The Middle East and North African (Mena) corporate captains see a healthy appetite for mergers and acquisitions (M&As) in the next 12 months despite Covid-19, according to Ernst and Young (EY).
Although business executives in the Middle East region are generally uncertain and cautious about the economy and their growth prospects; EY, in its latest Global Capital Confidence Barometer (CCB), said 62% of Mena executives remain optimistic that the global M&A market will improve in the next 12 months.
Locally, Mena executives are equally optimistic, particularly among those who responded later during the survey period.
“The Covid-19 is a great reset that will provide amazing acquisition opportunities. Sovereigns, large merchant families and corporations are aggressively looking at tactical buying opportunities,” said Anil Menon, Mena M&A and Equity Capital Markets Leader, EY.
In the immediate term, Mena executives in the region expect a slowdown in conventional M&A activity as firms focus on shoring up liquidity, driving cost efficiencies and, preserving value.
“However, the pandemic and lower oil prices are expected to accelerate consolidation across sectors and sale of non-core businesses held by merchant families,” it said.
Across the region, 54% of Mena executives say they plan to actively pursue M&A in the next 12 months, only slightly lower than six months ago, it said, adding of the Mena companies surveyed, 45% will use M&A to strengthen their resilience and position for recovery through bolt-on acquisitions and 30% for transformative deals that could fundamentally reshape their business.
Others that are less well-capitalised may find themselves forced to raise capital though divestments, either through full-enterprise sales processes or sale of minority stakes.
A more positive trend emanating from the Mena region is its emphasis on the rapid digitisation.
The survey found that 80% of Mena executives say that their company is already undergoing a “significant” business and technology transformation to meet profitability goals, which presents opportunities in the current market.
Additionally, 67% and 73% of Mena executives, respectively, are re-evaluating or taking steps to change their digital transformation and speed of automation initiatives, in response to the pandemic.
from Gulf Times https://ift.tt/2BAtyk7
Comments
Post a Comment