Trade uncertainties threaten M&A momentum in the Middle East
Merger & acquisition (M&A) activity in the Middle East is expected to decline this year after the Trump administration's announced reciprocal global tariffs on April 2, which triggered a 'major escalation' in trade tensions, according to a new report by Norton Rose Fulbright.
The UK-headquartered law firm's 'Global M&A trends and risks' report said volumes in the Middle East are expected to stall, with over half (55%) believing deal activity will decrease in the region, while only 11% of respondents expecting a year-on-year increase.
However, Middle Eastern investors are expanding their global footprint, with regional investors making commitments to international deals, particularly in the US, the report stated.
'The trade uncertainties that have arisen have definitely had an effect on deals,' said Raj Karia, Global Head of Corporate M&A and Securities at Norton Rose Fulbright in London.
'Deals in flight seem to be moving slower. The other issue is the gestation of deals there seems to be a bit of a pause while people work out what all of this means.'
The report also highlighted a reverse shift in certain geographies, with 28% of respondents in Asia saying their appetite for M&A activity has increased following the tariff announcements, with a renewed focus on geographies like Europe and the Middle East 'where targets are looking very attractive, and the market is favourable.'
Almost 47% of respondents said they expected a significant rise in the use of representations & warranties (R&W)/warranty & indemnity (W&I) insurance in the Middle East – the largest of any region. However, 30% anticipate a smaller increase.
Nearly 70% of Middle East dealmakers named private credit as one of their top two types of financing that will see the greatest increase in use in 2025.
'The versatility of private credit is one of the key drivers behind its increasing usage. Classically, it was used for sponsor-backed leveraged buyouts looking at cash-flow financing. But we are seeing private credit increasingly used for asset-based lending as well,' Norton Rose Fulbright partner Christopher Akinrele said.
Digital transformation is expected to drive M&A in the Middle East, with 44% of respondents supporting this view.
More than half of respondents in the Middle East expect ESG-related regulatory scrutiny to increase YoY, the law firm said.
The survey respondents included 100 executives from multinational corporations, 50 from large private equity firms and 50 from major investment banks.
According to consultancy firm EY, the MENA region saw 225 M&A deals in Q1 2025, a 31% increase from the 172 deals recorded in Q1 2024.
Total deal value rose by 66% to $46 billion in Q1 2025, compared to $27.6 billion in Q1 2024.
In the MENA region, the UAE remained the top target country, with 63 deals totalling $20.3 billion in Q1 2025. Kuwait was ranked second in terms of deal proceeds, with a total of $2.3 billion.
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