As Brazil celebrates its Independence Day, following a successful Olympics and impeachment of its sitting president, both Brazilian and foreign investors ask “What’s next?”

From Sao Paulo, PNWA’s Advisor, Marcos Rosset, cautions: “Massive economic changes are required to get the country back on track. Opposition to President Temer is fighting back strongly and Brazil’s major cities have witnessed daily protests with police.

From Rio de Janeiro, power investor of Brazilian stocks, Pedro Spinola, opines:  “Bovespa investors view this political change favorably but hope Brazil will institute important structural changes.”

Brazilians are naturally an optimistic people, often seeing a glass ‘’half full” in life. They’ve had a rough 2016, however, with GDP declining over 3% amid political chaos.  Before Dilma’s impeachment, many upper middle class Brazilians – especially from Sao Paulo – were seeking ways to emigrate abroad to find work and educational opportunities for their adult children.

Some of these executives, interviewed three months ago, highlight the following issues to pay heed:

  • Political competence of Temer, Brazil’s new president (formerly VP): some question his ability to navigate dicey public opinion, such as his giving in to Federal civil servants’ wage demands, while most Brazilians suffer unemployment
  • Political support of the new economic team, headed by Henrique Meirelles at Finance: as a member of Lula’s but not Dilma’s administration, will he retain Congressional approval for tough, even austere economic proposals, to support future growth?
  • Judicial process: Judge Sergio Moro, of the 13th Federal Court in Curitiba, has become political hero for Brazil’s downtrodden middle class. He traced political payoffs from a ‘car wash’ chain all the way to Brasilia. Will this US trained jurist be able to continue his inquiries?

For more info, contact Stephen Murphy, PNWA Senior Advisor, Latin America, and author, On the Edge: An Odyssey, at and/or PNWA’s representative in Sao Paulo, Marcos Rosset, at


After years of discussion and political wrangling, India’s proposed value-added Goods and Services Tax (GST) was passed in August during Parliament’s “monsoon session.”  The upper house, where the ruling BJP government does not have a majority, was mollified by several relatively minor changes.  Since the GST bill is actually an amendment to the Indian Constitution, it had to be ratified by a majority of the 29 states.  That happened in early September.  The Central and State governments have announced they hope to implement the new GST system by April of 2017.

The proposal, described as “the most comprehensive indirect taxation reform since independence”, will replace the plethora of central and state government indirect taxes on which those governments depend for revenue, in the absence of an effective direct income tax.  Among the 15 plus taxes that GST will replace are central taxes, including excise duties, additional customs duties, medicinal excises, service tax and countervailing duty, and state sales tax, gambling taxes, entertainment tax, entry tax, purchase tax and luxury tax.  Perhaps more importantly, GST will end the problem of taxes being levied at each state border when goods enter that state, which can make interstate business almost as complicated as international business.


President Obama’s historic visit to Cuba in March has put the Cuban market on the radars of a number of Pacific Northwest area businesses, e.g., Alaska Air’s bid to fly there.  PNWA’s Steve Murphy is our resident Cuba expert, having visit Cuba last summer and already executed a market research project there for an American firm.  See Steve’s recent article in the Seattle Trade Development Alliance’s March newsletter,

Steve and his Havana and Miami-based colleagues offer market research services  today from a team of experienced professionals.  PNWA’s Team Cuba” is ready to help companies identify business prospects and provide background information on potential business partners:

  • Chief Researcher Reynier Ortiz, based in Havana, has already completed an in depth market research this summer for a U.S. tannery, seeking alternative sourcing from Cuban goat and sheep herds.
  • Researcher Frank Martinez, currently based in the Miami area, has market research experience in Cuba and works with the Cuban-American community in Florida.
  • PNWA Senior Advisor for Latin America & Caribbean Stephen Murphy, based in Seattle, recently met University of Havana’s Business School Dean, the Catholic Cultural Center’s Rector, hoteliers, restaurateurs and travel agents while in Havana earlier this year.

Contact Stephen E. Murphy, Pacific NW Advisors at

2015 Corporate Finance – Our Perspective

PNWA Managing Director Jeff Hoyt ( reports that M&A activity in 2015 set a new record, surpassing 2007.  Mid-December global announced deal volume was $4.35 trillion globally.  Factors driving this high level of deal volume include increasing global competition, slow organic growth in the domestic economy, high public market stock valuations of acquirers, and ample access to both debt and equity capital markets.

Middle market activity has been robust as well albeit with differing drivers, including generational transition , often leading to sales of private middle market companies.  Also,increasingly onerous reporting and financial requirements of becoming a public company dissuade many from considering going public, particularly “old economy” companies and industries.

One example is Dannaher’s announced spinoff of Fluke, Tektronix, Kollmorgen and several others into a new company, Fortive Corporation, based in Everett.  The spinoff will immediately create a new public company, which will likely target small add-on acquisitions to complement existing businesses. The business case for the spinout is to separate Fortive’s slower growing but still profitable businesses from the remaining faster growing medical and technology  businesses, which tend to have higher market multiples in public equity markets (Danaher acquired Fluke in 1998).

A private market sector example is Haggen Foods.  After their private equity infusion (resulting in majority control), Comvest Partners undertook a transformative acquisition,  growing the size of the company almost eightfold and expanding the footprint into California, Arizona and Nevada as well as growing the Oregon store base.  Unfortunately the expected synergies did not materialize and this fall the added debt load pushed the combined company into bankruptcy less than a year after acquisition .