UAE merger activity dropped 37% in the first quarter of 2026, falling to just 33 deals worth US$2.2bn. Yet the decline masks a more complex reality: investors aren’t retreating—they’re recalibrating.
According to Ansarada’s latest Middle East M&A Market Analysis, the broader region recorded 196 announced transactions valued at US$23.3bn during Q1, down from 207 deals worth US$31.3bn in the same period last year. The UAE’s sharper decline—from 52 deals in Q1 2025 to 33 this year—reflects what Justin Smith, managing director at the AI-powered virtual data room platform, characterised as a strategic pause rather than a crisis of confidence.
“While volatility continues, there’s a lot of dry powder out there waiting for the right time, while deals already in motion continue to progress with more rigorous diligence,” Smith said. “The fundamental strategic drivers for M&A in the UAE remain strong, and dealmakers have to become more accustomed to operating in a new normal of volatility.”
That dry powder—undeployed capital sitting in private equity funds and sovereign wealth vehicles—represents billions waiting for clarity. The timing matters. Regional geopolitical tensions have stretched due diligence timelines and made risk assessment more complex, but they haven’t fundamentally altered the region’s appeal as an M&A hub.
Across the wider Gulf, the picture varied. Saudi Arabia recorded 24 announced deals in Q1, up slightly from 23 during the same quarter last year. Oman logged seven transactions valued at US$535m, whilst Qatar recorded four deals and Kuwait notched three worth US$24m. The divergence suggests that whilst the UAE saw capital pull back temporarily, neighbouring markets absorbed some of that activity—or simply operated on different timelines.
Sovereign wealth funds acted as ballast. Their presence in multiple transactions throughout the quarter provided the kind of patient capital that doesn’t flinch at short-term volatility. These state-backed vehicles continue pursuing long-term infrastructure priorities and national transformation agendas—Saudi Arabia’s Vision 2030 being the most prominent example—that operate independently of quarterly market sentiment.
“The conflict may be reshaping deal timelines, but it’s not reshaping the region’s thirst for ongoing M&A activity,” Smith noted. “We remain confident in the long-term health of deal activity in the UAE, which we view as an enduring and critical hub for M&A in the region and beyond.”
By sector, the picture shifted dramatically. Technology dominated by volume, capturing 68 deals worth US$7.3bn as investment poured into artificial intelligence, fintech and enterprise software. Transportation led by value with US$8.2bn spread across just nine transactions—suggesting large-scale infrastructure projects rather than scattered smaller deals. Energy and natural resources contributed US$2.2bn across 18 transactions, whilst healthcare recorded US$1.9bn across 19 deals as Gulf governments continued expanding medical capabilities. Industrials generated US$1.6bn through 23 deals, driven by ambitions to build domestic manufacturing capacity.
The technology sector’s resilience stood out. Sixty-eight deals suggests dealmakers in AI and fintech largely ignored the broader hesitation, continuing to pursue targets despite regional uncertainty. That concentration of activity points to sectors where strategic imperatives—digital transformation, financial services modernisation—outweighed geopolitical concerns.
Ansarada, which operates an AI virtual data room platform educated on more than 60,000 transactions across 170 countries, positioned the Q1 figures within a longer narrative of regional economic resilience. The Gulf Cooperation Council’s track record during COVID-19—when deal activity slowed but didn’t collapse—offered a precedent for how sovereign wealth-backed economies navigate external shocks.
Middle Eastern acquirers continued pursuing outbound transactions and international partnerships throughout the quarter, the report noted. That outward focus reflected sustained confidence in the region’s capital strength and strategic positioning, even as inbound activity moderated. For Gulf-based investors, diversification increasingly meant looking beyond regional borders—a trend that Q1’s figures suggested would persist.
Smith also highlighted how technology infrastructure itself becomes critical during periods of uncertainty. “Periods of uncertainty place enormous pressure on execution certainty,” he said. “Companies and investors require real-time visibility into risk, compliance and diligence readiness. Virtual data room platforms such as Ansarada are helping dealmakers manage complexity, maintain momentum and execute transactions with greater confidence and efficiency.”
The UAE’s 37% decline in deal volume tells part of the story. The US$23.3bn in regional activity tells another. Between those figures lies the reality of dealmakers weighing risk against opportunity, recalibrating timelines without abandoning strategies, and waiting for the right moment to deploy capital that remains substantial.
Whether that moment arrives in Q2 or later in 2026 will depend on factors largely beyond dealmakers’ control—the trajectory of regional tensions, oil price stability, and broader economic conditions. What appears clear from Q1’s figures is that the appetite for transactions hasn’t disappeared. It’s simply become more selective, more patient, and more dependent on execution certainty than it was twelve months ago.
For now, the dry powder sits ready. The question isn’t whether it will be deployed, but when conditions align sufficiently for those holding it to move.
