United Arab Emirates - Market Insights

UAE’s deal momentum and a balanced outlook

The United Arab Emirates (UAE) has entered 2026 with strong deal momentum following a robust 2025 (a reported 26% growth in Middle East and North Africa (MENA) M&A transactions in 2025 (www.ey.com/en_ae/newsroom/2026/02/m-a-activity-in-mena-region-experienced-strong-growth-in-2025-with-884-deals-totaling-us-106-1b), with the UAE as the region’s most active market with 95 deals, www.pwc.com/m1/en/publications/2025/docs/2025-transact-middle-east-mid-year-update.pdf), with such deal activity characterised by active sovereign and private capital, healthy balance sheets among regional corporates, and a sustained pipeline of strategic and sponsor-led transactions.

While global macro conditions remained variable and there are regional political headwinds, the UAE remains very well capitalised and deal flow is being primarily driven by the UAE sovereign and quasi-sovereign funds with over 60% of the outbound deal flow driven by those funds, primarily targeting the North American market.

A pivot towards scale: corporate carve-outs and partner-of-choice dynamics

A defining feature of recent years has been the pursuit of scale and specialisation. Corporate groups evaluated non-core divestments, carve-outs and joint ventures to sharpen strategic focus, while international buyers sought partnerships with UAE champions to accelerate regional market entry. The “partner-of-choice” dynamic — pairing regional capital and market access with international operating expertise — continued to underpin complex bilateral deals, frequently combining minority and majority structures with earn-outs and governance frameworks designed for long-term alignment.

The UAE is also increasingly looking for a value-add component from its outbound investments — that is, what their international targets can bring back into the UAE. This is particularly prevalent in the technology and processing sectors as the UAE seeks to diversify its economy and become a manufacturing hub for the region. This leads to complex transactions involving the licensing of technologies into regionally-based joint ventures where proprietary technology and underlying intellectual property ownership become core to the transaction.

Sector themes: energy transition, digital infrastructure and consumer scale-ups

Energy transition and industrials

Transactions in energy transition, decarbonisation services, water, waste and broader industrial greentech reflected a pragmatic focus on cash-generative platforms with long-term offtake, backed by government strategy (including net-zero targets) and industrial localisation.

Digital infrastructure and technology

Data centres, cloud-enabling assets, cybersecurity and applied AI remained active as buyers prioritise resilient revenue, mission-critical services and contractual visibility. This is underpinned by the UAE National Digital Economy Strategy and UAE AI Strategy 2031, with government driving the delivery of core infrastructure to facilitate a wider private-sector digital economy and ecosystem.

Healthcare, education and consumers

Demographic growth, premiumisation and private-pay resilience supported consolidation plays and build-and-buy strategies, with value creation anchored in operating efficiency, network effects and brand expansion.

Capital supply: sovereign, family offices and sponsors

The UAE’s capital stack remained supportive throughout 2025, with sovereign and government-related investors catalysing platform formation, co-investment and large-ticket acquisitions across priority sectors.

Family offices remained nimble, participating in club deals and growth equity rounds, while private equity sponsors emphasised operational value-creation, structured minority positions and sophisticated downside protection where appropriate.

Global managers continued to expand their on-the-ground presence in the financial freezones (ADGM and DIFC), including global capital-raising and deployment players such as BlackRock, KKR and Stonepeak, further deepening liquidity and deal origination channels across the region.

Cross-border dynamics: inbound confidence and regional scaling

Inbound strategic acquirers continue to view the UAE as a launchpad for MENA expansion, balancing market access with favourable regulatory environments in leading free zones. Outbound UAE acquirers have been targeting know-how and technology in Europe, the United Kingdom and North America, often pairing M&A with commercial partnerships, licensing and JV structures to accelerate localisation and route-to-market.

UAE as a global financial centre

The UAE’s ascent as a true global financial centre has been accelerating, underpinned by the scale and sophistication of Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC), continued regulatory modernisation, and the clustering of international banks, private capital and asset managers.

The arrival and expansion of leading U.S. private equity, AIFs and hedge fund platforms, including groups such as BlackRock, KKR, Blackstone, Stonepeak, General Atlantic and Brevan Howard (to name but a few), has reinforced the UAE’s role as a hub for capital deployment, co-investment and portfolio management, with leadership teams increasingly relocating investment, operations and risk functions to the region.

This institutional depth is translating into broader financing options, more competitive auction dynamics and expanded exit pathways for sponsors and founders.

Public markets and private pathways

Public market optionality remained relevant to price discovery and exit planning, but many boards continued to prefer private routes for speed and certainty, especially for complex carve-outs and cross-jurisdictional combinations. For IPO-ready assets, preparatory work on governance, reporting and capital structure remains a priority to preserve flexibility, while sponsors continue to explore dual-track processes to optimise outcomes.

Regulatory and policy environment: clarity enabling execution

The UAE’s policy environment remained focused on investment facilitation, ease of doing business and regulatory clarity across corporate, financial services and innovation-led sectors. Changes to the onshore Companies Law framework facilitating multiple classes of shares and more flexible ownership structures are aligning UAE corporate architecture with internationally accepted investment norms for global private equity houses.

Together with continued enhancements across ADGM and DIFC regimes and a broader policy goal of attracting foreign investment, deal execution is benefiting from more predictable timelines, well-developed free-zone regimes and increasingly sophisticated approaches to economic substance (through a developing corporate tax regime), data governance and sectoral licensing factors that collectively reduce friction in due diligence and closing mechanics.

Risk allocation and documentation trends

Negotiations have shown continued discipline on MAC, warranty scope and duration, and the use of hybrid security packages, while representations and warranties (R&W) insurance remains an increasing important tool for bridging gaps and enabling competitive bids (with generally decreasing insurance premiums reflecting an uptick in appetite). Earn-outs and completion mechanics are tailored to reflect performance visibility, with special attention to inflation pass-through, supply chain resilience and regulatory milestone timing in regulated sectors.

Looking ahead: disciplined optimism

Heading into 2026, UAE dealmakers are balancing disciplined optimism with preparedness for macro variability. Priority sectors retain strong structural drivers, and the region’s depth of capital supports continued activity in scale acquisitions, platform consolidation and cross-border partnerships.

Execution success will hinge on rigorous diligence, pragmatic structuring, and a clear value-creation thesis principles that served acquirers and sellers well through 2025 and are set to guide decision-making in the year ahead.