MENA M&A market to remain steady in 2016

Dubai / Emirates Business

According to the latest edition of the EY Capital Confidence Barometer (CCB), low oil price is having little impact on M&A strategy as MENA executives continue their steadfast pursuit of deal-making. Of the MENA executives surveyed, 37% expect to actively pursue acquisitions in the next 12 months.
Geographically, MENA companies are sticking close to home, with four out of five of their top deal destinations residing within the region, according to the CCB.
The Q1 2016 saw a 43per cent increase in domestic deal volume, rising from 21 deals
in Q1 2015 to 30 deals in
Q1 2016.
In MENA, distressed asset sales are playing a more prominent role in deal-making, largely because of a tightening of capital.
Within many countries, governments are being given priority access to available capital, leaving less capital available to private enterprises, and particularly family-owned businesses.
Phil Gandier, MENA Transaction Advisory Services Leader, says: “SMEs in MENA are being forced to take a hard look at their portfolios and shed any non-core assets in an effort to either shore up their balance sheets to weather any economic uncertainties or
release cash to fund potential M&A activity.
“We are starting to see more portfolio review/optimization initiatives than we ever seen in the MENA region and this will drive M&A activity.”
Disparities in vendors’ price expectation versus buyers’ valuation have created a price dislocation with the equilibrium price moving closer to buyer valuations.