A recent global survey conducted by Norton Rose Fulbright and Mergermarket, canvassing 200 senior M&A decision‑makers, indicates that 55 percent of respondents anticipate a dip in deal-making throughout the region, while a mere 11 percent foresee an uptick in activity. These figures mark a stark turn from January, when Middle East M&A outlook was bullish, buoyed by sovereign wealth funds and private equity activity following a robust 2024.
The tariff announcement disrupted what had been steady global deal valuations. Data from Dealogic showed global M&A value plummeting to US $243 billion in April, marking a 54 percent drop on the previous month and the lowest total since US deal signings hit multi-decade lows in May 2009. The toll on investment banking fees has been equally significant, falling around 10 percent in the first quarter as volatile market conditions weighed on corporate balance sheets.
Wall Street bankers acknowledge a cautious stance among clients. Goldman Sachs described increased dialogue but notable deal backlogs, while Morgan Stanley’s Ted Pick characterised the period as a “pause” rather than a full‑blown slump. JPMorgan echoed the sentiment, with CFO Jeremy Barnum describing a “wait‑and‑see” environment arising from tariff‑induced uncertainty.
Within the Middle East, M&A flare-up in 2024 rested on government-led diversification drives, notably under Saudi Vision 2030 and the UAE Centennial Plan 2071, with sovereign and government‑related investment institutions heavily involved. Private equity also sustained momentum by increasingly deploying capital into outbound and domestic transactions, particularly in technology, healthcare and consumer sectors.
However, the tariff escalation has now weighed heavily on deal-making appetite. More than two‑thirds of global respondents indicated that the trade spat had dampened appetite for deals, with Middle East executives echoing this concern. Access to debt is also under pressure: 35 percent anticipate greater difficulty securing M&A financing, and private credit is expected to fill the emerging liquidity gap, notably in the Middle East and Southeast Asia.
Despite headwinds, deal professionals are recalibrating rather than retreating. Almost two‑thirds of respondents anticipate rising use of representations and warranties insurance during 2025, with almost half in the Middle East expecting significant adoption, potentially smoothing future transaction risk. Meanwhile, over half have moved to acquire AI businesses to strengthen due diligence and sourcing capabilities.
Deal structure and thematic shifts are also emerging. Energy and healthcare sectors in the region are increasingly seen as ripe for reverse‑ESG warranties, a mechanism allowing sellers to assure buyers on non‑financial risks. Firms are also gravitating towards domestic strategic targets, following patterns seen in other emerging markets, though Middle Eastern SWFs continue to pursue sizable outbound investments.
The political geography further complicates the outlook. Positioned between growing US‑China rivalry, the Middle East risks exposure to geopolitical ripples. Deals tied to global value chains may be reconsidered as investors reassess jurisdictional risk. Meanwhile, the region’s regulatory frameworks such as UAE free zones remain attractive for inbound private enterprise and joint ventures.
Despite these headwinds, there is cautious optimism for a rebound in the latter half of the year. Financial institutions are beefing up private-credit infrastructure, deal insurance is gaining traction, and emerging technologies like AI continue garnering strategic interest. Should global trade tensions ease, Middle East M&A could reclaim its 2024 growth trajectory, reaffirming its status as a cornerstone of global deal-making.
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