The value of M&A activity in the Middle East nosedived 51% y-o-y to USD 58.7 bn in 2020 as M&A volume fell 13% y-o-y. Just 423 transactions were announced last year, according to a report from Baker McKenzie. The rate of decline in the region outpaced the global average, which saw transaction value dip 6% y-o-y and volumes drop 5%. In the Middle East, M&A picked up in the back half of the year (but the number of transactions still remained marginally lower than 2H2019 numbers), largely buoyed by a 56% y-o-y surge in agreements in November.

The majority of M&A in the region in 2H2020 was cross-border, which accounted for 147 agreements worth USD 9.9 bn compared to 157 agreements worth USD 10.4 bn for the same period in 2019. Meanwhile, a total of 73 domestic agreements worth USD 4.6 bn went through, up from 68 M&A totaling USD 3.7 bn.

Egypt ranked second for outbound transactions in both the full year as well as 2H2020. The US ranked first in both outbound and inbound cross-border M&A, with 19 inbound transactions worth USD 14.1 bn and 40 outbound agreements totaling USD 5.2 bn during the year..

The technology sector was the top target for inbound investments, followed by financial services, while energy and real estate topped the charts for the highest value of inbound investments.

The region could bounce back in 2021 as covid-19 subsides: “The megadeals we’ve seen in some sectors such as high technology, financial institutions, energy and power and real estate have shown that there is interest in the region” says Omar Momany, Partner and Head of the Corporate M&A Practice Group at Baker McKenzie Habib Al Mulla Dubai, adding that he expects the region to make a comeback and more M&A activity to occur.