Middle East M&A will remain resilient in 2026 – but more selective

While some reports suggest that the conflict could bring the region’s M&A activity to a halt, Gabe Langerak, Devvrat Gaggar and Radhika Gupta of WTW argue otherwise. In their view, the underlying fundamentals for continued dealmaking remain in place, although the drivers and nature of transactions is likely to evolve.

The Middle East entered 2026 with a level of M&A momentum that, in hindsight, matters far more than it first appeared. Q1 activity was not simply resilient; it was directionally clear. Infrastructure, technology and energy dominated value, but deal volume was not restricted to a single sector or market. This starting position shapes how the conflict in the Middle East is likely to influence M&A from here.

According to data from Ansarada, transportation led the first quarter of 2026 by value, with $8.2 billion across 9 transactions, while technology dominated volume with 68 deals worth $7.3 billion. Energy and natural resources contributed $2.2 billion across 18 deals, healthcare $1.9 billion across 19 transactions, and industrials $1.6 billion across 23 deals. These figures allude to a market driven by structural priorities rather than short‑term sentiment.

Where the market stood before the war

The region entered the current period of conflict from a position of relative strength – characterised by diversified deal flow and strong state participation – shaping a more measured and strategic response compared to situations where the markets were already under duress.

M&A activity in the Middle East in early 2026 continues to be anchored in national transformation agendas, particularly the drive to diversify away from energy. Within this, there is a clear and accelerating emphasis on building AI and technology ecosystems, with governments and sovereign-backed platforms actively directing capital towards digital infrastructure, advanced technologies, and innovation-led growth – reinforcing a long-standing strategic pivot that has been evolving since the early 2000s.

Additionally, WTW research in partnership with Bayes Business School reveals that M&A globally seems to be moving in the direction of slower deals rather than fast paced deals. Despite an anecdotal focus on the speed of corporate transactions, this suggests that the current market environment rewards the deeper due diligence or more complex integration planning associated with longer closing timelines.

In our view, this starting point reduces the likelihood of a sharp collapse in activity. Instead, it increases the probability of selective pauses followed by targeted acceleration.

What history tells us about M&A during wars

Historical precedent supports this view. Research and market reviews following the Russia-Ukraine war show that M&A activity typically slows immediately after conflict escalation due to uncertainty, valuation gaps and financing constraints, particularly for cross‑border deals. However, these same sources highlight that activity does not disappear.

Instead, M&A activity becomes more selective, with buyers focusing on discounted and distressed assets, essential services and sectors aligned with long‑term strategic need.

Data from KPMG’s Ukraine M&A market review shows that while deal volumes and valuations dropped sharply in 2022, activity rebounded in 2023 as businesses adapted and buyers adjusted risk expectations. Average deal values increased year‑on‑year as confidence stabilised, even though the war continued.

The consistent lesson is that war narrows options but rewards prepared buyers.

The case for a resurgence in Middle East M&A

Applying those lessons to the current conflict in the Middle East, there is a credible case for M&A activity in the region to reemerge in a different form, rather than contract outright.

First, stabilising acquisitions. Historical analysis of wartime M&A shows, and market logic dictates, that businesses facing liquidity constraints can become acquisition targets for stronger strategic buyers, particularly where assets are operationally important or systemically relevant. In the Middle East context, this is most likely to occur among small and medium sized logistics operators, transport linked services and smaller technology firms facing funding pressure.

Second, periods of conflict have historically created entry points for decisive global investors. Commentary on M&A during heightened uncertainty consistently notes that while many investors pause, others move early to secure market presence at reset valuations, particularly in regions with strong long-term fundamentals. The GCC and the UAE in particular, fits this profile despite heightened risk perception by some.

Third, sovereign wealth funds are likely to play a major role. Given their role as strategic consolidators and champions of national agenda’s across the GCC, we expect that sovereigns will continue to ensure the region remains on track to achieve their goals and protect local jobs and business. During periods of geopolitical stress, this role typically expands rather than contracts, as states prioritise resilience, efficiency and continuity.

The opposing argument is equally grounded in evidence. Cross border investment often falls sharply when geopolitical risk rises. Increased sanctions screening, longer diligence timelines, higher insurance and financing costs, and wider valuation gaps can all act as friction – especially for inbound transactions and for assets exposed to supply chain disruption.

In addition, broader geopolitical analysis suggests that sustained escalation could raise regional risk premiums, particularly for assets exposed to logistics disruption or cross‑border trade routes. That environment would naturally delay discretionary transactions and favour minority stakes, staged investments or state‑backed structures.

In other words, a “resurgence” is unlikely to look like a return to broad, high-volume dealmaking. In past GCC cycles of heightened uncertainty, activity has tended to reappear first through domestic consolidation and platform-building: stronger balance sheets buying scale, governments and sovereign investors backing national champions, and subscale operators combining to protect margins and access capital.

Looking ahead, the same pattern implies that the next 12–24 months could be defined less by headline mega-deals and more by a steady drumbeat of sector consolidation in a few structurally pressured arenas.

Where consolidation is most likely to take shape

In our view, consolidation is most likely to emerge across a range of sectors:

Transportation and logistics
Already a value leader in Q1 and historically a sector where scale and network density matter most during disruption; expect roll-ups of subscale operators and state-backed platforms tightening control of critical corridors.

Financial services
Banking has been on a multi-year consolidation path; periods of higher risk typically accelerate “combine or be absorbed” dynamics among smaller domestic players, as they’re no longer able to keep up with volatility and the lower margins, especially where funding costs and compliance or regulatory burdens rise.

Technology and digital infrastructure
Capability acquisition (cybersecurity, enterprise software, cloud and data centres) is likely to outweigh organic build as governments and strategic buyers treat digital capacity as strategic infrastructure. In the banking segment, traditional banks are expected to acquire fintechs to bypass the “build phase” of digital transformation.

Energy, industrials and localisation-linked assets
This will remain a large sector throughout the region, and by virtue of the implications of the current crisis will likely have a number of distressed assets, which need to be saved to ensure business and value-chain continuity.

Healthcare
Structurally defensive and still fragmented in many markets; consolidation tends to accelerate as operators seek capital for capacity expansion and as governments prioritise system resilience.

The common thread is sovereign intent: in prior cycles, state-backed capital has often acted as the catalyst for consolidation, and that tendency typically intensifies when resilience becomes a policy goal. Practically, that also means more transactions structured around control, strategic stakes, and partnerships with clear national-alignment narratives – not just pure financial arbitrage.

Due diligence will be key

Based on historical patterns, the most visible impact on M&A is unlikely to be immediate. Past conflicts suggest that the first two to three quarters are characterised by hesitation and repricing rather than a collapse in activity. More meaningful shifts including distressed processes, consolidation and state‑led transactions typically emerge 6-12 months into prolonged uncertainty, once markets adapt to a ‘new normal’.

Our view would be that with the knowledge of these timelines, and the more thoughtful analysis that we see organisations globally employing in transactions, more opportunistic buyers are already identifying likely targets and starting their (pre-)diligence processes early to ensure they’re ready post-conflict and have had enough time to perform suitable analysis of the assets and people they are buying.

Our prediction is that the transactional landscape will start to become evident through the summer months.

As we know that one of the key reasons for transactional failure lies with people challenges, performing timely due diligence from a people risk perspective is imperative – including retention planning, leadership assessment, and alignment of organisational design and HR policies and practices. This should be started prior to signing, to ensure inclusion in the valuation and business case projections, allowing likely synergies to be identified upfront.

Closing view

History suggests that wars rarely eliminate M&A markets. They change who transacts, how deals are structured and which sectors matter most. The Middle East entered 2026 with diversified activity, strong sovereign balance sheets and a long‑term strategic agenda.

That does not insulate the region from risk, but it does mean that the next phase of M&A is most likely to be shaped by intent and alignment – through targeted consolidation, requiring a laser focus on ensuring retention of the right people, at the right time, through the right means.