Middle East dealmaking defies global uncertainty

Dealmaking across the Middle East gathered pace through 2025, underscoring a shift from opportunistic transactions to targeted consolidation and long-term strategic bets. Mergers and acquisitions activity in the region posted a sharp rise in value, climbing 260 per cent to about $53 billion during the first nine months of the year compared with the same period in 2024, reflecting renewed confidence among corporate buyers and state-linked investors navigating uneven global conditions.

Analysis in the 22nd Annual Global M&A Report 2025 by Boston Consulting Group points to a concentrated group of experienced acquirers driving this momentum. Rather than broad-based dealmaking, activity has been shaped by companies and sovereign-backed groups deploying capital selectively, focusing on assets that promise scale, technology depth or geographic reach. This discipline has helped transactions progress despite higher financing costs, volatile equity markets and persistent geopolitical risks.

Energy transition, infrastructure, technology services and healthcare emerged as leading sectors, mirroring regional priorities around diversification and long-term growth. National investment strategies across Gulf economies continued to encourage consolidation in utilities, logistics and industrials, while digital transformation initiatives fuelled acquisitions in data centres, fintech platforms and enterprise software. Healthcare transactions, spanning hospitals, diagnostics and life sciences services, reflected demographic pressures and policy support for private-sector participation.

Large, state-linked entities remained central to deal flow, often acting as anchor investors or strategic consolidators. Sovereign wealth funds and government-related companies showed a preference for majority stakes or full acquisitions that allow operational control, rather than minority financial positions. This approach contrasted with patterns seen in parts of Europe and North America, where private equity firms dominated volumes but faced challenges exiting assets amid uncertain valuations.

Cross-border activity formed a significant share of Middle Eastern transactions, with buyers increasingly looking beyond domestic markets. Targets in Europe, Asia and parts of Africa featured prominently, particularly in energy services, ports, renewables and advanced manufacturing. These outbound deals were often framed as capability-building moves, aimed at importing expertise and technologies to support domestic development agendas.

At the same time, inbound investment into the region also strengthened, supported by regulatory reforms, deeper capital markets and an expanding pipeline of privatisations and public-private partnerships. International strategic buyers showed interest in consumer-facing sectors and infrastructure-linked assets, drawn by population growth, tourism expansion and long-term government spending commitments.

Deal structures reflected caution alongside ambition. Earn-outs, phased acquisitions and joint ventures were commonly used to manage valuation gaps and execution risk. Financing mixes combined internal cash reserves, bank lending and, in some cases, capital markets instruments, reducing reliance on highly leveraged structures that became less attractive as interest rates stayed elevated.

Market advisers noted that transaction timelines lengthened, with more rigorous due diligence and regulatory scrutiny. Environmental, social and governance considerations played a growing role, particularly in energy and infrastructure deals, where alignment with sustainability targets became a prerequisite for board approval. This emphasis also influenced post-merger integration plans, with acquirers investing early in governance frameworks and operational alignment.

Despite the strong headline growth, dealmaking remained uneven across the region. Activity was heavily concentrated in Gulf economies with deep pools of capital and established advisory ecosystems. Smaller markets saw fewer large transactions, though niche deals in tourism, agribusiness and specialised manufacturing signalled emerging opportunities tied to local development strategies.