The volume of mergers & acquisitions (M&A) in the Middle East and North Africa (MENA) region registered a rise of 4 percent to 416 last year 401 in 2010, Ernst & Young's 2011 year-end MENA M&A update showed. However, their value fell by 28 percent to $31.7 billion in 2011 from $44.1 billion in 2010. The first half of 2011 experienced a higher average value of M&A deals at approximately $10 billion as compared to approximately $6 billion in the second half. Fourth quarter activity in 2011 experienced a considerable increase in total deal value compared to the third quarter, rising from $4.4 billion in Q3 2011 to $7.2 billion in Q4 2011, a jump of 64 percent. Phil Gandier, MENA Head of Transaction Advisory Services, Ernst & Young, said: "A larger number of deals at smaller valuations signifies that asset values across the region have taken a tumble in light of the lower regional economic growth and also the projections for future growth. One of the key obstacles slowing deal closures has been the continuation of the valuations gap between buyers and sellers." Moreover, he said "once this discrepancy begins to narrow, we may begin to see deal closures picking up some pace. Sellers have acknowledged that future cash flows from their business stakes will not be as strong as they had hoped for and are now in the process of re-evaluating their options. These numbers indicate that 2012 will be favorable to buyers if they can add substantial value." The UAE and Saudi Arabia remain the most active at 49 deals and 44 deals, respectively. In terms of deal value, countries that ranked highest were the UAE, comprising 40 percent ($3.9 billion) of total disclosed deal value in the domestic space in 2011; Saudi Arabia followed at 29 percent ($2.8 billion) and Kuwait at 11 percent ($1.1 billion). In terms of volume, domestic transactions outnumbered inbound and outbound deal activity, comprising about 54 percent of total announced deals in 2011. In terms of value, however, outbound deal activity held the greatest value among total announced deals, comprising $16.3 billion, or 51 percent of total announced deal value in 2011. By volume, outbound transactions came second after domestic deals in terms of dominance in M&A market activity, comprising 104 deals, or 25 percent of the total deal volume. Inbound deals, comparatively, held the lowest volume and value among total announced deals, comprising 88 deals, or 21 percent of total announced deal volume.
