Clyde & Co launched its inaugural Middle East Deal Study at an exclusive event hosted at the Ritz Carlton recently.
The study, the first of its kind in the region, analyses data from 86 of the Mergers and Acquisitions (M&A) and Joint Venture (JV) transactions the firm worked on in the region during 2012.
The study establishes a baseline for 'market practice’ in the Middle East, providing a unique insight into doing business in the Middle East, identifying trends and providing statistics. Interestingly, Joint Ventures remained as attractive as M&As in providing a route to market.
In fact, JV transactions occurred as frequently as M&A transactions which can be explained by the regulatory environment in the Middle East, where local partners and market knowledge is often required.
Overall, analysis of the deal study highlights an increase in market confidence, a rise in the use of the auction sale processes and an enthusiasm from new entrants trying to gain a foothold in the region. These elements have transformed the Middle East into a seller friendly market, with entrepreneurial businesses attracting international investors looking to access the Middle East market.
With possible reductions to the ‘barriers of entry’ in doing business in the Middle East market, brought about by either the new investment law which may increase foreign ownership limits or the eagerly awaited announcement by MSCI to upgrade the UAE and Qatar to emerging markets, has the potential to make the region even more attractive to international companies and investors.
This could have a positive impact on the regions deal market, invigorating the private sector to follow the upward investment trend seen through public sector spending in critical areas of the economy.
The study highlights that sellers and buyers should expect split signing and completion when doing an M&A deal. 31%of M&A deals took between three and six months to complete, bringing up a host of related issues such as walk away rights and management of the target during this period.
The study also found a clear tendency towards the use of English law, with M&A deals split between courts and arbitration (41% and 59% respectively) whilst arbitration remained the preferred forum for joint ventures (93%).
Philip O'Riordan (pictured), partner in Clyde & Co’s MENA corporate group, said:
"Globally, we see the importance of the public sector in stimulating growth and providing employment.
"The findings of the study show that regionally there is the emergence of a vibrant private sector, which we expect to grow on the back of increased public investment in critical areas of the economy such as energy, infrastructure and construction.
"We believe the deal study provides valuable information for any company planning and implementing a transaction in the region."
To request a copy of the deal study please email [email protected]
(Source: Clyde & Co)