Alvarez & Marsal says dealmaking wave robust in MENA despite global dip

Alvarez & Marsal is expanding in the Middle East on bets that mergers, acquisitions and restructuring will drive business.

The New York-based turnaround firm recently opened offices in Riyadh and Abu Dhabi and is on track to have more than 200 employees in the region this year. The company made its mark in the Middle East after being appointed as the administrator of scandal-hit NMC Health Plc in 2020.

Faisal Shaikh, managing director and regional head of corporate finance at A&M in Dubai, talked to Bloomberg News.

How is the regional M&A pipeline?

While the GCC is not totally unaffected by the global deal-making environment, favourable regional dynamics and proven resilience continue to fuel M&A attractiveness in the region. Increased interest rates have not had a material impact on transactional activity in the region.

The pipeline across the buyer universe — strategics, sovereign wealth fund, and financial sponsors — remains strong but with an enhanced focus on integration synergies and value creation. Inorganic growth via acquisitions is very much in vogue with strategic buyers as a means of fast-tracking market share growth, extracting synergies, and accessing talent.

What is driving mid-level M&A deals?

The mid-segment part of the spectrum is populated by family groups, corporates, as well as increasingly SWFs and state-owned entities. This space is driven by themes including sectoral consolidation, value chain bolt-ons, and capability acquisitions.

By definition, opportunities in this segment far outnumber the mega-deal segment but require patience.

Is consolidation a big theme in the region?

Companies and SWFs are seeking to create end-to-end platforms that serve customers across the value chain, whether in the healthcare, logistics, retail and consumer, or TMT space. We see consolidation being followed by a number of sovereigns in the region to enhance both the performance of their investments as well as improve the service offerings to their populations.

Have you seen an uptick in restructuring?

The environment of higher interest rates, inflation, increased competition, consolidation, and digitalization has increased the focus of investors, financial institutions, regulators and owners on performance, returns, and value creation. This has resulted in portfolio, company, and investment reviews with a focus on rehabilitating poor performers and improving resilience. We expect restructuring to be a central component of this focus and therefore continue to grow.

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