Mergers and acquisitions in the Middle East are booming, and at the center of it all? The UAE and Saudi Arabia.
In 2024, MENA recorded 701 deals worth $92.3 billion, driven by bold diversification strategies, capital market reforms & a surge in foreign investments. The UAE and KSA accounted for approximately 45% of MENA’s 2024 deal volume.
For investors, VCs, PEs, family offices and business owners, now is the time to seize these high-growth opportunities.
Here’s your actionable checklist to navigate mergers and acquisitions in the UAE & Middle East with confidence:
1. Target Identification: Follow Economic Growth
- Sector Focus: Prioritize sectors aligned with economic transformation such as technology, renewable energy, healthcare, manufacturing, fintech and consumer goods, which are hotbeds of growth. Interestingly, Oil & Gas and Insurance led 2024’s top deals.
- Vision 2030 Synergies: In KSA, target companies contributing to Vision 2030 initiatives, including tourism, fintech, and sustainable energy.
- Localization Wins: Success often hinges on aligning with Emiratization and Saudization policies. Structure deals to include strong local partnerships.
2. Valuation: A Core Part of Mergers and Acquisitions
- Quick Process Snapshot: Use a mix of comparable deals, market multiples, and cash flow forecasts (DCF). For startups, lean on milestone-based methods.
- Regional Adjustments: Account for government incentives, local risk, and regulatory frameworks, especially in sectors like fintech, healthcare, and energy.
- Strategic Premiums: Pay more for assets aligned with Vision 2030 (in KSA), digital growth, or national transformation priorities.
3. Deal Negotiations: Lock the Terms
- Term Sheet Essentials: Clearly define valuation, equity structure, earn-outs, board rights, investor protections, and exit rights.
- Local Compliance Factors: Account for foreign ownership caps, free zone rules, and mandatory local partner structures, where applicable.
- De-risk the Deal: Negotiate representations & warranties, indemnities, and conditions precedent to safeguard both sides.
4. Due Diligence: Look Beyond Numbers
- Financials: Review 3-5 years of the target’s past audited financials, tax filings, and liabilities. In KSA, confirm real estate ownership via the Ministry of Justice.
- Commercials: Discuss customer contracts, contract value, new pipeline, suppliers, and multi-region operations so that you as a fund or investor understand the ecosystem.
- Legal & Compliance: Ensure the deal aligns with UAE Commercial Companies Law or KSA’s Competition Law. Flag any litigation, IP risks, or contractual liabilities.
- Cultural Alignment: Cultural mismatches derail nearly 70% of global mergers & acquisitions. Evaluate management compatibility with integration goals.
5. Regulatory Approvals: Start Early, Move Fast
- KSA: Secure approvals from the Capital Market Authority (CMA), Saudi Arabian Ministry of Investment (MISA) and General Authority for Competition (GAC).
- UAE: Secure approvals from UAE Central Bank, file with Competition Regulation Committee and adhere to free zone guidelines.
- Cross-Border: Leverage bilateral frameworks, such as those by the US-UAE Business Council, to streamline partnerships.
6. Post-Merger Integration (PMI): Truly Merge Entities
- Quick Wins: In the first 100 days, integrate IT, supply chains, and operational workflows to capture immediate synergies. Focus on the new entity’s structure and manage teams effectively.
- Cultural Sensitivity: Tailor communications to UAE’s multicultural environment and KSA’s localization goals. Teams have to be aligned with the new or revised missions, so get buy-in from key stakeholders for smooth operations.
Why Choose Kuvera Consulting?
Our experienced mergers and acquisitions transaction advisory team is well-equipped to guide you to turn opportunities into successful investments.
We support venture capital funds, private equity firms, family offices, growing startups, and groups of companies across manufacturing, healthcare, technology, gaming, beauty & wellness, and more.
Reach out to us today to explore how our expertise can help drive your company’s strategic success.
To know more, you can explore our solutions or reach out to Kuvera Consulting’s team on contact@kuveraconsulting.com with your inquiry directly.