M&A activity across Saudi Arabia and the wider Middle East has continued to demonstrate notable resilience in 2025, even as global deal markets remain constrained by macroeconomic volatility, elevated financing costs, and geopolitical uncertainty. At our recent Dealmakers Dialogues Riyadh event, Fikry Younis, Philip Kotsis, and Marko Markovic explored why regional dealmaking has remained robust and the opportunities and challenges that lie ahead.

A market structurally set for deal flow

Unlike many mature markets where transaction volumes have stagnated or declined, the Middle East, led by Saudi Arabia and the UAE, has sustained growth in both deal volume and value over recent years. This reflects a structural upswing driven by economic diversification agendas, strong public-sector balance sheets, and growing private-sector participation.

In the first half of 2025, the region recorded approximately 271 M&A transactions, representing around 19% yoy growth despite a global slowdown. Capital continues to be directed toward strategic sectors including technology, energy transition, healthcare, and industrial infrastructure. Importantly, H1 also saw a clear shift toward mid-market, high-impact transactions, with assets that are easier to finance, quicker to execute, and closely aligned with national priorities such as localization, non-oil GDP growth, and the build-out of digital infrastructure.

Saudi Arabia recorded 59 transactions in H1, supported by industrial, TMT, and financial services activity. The largest deal there was Elm Co’s 100% acquisition of Thiqah Business Services for €771m, a digital services deal. Per Refinitiv data, in Q4 there were 78 deals recorded worth €3.5bn, a 6.8% increase in volume from Q3 and a 75% increase in value. It’s also a substantial rise from Q4 2024, which saw 54 deals worth €2.9bn.

Across the wider TMEA (Türkiye, Middle East, and Africa) region, overall deal volume declined by 23.4% yoy in Q3, while deal value rose sharply by 41.6%. Middle East activity played a disproportionate role in this divergence. Technology, media, and telecommunications (TMT) value increased seven-fold, driven by Palo Alto’s €21.3bn acquisition of CyberArk, the largest EMEA deal through Q3, while energy and utilities value rose 281.8%, led by the €9.4bn Jafurah Midstream Gas Company transaction. Q4 data from Refinitiv indicates that Middle East deal value has seen a sharp rise in deal volume and value, both qoq and yoy: there were 293 deals in Q4 2025, rising from 253 in Q3 2025 and 205 in Q4 2024, while value jumped from €12.37bn in Q3 2025 and €10.76bn in Q4 2024 to €26.7bn in Q4 2025. 

Drivers, trends, and opportunity

A defining feature of the regional M&A landscape remains the deployment of sovereign capital. Saudi Arabia’s Public Investment Fund (PIF), alongside UAE-based investors such as Mubadala and ADQ, continues to act as a catalyst for both domestic consolidation and cross-border expansion. With deep, patient capital, these institutions provide liquidity and execution certainty, insulating deal activity from global financing constraints. Recent transactions, including PIF-backed Humain’s €2.55bn strategic partnership with Blackstone and AirTrunk, underscore how M&A is being used to accelerate national objectives, such as AI-ready hyperscale infrastructure.

Vision 2030 also continues to shape deal rationale in Saudi Arabia, with reforms to regulation, taxation, and privatization improving market accessibility and reducing execution risk. The above-mentioned Elm Co deal also aligns closely with Vision 2030 goals to localize technology, drive innovation, and foster national champions in strategic industries.

Kotsis says that mid-sized deals, across different sectors aligned with national priorities, are playing a big role in M&A. “Vision 2030 has set the stage and has been the nucleus for a number of different projects and initiatives. It’s very clear which sectors are being focused on: digital, digital infrastructure, energy, energy infrastructure, industrial, manufacturing, construction. That seem to be the trend and it’s continuing with a very strong Q3 and Q4, and we’re hoping that goes into 2026.”

But Younis says that other sectors should not be counted out. “We may start seeing more activity in the periphery sectors – sectors that are not directly related to the Vision, like vocational education, industrial services, ESG services, and environmental services.” 

Execution challenges and pricing discipline

Despite the positive outlook, deal execution remains complex. Dealmakers continue to contend with regulatory fragmentation across jurisdictions, evolving competition regimes, and heightened scrutiny of cross-border transactions. Geopolitical risk, oil price sensitivity, and broader macro uncertainty continue to shape financing structures and valuation expectations, while the regulatory environment, although improving, can still present hurdles, particularly for foreign investors.

Valuation discipline is consistently cited as one of the most persistent challenges. As Younis notes, gaps on pricing have always been the case, but the way they are addressed is changing. Investors are increasingly moving away from ‘narrative-based’ or ‘hockey-stick’ projections toward more rigorous, operationally grounded analysis. Buyers and sellers are going deeper into operational due diligence, scrutinizing supply chains, manpower, and regulatory exposure, to substantiate valuation and pricing assumptions.

Kostis echoes this view, pointing to the enduring valuation gap between aggressive sellers and more cautious buyers. Corporates often pursue the highest possible price, sometimes framing transactions as ‘take it or leave it’ situations, while buyers remain sceptical about where the market will be in a year, two years, or five years. Bridging this gap – coming to a ‘meeting of the minds’ on valuation – remains critical to getting deals across the line.

At the same time, regulatory processes are becoming less of an impediment. Kostis highlights that the environment is getting smoother and more efficient, making it easier for international investors to understand, navigate, and progress transactions. While challenges remain, particularly on valuation alignment, both execution frameworks and regulatory clarity are trending in a more constructive direction.

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