MENA M&A deals could take months to recover fully after regional volatility linked to the Iran war, even as global dealmaking remains on course for one of its strongest years on record.
Bank of America’s co-head of global mergers and acquisitions, Eamon Brabazon, said confidence in the region has not disappeared, but a rapid rebound is unlikely. His view is that dealmaking appetite remains alive, although investors and boards may need time before returning to the market at full speed.
The latest LSEG figures show how sharply activity slowed in the opening quarter of 2026. MENA M&A activity fell 74% year-on-year to $18.8 billion, down from $66.4 billion a year earlier. Deals involving a MENA target reached only $4.6 billion, a 90% decline and the lowest first-quarter total in a decade.
The numbers underline the pressure facing bankers, advisers and corporate buyers in the Middle East and North Africa. Geopolitical risk has forced some companies to delay transactions, reassess valuations or wait for clearer market signals before committing to large acquisitions.
Still, Bank of America does not see the region as permanently derailed. The bank expects pent-up demand to support a recovery once confidence returns. The biggest question is timing. In previous periods of regional stress, deal confidence has returned in months rather than days or weeks.
Why MENA Dealmaking Slowed
The slowdown in MENA M&A deals reflects a mix of geopolitical, financial and boardroom pressures.
The Iran war created uncertainty for investors, lenders and corporate decision-makers. Even when companies still want to buy assets, regional conflict can complicate financing, risk assessment, due diligence and valuation.
M&A depends heavily on confidence. Buyers need to believe that future cash flows are stable. Sellers need to believe they can receive fair value. Lenders need to believe the deal can be financed without excessive risk. When conflict raises uncertainty, deals can pause quickly.
Oil prices also matter. Higher oil prices can support Gulf government revenues, but sudden spikes can also increase inflation risks, pressure interest-rate expectations and unsettle global markets. That mix can make deal committees more cautious.
The result is not necessarily cancelled deals. In many cases, transactions are delayed. Companies may keep strategic plans alive but wait for calmer conditions before signing.
LSEG Data Shows a Sharp Fall
The LSEG data points to one of the steepest recent slowdowns in MENA deal activity.
Total MENA M&A activity dropped to $18.8 billion in Q1 2026. That was down 74% from $66.4 billion in the same period a year earlier. The fall was even sharper for deals involving MENA targets, which dropped 90% to $4.6 billion.
This matters because target M&A shows investor appetite for acquiring companies inside the region. A decline of that size suggests buyers became more cautious about regional exposure, valuations and execution risk.
Outbound activity, sovereign-backed platforms and large strategic buyers may still support selected deals. However, the broad market has clearly lost momentum compared with the previous year.
For bankers, that means the second half of the year will be critical. If confidence improves, some postponed deals could return. If volatility continues, the region may finish the year well below earlier expectations.
Bank of America Sees Pent-Up Demand
Bank of America’s view is not entirely negative.
Brabazon said the region remains affected by volatility, but pent-up demand still exists. That means companies and investors have not abandoned deal plans. They may simply be waiting for better timing.
This is common in M&A markets. Strategic deals often take months or years to plan. A war, rate shock or market selloff can delay signing, but it does not always change the long-term logic of a transaction.
Buyers may still need scale. Sovereign-backed companies may still have national growth mandates. Energy, technology and infrastructure groups may still need assets to support long-term transformation plans.
The challenge is confidence. Bank of America expects that confidence to return gradually, not instantly.
Recovery Could Take Months
The central message from Bank of America is that MENA M&A recovery could take months.
That timeline matters for companies hoping for a fast rebound. When markets experience conflict-related volatility, investors often wait for a stable pattern before acting. They want to see currency stability, oil-market clarity, lower risk premiums and calmer equity markets.
Boards also tend to become more conservative during uncertain periods. Even if a deal still makes strategic sense, executives may avoid announcing major acquisitions when investors are nervous.
This is why the region may not regain lost ground immediately. Some transactions missed in the first half may return later, but others could slip into 2027.
The recovery path will depend on regional stability, financing conditions, oil prices and the willingness of major buyers to move ahead.
Global M&A Remains Strong
The MENA slowdown contrasts with a much stronger global M&A environment.
Bank of America said 2026 was on track to become a record year for global mergers and acquisitions, with first-half volume of about $2.1 trillion and a possible annual outlook of $6.1 trillion.
That would make the global deal market far stronger than the regional MENA numbers suggest. The global market is being supported by large transactions, strong corporate balance sheets, high cash levels and strategic demand for scale.
The Americas remain a major driver of activity, while the EMEA region has also recorded strong year-on-year growth. Large transactions above $10 billion are playing a major role in headline deal volumes.
This creates an important contrast. MENA is facing a confidence delay, but the global M&A cycle has not collapsed.
AI and Data Centres to Drive Deals
Artificial intelligence and data centres are expected to remain major drivers of MENA M&A deals.
AI is changing the investment priorities of governments, sovereign wealth funds, telecom companies, cloud providers and infrastructure investors. Data centres require capital, land, energy, cooling systems, fibre networks and long-term customers. These needs create opportunities for mergers, acquisitions, joint ventures and strategic partnerships.
The Gulf has already positioned itself as a major digital infrastructure market. Countries such as the UAE and Saudi Arabia are investing heavily in AI, cloud services and advanced technology. That could keep deal activity alive even during wider market uncertainty.
Technology deals may not remove geopolitical risk, but they can create strategic urgency. Companies that wait too long may lose access to critical assets, customers or infrastructure platforms.
Energy Transformation Remains Key
Energy transformation is another likely driver of future M&A in the region.
MENA economies remain deeply connected to oil and gas, but governments and companies are also investing in renewables, hydrogen, power grids, petrochemicals, mining and industrial decarbonisation.
This creates a wide field for acquisitions. Energy companies may buy technology providers, infrastructure assets, renewable platforms or downstream businesses. Sovereign-backed investors may also target global energy transition assets.
The region’s financial capacity gives it an advantage. Gulf investors in particular have the balance sheets to pursue large transactions when confidence returns.
Energy transformation is not a short-term trend. It is a long-term strategic shift, which means M&A demand in this area is likely to continue beyond the current volatility.
Funding Conditions Still Support Deals
One reason global M&A remains strong is that funding conditions are still supportive for large companies.
Bank of America noted that corporate balance sheets are strong, leverage is low and cash balances are high. Strong stock prices also help companies finance acquisitions through equity, cash or mixed structures.
This matters for MENA because many of the region’s most active buyers are sovereign-backed companies, large energy groups, financial institutions and infrastructure platforms. These buyers often have stronger access to capital than smaller private companies.
However, funding strength does not remove execution risk. In uncertain markets, buyers may demand lower prices or stronger protections. Sellers may resist if they believe valuations will recover.
That gap between buyer caution and seller expectations can slow dealmaking even when funding is available.
What This Means for Regional Investors
For regional investors, the slowdown creates both risk and opportunity.
The risk is that uncertainty delays exits, reduces valuations and makes financing harder for mid-sized deals. Private equity firms, family businesses and strategic sellers may have to wait longer to complete transactions.
The opportunity is that patient buyers may find better entry points. If some sellers need capital, stronger buyers could negotiate more attractive terms. Sovereign-backed investors and large corporates may gain an advantage because they can act when others hesitate.
The most resilient sectors are likely to be technology, digital infrastructure, energy transition, logistics, healthcare, financial services and strategic industrial assets.
MENA M&A Outlook
The outlook for MENA M&A deals is cautious but not weak.
The first half of 2026 has clearly been damaged by geopolitical volatility. The sharp decline in Q1 activity shows that deal confidence fell quickly. However, the long-term drivers of M&A in the region remain intact.
Governments still want diversification. Sovereign funds still want global exposure. Companies still need scale. Digital infrastructure still requires capital. Energy transformation still needs investment.
That means the region could recover once volatility eases. The recovery may not be immediate, but delayed demand could support a stronger pipeline later in the year or into 2027.
Conclusion
MENA M&A deals face a slow recovery after the Iran war disrupted confidence and reduced transaction activity in the first half of 2026. LSEG data shows a sharp 74% fall in Q1 regional M&A activity, with deals involving MENA targets dropping 90% to the lowest first-quarter level in a decade.
Bank of America expects confidence to return, but not overnight. The bank’s view is that recovery is more likely to take months than days or weeks.
The region’s deal pipeline still has support from AI, data centres, energy transformation and sovereign-backed strategic investment. Globally, M&A remains strong, with large transactions and corporate cash helping drive record activity.
The final outlook is measured. MENA dealmaking has lost ground, but it has not lost its long-term logic. Once confidence improves, postponed transactions could return, especially in sectors tied to technology, infrastructure and energy transition.
