Why Mergers And Acquisitions Are Back On The Rise

Zeid Hanania and Nadim Kayyali discuss the return of M&As and why we can expect to see more activity in Africa in the coming years.

As we approach the 10-year anniversary of the 2008 global financial crisis next year, businesses in the Gulf region as a whole – and the United Arab Emirates in particular – appear to be more resilient, robust and optimistic than before.

Despite – or perhaps partly as a result of – wider geopolitical and economic regional issues affecting the Middle East, including fluctuations in the price of oil and political instability, the UAE has in the last few years managed to enhance its position as a regional hub for investment activity across the region and beyond.

Regional merger and acquisition activity last year witnessed a healthy jump in both deal value and volume (as compared to 2015, with approximately 75 reported transactions having been completed according to Merger market). The financial services sector in particular witnessed a couple of landmark deals with the $14.8bn merger of First Gulf Bank and National Bank of Abu Dhabi being in the forefront of such activity.

As the regional economic environment stabilises, it is likely that deal activity will slowly increase across the region. While political instability and market volatility has generally hampered investment activity, it has also conversely contributed to some notable transactions by presenting buyers with cost saving and consolidation opportunities across certain sectors. One key issue that still lingers as a limiting factor to transactions is the valuation gap between sellers and buyers although it is expected this will slowly dissipate as more realistic valuations ultimately take hold in light of economic and geopolitical realities.