Geopolitical Tensions Will Accelerate Restructurings and Corporate Integrations
-
April 08, 2025
-
This article was published in Cinco Días March 21st, 2025.
Spanish companies are paying more attention than ever to economic news regarding trade tensions, tariff threats, supply chain fragmentation, and the realignment of economic blocs. All of this reinforces uncertainty, which, while not new, is nevertheless reshaping the global economic power map and driving an increase in restructurings and corporate integrations.
These changes have reached Spain at a time when the new Insolvency Law is fully in force, already facilitating significant restructurings in the market. In 2025, the number of court-approved restructuring plans will continue to rise, especially among mid-sized companies, for two reasons: first, the law is a highly effective tool, and second, more companies will struggle to resolve their capital issues and will seek industrial or financial partners, even if it means losing majority ownership. Potential tariffs, the prevailing uncertainty, and, above all, the approaching deadlines for repaying public loans granted during the pandemic are pressuring some companies.
According to official estimates released by SEPI and COFIDES (the Spanish Development Financing Company), of the more than €4 billion those entities injected directly into companies between 2020 and 2022, approximately €2.5 billion (around 65% of the total) must be repaid by 2028, or 2029 at the latest. Firms lagging in repayment are facing higher interest rates, as the system rewards those that return the loans earlier. This situation suggests that if a company has not yet managed to repay its debt—even with an economy growing at over 3.2%—it may be facing deeper financial troubles. Corporate delinquency stands slightly below 4%, and while it is not expected to decrease significantly, an alarming increase is also unlikely.
Some sectors, particularly those related to consumption, have successfully repaid their financial aid. This includes hotel chains, travel agencies, transportation, logistics, and the restaurant industry. The latter, after enduring significant challenges in 2021 and 2022, has experienced a clear economic recovery in the years following.
On the other hand, certain sectors may struggle—especially renewable energy companies involved in new project developments. Many firms in this sector suffered from high debt costs due to rising interest rates, while also being hit by declining energy prices. Their high leverage ratios have prevented them from continuing to build new facilities and repaying their debts. A common solution is to sell assets at reduced prices to opportunistic funds or undergo an orderly liquidation. Despite these challenges, the sector has a strong future, as energy prices are rebounding, and data centres—major energy consumers—are entering the Spanish market. For the near future, financial resilience is crucial to weathering this challenging period.
The automotive sector and its auxiliary industries are also vulnerable. In addition to the potential impact of aforementioned tariffs and geopolitical instability, they face stiff competition from China and a profound model transition, with ongoing debates regarding the merits of combustion engines versus electric vehicles.
Heavy industries will also be negatively affected by the ongoing uncertainty. These companies, which rely heavily on debt, are under intense competitive pressure due to geopolitical factors and the risk of new tariffs that could hinder exports. This includes industrial companies in the capital goods sector and producers of essential raw materials such as lumber, steel, and aluminium. These industries initially suffered from soaring costs at the start of the pandemic, followed by the impact of rising interest rates, which increased their financial burden. Now, they must navigate the economic slowdown in major European markets (especially France and Germany), while also facing potential new tariffs. The U.S. strategy to impose tariffs could be a way to protect its industry while negotiating reduced tariffs in exchange for access to foreign markets, particularly in the EU, where regulatory barriers have historically limited U.S. expansion.
This landscape will push many companies to seek industrial partners along with help from their lending banks. Financial institutions have tightened credit risk requirements and are less inclined now to extend loans if they perceive objective difficulties—especially if better alternatives exist, such as bringing in private equity funds to strengthen a borrower’s solvency. The entry of new investors may lead to original shareholders losing control, but in many cases, those older shareholders will recognize this as the best option. Based on our extensive experience in restructuring scenarios, bringing in new partners can be a viable solution for companies facing uncertain medium-term prospects. Pragmatism and flexibility are essential in these circumstances, and Spain’s new Insolvency Law provides a useful framework for this process.
The direct consequence of this trend is increased market consolidation, leading to a reduction in the average company size. The food industry has already experienced firsthand the risks of not having direct access to raw materials—a lesson that other sectors facing vertical integration will also learn. This is currently happening in the hospitality industry, and we will continue to see similar cases involving sophisticated financing structures, shadow banking, and specialized niche lenders. Enhancing competitiveness is another key focus for businesses. To achieve this, they must prioritize scale, investment capacity, and workforce training.
Given the evolving economic environment of today, it’s clear that companies must strengthen their market positions, even if it means undergoing restructuring or engaging in mergers. The company leaders with the best strategic vision will reposition themselves successfully within their industries and secure competitive advantages to pull through in this increasingly volatile environment.
Related Insights
Related Information
Published
April 08, 2025
Key Contacts
Senior Managing Director