EMEA’s M&A market remained relatively steady in Q3 after growth in H1: deal volume was down 5.2% yoy and value was up 2.5%. Lower inflation and interest rates are driving higher spending and larger deal sizes, putting 2024 deal value on track to surpass last year.

The Middle East region is showing similar trends, underscoring the dynamic and resilient nature of the market there, driven by strategic investments, economic growth, and technological advancements.

In fact, in the wider region of Turkey, the Middle East & Africa, deal volume declined 12.2% yoy at Q3 2024, but value increased 25.3%. And in Saudi Arabia, M&A deals saw a similar decline of 12.5% in deal volume yoy, but value surged 71.8%.

So, what is driving M&A in the region? At our recent event in Dubai, John Komninakidis, Zubin Chiba, and Megha Agarwal discussed the challenges of doing deals and what it takes to achieve successful outcomes.

Key Challenges

In addition to economic volatility, local ownership restrictions, and a complex regulatory environment, the experts highlighted some key challenges in the context of recently completed deals:

• Tight Timelines: Completing transactions within a short timeframe, especially during periods when key stakeholders are unavailable, such as summer.
• Managing Expectations: Aligning the expectations, objectives, and values of both buyers and sellers early in the process to avoid conflicts later.
• Investor Dynamics: Navigating the dynamics between founders and new private equity investors post-transaction.
• Quality of Information and Management: In the Middle East, businesses with properly audited accounts and top-notch management are valued more highly and transact more smoothly. Conversely, businesses with less qualified management or accounts audited by lesser-known firms face longer transaction times and greater difficulty in attracting buyers.
• Regulatory Delays: Deals involving Saudi Arabia often experience a three-month completion delay, which can be challenging for buyers eager to take control.

Success Factors

Despite these hurdles, the experts felt that many of these challenges could be overcome by strategic planning, clear communication, and strong management:

• Clear and Compelling Equity Story: A well-defined equity story that aligns with the buyer’s strategic rationale and synergy expectations is fundamental to success.
• Strong and Committed Management Team: The commitment and performance of the management team, along with their technical expertise and operational know-how, can significantly influence the success of the transaction.
• Efficient and Transparent Due Diligence: A well-prepared sell-side due diligence process, complemented by thorough buy-side diligence and supported by quality information systems, can help ensure a smooth and efficient transaction.
• Strategic Alignment and Localization: Deals driven by a strong localization agenda and strategic alignment with local economic goals, particularly in regions like Saudi Arabia, are more likely to succeed.
• Competitive Tension and Clear Timelines: Utilizing competitive tension by engaging multiple potential buyers and establishing clear timelines and exclusivity agreements can keep both parties motivated and on track.
• Multi-Level Trust and Comprehensive Advisor Involvement: Building trust at multiple levels within deal teams, advisors, and principals, along with maintaining deal momentum and involving a full suite of advisors early in the process, is essential for successful deal closure.

Optimizing Technology

Moreover, technology has the potential to further help achieve success in dealmaking. Datasite focuses on minimizing time and risk across all stages of the project lifecycle, whether in preparation, sell-side, or buy-side processes:

• Document Comparison: Allows side-by-side comparison of documents to quickly identify changes.
• Redaction: Supports multiple users working on the same document, enhancing efficiency.
• Data Transformation: Converts data into actionable information, allowing instant collaboration through advanced search capabilities.
• Optical Character Recognition (OCR): Enables full-text search across various document types (PDF, Excel), ensuring no information is missed during due diligence.
• Analytics: Provides comprehensive tracking of deal progress, offering visibility into project engagement and identifying serious buyers.
• Mobile App: Provides on-the-go access to VDR and Q&A functionalities, reducing bottlenecks in the Q&A process.
  

To find out more about how Datasite can help you on your next deal, click here.