Middle East M&A Set To Wobble Amid Tariff‐Driven Volatility

(MENAFN- The Arabian Post) Mergers and acquisitions across the Middle East are poised to slow as escalating global trade tensions erupted following the Trump administration's imposition of reciprocal tariffs on 2 April. A sweeping 20 percent tariff on EU goods, 10 percent on UK imports and 25 percent on automobiles rattled markets and shook corporate confidence, triggering what dealmakers describe as a“major escalation” in international trade friction.

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.

See also Saudi Oil Flow to China Inches Down Amid OPEC+ Expansion

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.

See also Dubai Holding's Residential REIT IPO Draws Record Demand, Signalling Investor Confidence

Notice an issue? Arabian Post strives to deliver the most accurate and reliable information to its readers. If you believe you have identified an error or inconsistency in this article, please don't hesitate to contact our editorial team at editor[at]thearabianpost[dot]com . We are committed to promptly addressing any concerns and ensuring the highest level of journalistic integrity.

MENAFN11062025000152002308ID1109659604