactions involving securities. In the context of acquisition finance, the most relevant taxes are the IOF-credit and the IOF-foreign exchange. The IOF-credit is levied on the provision of funds to the borrower in loan, financing, and credit opening transactions. The IOF-exchange, in turn, is levied on the settlement of foreign exchange transactions, including foreign loans and associated remittances.

The IOF framework experienced significant volatility in 2025. On 22 May 2025, Decree No 12,466/2025 increased IOF-credit and IOF-FX rates across a broad range of transactions, partially rolled back within 24 hours by Decree No 12,467/2025. On 11 June 2025, Decree No 12,499/2025 revoked the prior measures and consolidated the remaining changes, notably restoring the IOF-credit flat rate on business loans to 0.38%, while maintaining a 3.50% IOF-FX rate on most outbound transfers. On 25 June 2025, Congress suspended all three decrees through Legislative Decree No 176/2025. Subsequently, on 16 July 2025, the Brazilian Supreme Court partially reinstated Decree No 12,499/2025, confirming the Executive’s authority to adjust IOF rates by decree, but suspending the reclassification of supplier receivables financing (risco sacado) as credit operations. As of early 2026 (subject to ongoing Federal Supreme Court (Supremo Tribunal Federal – STF) proceedings), IOF-credit on intercompany loans generally applies at a daily rate of 0.0082% plus a 0.38% flat rate, while IOF-FX remains at 3.50% for most outbound transfers (0% on return of foreign investment). Given this regulatory instability, IOF structuring in acquisition finance requires close and continuous monitoring.

Brazilian law does not adopt a formal “qualifying lender” concept akin to that found in certain common-law jurisdictions. In practice, the key structuring issue is the applicable withholding income tax (Imposto de Renda Retido na Fonte/Withholding Tax – IRRF/WHT) on interest payments.

Interest paid by a Brazilian borrower to a foreign lender is generally subject to WHT at 15%, increased to 25% if the beneficiary is resident in a tax haven jurisdiction. Double taxation treaties may reduce the applicable rate, depending on the lender’s jurisdiction and the treaty’s terms.

Certain structures and instruments may benefit from special regimes. In private equity-sponsored acquisitions, financing and holding structures often involve Private Equity Investment Funds, due to their tax-neutral nature at fund level, with taxation generally occurring at the investor level. In addition, distributions by qualifying share investment funds (Fundo de Investimento em Participações – FIPs) to non-resident investors may be subject to a 0% WHT rate, provided statutory and regulatory requirements are met and the investor is not located in a tax haven jurisdiction. Separately, qualifying incentivised debentures under Law No 12,431/2011 may also benefit from reduced or zero WHT rates for certain investors, subject to the applicable conditions.

Brazilian tax law provides for thin-capitalisation rules applicable to indebtedness owed to related parties abroad. These rules are intended to limit the deductibility of interest for Brazilian corporate income tax purposes where a Brazilian borrower is financed through excessive related-party debt rather than equity. In broad terms, the purpose of the regime is to prevent foreign related parties from extracting profits through deductible interest payments, instead of receiving returns through equity participation, by imposing statutory debt-to-equity limitations on cross-border intragroup financing (Law No 12,249/2010, Articles 24 and 25).

In practice, interest deductibility is denied when the debt from a foreign related party holding equity in the Brazilian borrower exceeds twice (2:1) the value of that party’s equity participation in the borrower’s net equity. Where multiple related creditors exist, the aggregate debt limit equals twice the sum of all participations. For foreign lenders in low-tax jurisdictions or subject to privileged tax regimes – whether or not related to the borrower – the ratio is reduced to 0.3:1 (ie, 30% of the Brazilian entity’s net equity). Importantly, loans from unrelated third parties that are guaranteed or otherwise backed by a foreign related party are treated as related-party debt for these purposes (IN RFB 1,154/2011). Since 2024, Brazil’s Organisation for Economic Co-operation and Development (OECD)-aligned transfer pricing regime (Law No 14,596/2023) has introduced a further layer of scrutiny: the Federal Revenue Service may recharacterise debt as equity if the financing arrangement lacks genuine debt features, and intragroup guarantee fees must be priced at arm’s length.

As a result, thin-capitalisation rules are particularly relevant in acquisition finance structures involving intragroup loans, post-closing debt push-downs or other arrangements designed to allocate acquisition debt to a Brazilian entity within the group.

Brazilian law does not establish a formal “certain funds” regime equivalent to that found in certain European jurisdictions. Accordingly, in private transactions in Brazil, there is no statutory requirement for the purchaser to demonstrate in advance the irrevocable availability of the funds required to complete the acquisition. Financing risk is instead allocated predominantly by contract, supported by guarantees and other transactional mechanisms freely negotiated by the parties.

As for bank financing, there is no specific prohibition on the extension of credit to finance share acquisitions. Financial institutions authorised to operate in Brazil may structure such transactions, subject to the prudential rules of the Central Bank of Brazil, including exposure limits and risk-management requirements. In this context as well, there is no legal requirement that the financing be irrevocably funded at the time the share purchase agreement is signed, unless the parties have contractually agreed otherwise.

There is no legal obligation for the financing bank to provide irrevocable assurance of the availability of funds at the time of the transaction announcement. A stricter regime applies, however, in the context of a public tender offer for shares (Oferta Pública de Aquisição – OPA). Under Article 11 of CVM Resolution No 215, the offeror must retain a financial institution to guarantee the financial settlement of the OPA. This requirement functions as a de facto "certain funds" mechanism for listed targets, ensuring that public shareholders receive cash at closing.

Also, the prudential rules applicable in Brazil before the Central Bank of Brazil – such as regulatory capital requirements, inspired by Basel standards – aim to ensure the solvency and resilience of financial institutions, not to guarantee, for a specific transaction, the firm and irrevocable availability of the funds necessary for the acquisition. Therefore, such requirements should not be confused with a certain funds regime.

Judicial Reorganisation and Insolvency Risk

Law No 11,101/2005 (Reorganisation and Bankruptcy Law) affects acquisition finance structuring in two principal ways. First, the 180-day stay on enforcement that accompanies a judicial reorganisation filing (Article 6, Section 4) applies even to fiduciary-secured creditors when the collateral is deemed essential to the debtor's business (Article 49, Section 3). Second, pre-petition security interests created during the suspect period may be declared ineffective against the bankruptcy estate (Article 129, III). Both risks must be factored into collateral selection and documentation.

Merger Control

Acquisition finance timetables must account for the Administrative Council for Economic Defence (Conselho Administrativo de Defesa Econômica – CADE)’s pre-closing, suspensory merger control regime. Filing is mandatory when at least one economic group recorded gross revenues in Brazil of BRL750 million or more, and another BRL75 million or more, in the preceding fiscal year (Law No 12,529/2011, Article 88). In 2024, the CADE received a record 712 merger notifications – nearly 20% more than in 2023 – and continued to reduce average review times: fast-track cases were cleared in an average of 15 days, ordinary cases in approximately 94 days. Closing before clearance (gun-jumping)exposes the parties to fines of up to BRL60 million and potential nullification of the transaction. These timelines directly affect the structuring of bridge facilities and the conditionality of commitment letters.

Sector-Specific Approvals

Depending on the target’s industry, acquisition finance timetables must also factor in regulatory approvals from sector-specific agencies – including the Central Bank of Brazil (Banco Central do Brasil – BCB) (for financial institutions), the National Telecommunications Agency (Agência Nacional de Telecomunicações – ANATEL) (telecoms), the National Regulatory Agency for Private Health Insurance and Plans (Agência Nacional de Saúde Suplementar – ANS) (health insurers), the Brazilian Electricity Regulatory Agency (Agência Nacional de Energia Elétrica – ANEEL) (energy), and the Brazilian Health Regulatory Agency (Agência Nacional de Vigilância Sanitária –ANVISA) (pharmaceuticals, among others). These approvals may impose conditions that affect the financing structure, such as restrictions on collateral over regulated assets or requirements for minimum capital adequacy.

Cross-Border Financings

Cross-border financings require attention to foreign exchange and foreign investment rules. Foreign direct investment and external credit operations are governed by BCB Resolution No 278, which implements Law No 14,286/2021 (the new foreign exchange framework).

Separately, portfolio investment by non-residents in the Brazilian financial and securities markets is governed by Joint BCB/CVM Resolution No 13, which entered into force on 1 January 2025, replacing the National Monetary Council (Conselho Monetário Nacional – CMN) Resolution 4,373/2014 and simplifying registration, custody and representative requirements for foreign portfolio investors.

Legal Framework for Collateral

Law No 14,711/2023 (Marco Legal das Garantias) made three changes of practical significance for acquisition finance:

• it formally introduced the figure of the collateral agent, enabling co-ordinated enforcement on behalf of multiple creditors;
• it created an extrajudicial enforcement route for mortgages, modelled on the existing procedure for fiduciary assignments of real estate (Law No 9,514/1997); and
• it permitted multiple fiduciary assignments over the same real estate asset, functionally equivalent to second-lien structures.

CVM’s Regulatory Agenda

The CVM has been revising the rules governing private equity funds (FIPs) and the regulatory framework for debenture issuances, with a view to reducing compliance costs for smaller issuers and broadening the range of eligible investors. These changes may expand the pool of capital available for acquisition financing, particularly in mid-market transactions.