In Q1 2015, some 90 deals were announced as compared with 89 in Q1, 2014, EY said in its Q1 Mena mergers and acquisitions (M&A) update.


Announced deal value in the Mena region has gone up 9% to $8.9bn in the first quarter of this year compared with $8.2bn in Q1, 2014, Ernst & Young (EY) has said in a report.
In Q1 2015, some 90 deals were announced as compared with 89 in Q1, 2014, EY said in its Q1 Mena mergers and acquisitions (M&A) update.
Inbound announced deal value increased from $0.4bn in Q1, 2014 to $2.6bn in Q1, 2015; while domestic announced deal activity value decreased by 48% from $1.7bn in Q1, 2014 to $0.9bn in Q1, 2014.
Outbound announced deal value decreased by 11% from $6.1bn in Q1, 2014 to $5.5bn in Q1, 2015.
Phil Gandier, Mena head (Transaction Advisory Services) at EY said, “The Mena M&A market continues to display resilience to the challenging regional geopolitical climate in parts of the region. The sustained volume of M&As indicates that regional M&A performance has a low correlation to oil price volatility. The inbound M&A market performed very well compared to the same period last year, which reflects the sustained demand from foreign investors.
“The pipeline of M&A deals looks robust for the rest of the year. According to EY’s latest Mena Capital Confidence Barometer (CCB), which looks at the sentiments of C-suite executives across the region, the majority of Mena executives (69%) expect the deal market to remain stable in 2015.”
More than half of Mena businesses are planning for larger deals in the coming year, compared to 28% who said they would maintain the current transaction strategy.
Average deal sizes are going up primarily as a result of activity in certain sectors. In the last couple of years, this has largely been focused on defensive sectors; which tend to perform well in relation to other industries during a period of market or economic weakness, such as education, healthcare and consumer products, which for the most part were small-scale.
More recently, though, there has been more activity in the oil and gas and financial services sectors, where transactions tend to be larger.
Anil Menon, Mena M&A and IPO leader, EY, said, “Deal flow is looking very healthy, underpinned by the re-emergence of Egypt and the bounce back of other markets that had slowed in recent years. This year we are likely to see many more outbound deals as overseas forays are back on the Mena radars.
“Around one third (34%) of businesses in the region plan to focus on investing in new geographies and markets for organic business growth, compared with just 6% a year ago.”
Mena CCB respondents are optimistic about pursuing acquisitions. The number of acquisition opportunities remains high at 68%, broadly in line with the global trend, and deal pipelines in Mena look to be getting stronger.  
The survey shows that 28% of Mena businesses have three deals on hand, up from 9% last October. The number of Mena businesses with an average of five deals in the pipeline has also increased over the past six months.  
Within Mena, small-to mid-market deals, below $250mn will continue to figure prominently in executives’ plans, particularly among the dominant family-owned businesses.
The survey shows that 88% of Mena executives will look for deals in the lower middle market, up from 77% six months ago. The mid-market sectors are primarily targeted by family businesses, a constituency that has been focused on reconfiguring portfolios and institutionalising their business.