Legal Updates

*Based on a presentation delivered at the Asian Legal Business (ALB) Philippine In-House Legal Summit 2025, held on 8 October 2025 at Shangri-La at the Fort, Bonifacio Global City, Taguig.

Globally, M&A activity slowed considerably in 2023 and 2024 as high interest rates, inflation, and geopolitical uncertainty made investors more cautious. But the Philippines tells a more nuanced story. Despite global uncertainty, the market sustained steady deal flow throughout 2025, particularly in infrastructure, renewable energy, financial services, and consumer-driven sectors.

As the year draws to a close, these trends highlight a market defined not by volume but by resilience, sector concentration, and increasing execution complexity.

Market Trends and Their Legal Implications

Deal activity in 2025 continued to cluster in sectors with long-term growth potential. Infrastructure attracted both domestic and foreign investors, particularly in transportation and toll-road assets. Renewable energy sustained strong interest, driven by policy direction and ESG commitments. Financial services saw continued consolidation, while consumer and healthcare assets remained resilient on the strength of domestic demand.

Each of these sectors brought distinct legal considerations. Infrastructure transactions required careful analysis of concession terms, change-of-control restrictions, and multi-agency approvals. Renewable energy deals involved DOE permitting and land-use constraints that could shape both structure and timelines. Investments in the financial sector were subject to BSP and SEC oversight, and consumer-facing transactions, especially in tech or BPO, raised diligence issues around data privacy and intellectual property.

Deal structure also evolved. Carve-outs, joint ventures, and asset deals became more common, requiring detailed transfer documentation, assignment of contracts and permits, and coordinated employee transitions. The shift reflects the increasing sophistication of both buyers and sellers, and the legal complexity that follows.

Investor Appetite: What Buyers Are Asking

Investor questions continued to reflect their strategic priorities.

Strategic buyers focused on practical and regulatory feasibility such as: Can control be acquired given foreign-ownership limits? What approvals are required, and how long will they take? How should the deal be structured to remain compliant in regulated sectors?

Financial investors such as private-equity and venture funds examined different concerns: Are shareholder and exit rights enforceable in Philippine courts? Will drag-along or tag-along mechanisms hold up? What tax exposures or contingent liabilities may affect returns?

Across both groups, diligence expanded beyond financial and legal issues. Investors examined ESG, anti-corruption, AML, sanctions exposure, and governance practices in detail. Compliance is now a central part of the due-diligence process, no longer a formality, but a major factor in deal certainty and structuring.

This shift has broadened the role of counsel. Instead of identifying risks only after signing, transaction lawyers now incorporate protections at the front end, through representations, warranties, indemnities, and conditions precedent in order to ensure risks remain manageable.

What’s Driving Domestic Deal Flow?

Several domestic trends supported deal flow in 2025.

Capital Recycling. Conglomerates continued divesting non-core assets to reallocate capital toward growth areas such as renewables, logistics, and emerging EV-related businesses. Recent announcements, including the Ayala Group’s exit from its long-standing Honda dealership operations, illustrate this shift. Such divestments often reveal valuation gaps: sellers price in future upside, while buyers price in risk. Legal tools such as price adjustments, earn-outs, and escrow arrangements help bridge those differences.

Family Succession. Generational transitions in family-owned businesses created opportunities for strategic partnerships and investments. These transactions brought governance questions to the fore: board composition, veto rights, control arrangements, and minority protections, all requiring careful structuring.

Bank Liquidity. Philippine banks continued to fund acquisitions, supporting transaction activity but adding layers of documentation and negotiation. Financing arrangements required coordination around conditions precedent, financial and operational covenants, and security packages encompassing pledges, mortgages, and assignments.

Competition-Law Thresholds and Transaction Timing

The Philippine Competition Commission’s recent adjustments to mandatory notification thresholds were modest but meaningful for mid-market deals. For transactions above the thresholds, the suspensory nature of PCC review remained a central consideration: parties cannot close until clearance is granted.

The PCC also continued to signal its willingness to examine sub-threshold deals in sensitive sectors such as energy and transport. This underscores the importance of early regulatory assessment, realistic transaction timelines, carefully drafted closing conditions, and strict adherence to pre-closing restrictions.

Technology and the Changing Nature of Due Diligence

Technology, particularly AI-assisted tools, is beginning to reshape how due diligence is conducted. Automated review can speed up analysis of large data sets, but efficiency does not replace judgment. Lawyers remain essential in validating machine-generated results, interpreting context, and identifying risks that automated tools may overlook.

As these technologies develop, the lawyer’s role shifts rather than diminishes. Professional judgment, regulatory experience, and sector knowledge remain central to meaningful due diligence and risk assessment.

M&A: A Year-End Assessment

As 2025 ends, two themes characterize Philippine M&A. First, market activity has been driven less by transaction volume and more by execution quality. Anticipating regulatory challenges, structuring for compliance, and drafting around risk have become central to successful deals. Second, regulatory bodies, including the PCC and sector-specific agencies, continue to shape timing, feasibility, and allocation of risk.

With continued capital recycling among conglomerates, generational shifts in family enterprises, sustained investor interest in renewables and consumer assets, and ongoing bank financing, the Philippines is positioned for continued activity in 2026. Whether this momentum develops into a sustained cycle will be a key trend to watch in the coming year.