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Mergers and acquisitions in the MENA region have not been derailed, but Bank of America (BofA) predicts a long recovery from the reduced dealmaking activity caused by the conflict between Iran and the US and Israel.
According to LSEG Q1 data, MENA M&A activity declined 74% year-on-year (YoY), slipping to $18.8 billion from the previous year’s recorded $66.4 billion. Deals involving a MENA target totalled $4.6 billion over the same period, marking a decline of 90% YoY and recording the lowest Q1 total in a decade.
According to Eamon Brabazon, Co-head of Global M&A at BofA, while the greater MENA region has suffered volatility this year, “what we have tended to see in the past during similar situations is that confidence does come back, but it tends to come months, rather than days or weeks later.”
“It is speculation at this point, but my view would be that we are meaningfully down at half year and it is possible that we have missed a number of deals in the first six months, but there is pent-up demand,” Brabazon added while reiterating that an instantaneous recovery was unlikely.
Sectors expected to drive M&A dealmaking in the region will align with global themes, according to BofA, with artificial intelligence, data centres and energy transformation taking the lead.
Besides geopolitical headwinds, inflation risks triggered by oil price hikes are weighing down market confidence. Brabazon said 2026 was on track to be a record year in global M&A dealmaking, with the H1 volume of $2.1 trillion on track for an annual outlook of $6.1 trillion. BofA has referred to it as the “biggest annual market in history”.
“It is a robust and constructive M&A environment. Yes, there has been volatility, but the VIX [Volatility Index] has been range bound in the mid-teens and not something that is derailing the scale of ambition,” Brabazon said. “The market is awash with funding, with a focus on really large transactions – more than $10 billion plus.”
Year-to-date H1 figures of the EMEA region indicate a 77% year-over-year growth to $684 billion in M&A deal-making, the largest regional jump behind the Americas, which recorded a 54% growth to $1.45 trillion.
According to Brabazon, momentum is being driven by an investment landscape where balance sheets are “at all-time lows in terms of leverage and at all-time highs in terms of cash balances,” while “stock prices are closer to all-time highs, so you know the ability to fund your transformational deal is really strong right now.”
He added that despite 2–3% inflation and “a lot of volatility” since 2025, corporations are adept at dealing with uncertainty. “If you overlook short-term volatility, the long-term decisions cannot be stopped, and companies are good at adapting.”
(Reporting by Bindu Rai, editing by Seban Scaria)
