MENA dealmakers brace for slower rebound

MENA mergers and acquisitions are expected to recover only gradually after war-driven volatility hit confidence, even as bankers say the region’s strategic deal pipeline remains alive.

Bank of America expects activity lost during the first half of the year to take months, rather than days or weeks, to return, with transactions delayed by the conflict involving Iran, the US and Israel. The bank’s view reflects a cautious mood among advisers after a sharp fall in regional deal value during the opening quarter, despite a stronger global market for large transactions.

LSEG data showed M&A activity with any MENA involvement fell 74 per cent year on year in the first quarter to $18.8 billion, down from $66.4 billion. Deals involving a MENA target dropped 90 per cent to $4.6 billion, the lowest first-quarter total in a decade. The contraction marked a striking divergence from global M&A, where major technology, energy and cross-border deals helped push transaction values higher.

Eamon Brabazon, co-head of global M&A at Bank of America, said confidence usually returns after periods of acute geopolitical stress, but not instantly. His assessment points to a market where boardrooms are still discussing transactions, but signing timelines, valuation assumptions and financing structures are being reassessed.

The slowdown has not been evenly spread. Gulf sovereign-backed platforms and large strategic buyers remain active, particularly in sectors tied to national transformation plans, supply-chain resilience and energy security. Deals linked to artificial intelligence, data centres, energy transition and infrastructure are expected to attract stronger interest as investors look for assets with long-term policy support and cash-flow visibility.

Bankers say the setback is more about timing than abandonment. Some transactions have moved ahead, while others have been pushed into the second half as buyers seek clearer visibility on oil prices, inflation, financing costs and regional security risks. Higher crude prices can support fiscal strength across parts of the Gulf, but sudden spikes also complicate assumptions on global growth, logistics and imported inflation.

The first quarter still produced several notable transactions, underscoring that capital deployment has not stopped. Saudi Arabia’s Public Investment Fund-backed Savvy Games Group agreed to buy Shanghai Moonton Technology from ByteDance in a transaction valued at about $6 billion. Bahrain’s Alba moved to acquire Aluminium Dunkerque in a deal tied to industrial expansion, while Qatar-listed Lesha Bank was linked to a cash transaction involving aircraft-leasing assets.

These deals highlight a broader shift in MENA M&A. Activity is increasingly led by strategic acquirers, sovereign funds and state-linked companies rather than purely financial buyers. Their mandates are often tied to industrial policy, domestic capacity-building and global expansion, giving them longer investment horizons than conventional private equity funds.

Outbound acquisitions remain a key feature of the market. Regional buyers continue to look beyond the Gulf for assets in technology, logistics, gaming, manufacturing, energy and financial services. That approach reflects an effort to diversify income streams, secure supply chains and deepen exposure to high-growth sectors outside hydrocarbons.

The caution is sharper for inbound and domestic target deals. Foreign buyers weighing MENA assets are likely to demand stronger protection against volatility, including revised material adverse change clauses, delayed completion triggers and more conservative valuation mechanisms. Sellers, especially in high-growth sectors, may resist price cuts, creating a gap that slows negotiations.

Global conditions provide some support. Bank of America estimates first-half global M&A volume at about $2.1 trillion, with the year tracking towards what could become one of the strongest annual markets on record. EMEA dealmaking has also shown strong growth, helped by large transactions and rising confidence among corporate buyers with cash-rich balance sheets.