TRANSACTIONS AND M&A

Key Considerations in Evolving Market Conditions

by Naji Khairallah

For live transactions, parties may wish to consider whether valuation assumptions, conditions precedent, financing arrangements and regulatory approvals may be affected.

Transactions and M&A activity across the UAE and wider region continues to demonstrate resilience. However, periods of evolving market conditions often prompt businesses, investors and sponsors to reassess how transactions are structured, negotiated and executed in practice.

While the UAE remains a stable and well-regulated business environment, organisations involved in acquisitions, disposals or strategic investments may nevertheless wish to consider how changing operating conditions could affect deal timelines, valuation assumptions, financing arrangements and overall transaction certainty.

In particular, market participants are increasingly focused on how risk is allocated between parties, how contractual protections operate in practice, and how transactions can be structured to accommodate potential disruption without undermining deal value or execution.

Against this backdrop, a number of key considerations are emerging across live transactions and deal pipelines.

1. Deal Timelines and Execution Risk

Transaction timetables are often sensitive to a range of external factors, including regulatory processes, third-party consents, financing arrangements and operational considerations.

Where conditions are evolving, parties may wish to assess whether agreed timelines remain achievable and whether transaction documentation provides sufficient flexibility to accommodate potential delays.

Particular attention is often given to:

• the scope and timing of conditions precedent, including regulatory approvals and consents
• the interaction between long-stop dates and deal certainty
• interim operating covenants and restrictions between signing and completion
• the potential for delays in satisfaction of closing conditions

In some cases, parties may seek to renegotiate timelines or introduce additional flexibility into transaction documentation to reflect changing circumstances.

Careful structuring of completion mechanics can help manage execution risk and reduce the likelihood of transactions failing to complete.

2. Valuation and Pricing Considerations

Market conditions may also influence valuation assumptions and pricing expectations between buyers and sellers.

Where there is uncertainty around future performance, revenue projections or cost structures, parties may wish to consider whether pricing mechanisms appropriately reflect that uncertainty.

Common approaches include:

• earn-out arrangements, linking consideration to future performance
• deferred consideration structures, spreading payments over time
• completion accounts or price adjustment mechanisms, ensuring alignment between agreed value and actual financial position
• increased scrutiny of working capital, liquidity and cashflow assumptions

These mechanisms can help bridge valuation gaps and facilitate transactions where parties have differing views on future performance.

However, they also introduce additional complexity and require careful drafting to minimise the risk of post-completion disputes.

3. Financing and Funding Certainty

Access to financing is a critical component of many transactions, particularly in leveraged acquisitions and private equity transactions.

In periods where lending conditions may evolve, parties may wish to assess whether financing arrangements remain robust and whether any conditions attached to funding could impact deal execution.

Key considerations include:

• lender approvals and internal credit processes
• conditions to drawdown and availability of funds
• potential changes in lending appetite, pricing or terms
• the interaction between financing conditions and transaction documentation
• financing-related termination rights

Early engagement with lenders and alignment between financing arrangements and transaction documentation can help enhance deal certainty and reduce execution risk.

4. Material Adverse Change and Risk Allocation

Material adverse change (MAC) clauses and related deal protection provisions remain a central feature of transaction negotiations.

These provisions are designed to allocate risk between parties in the period between signing and completion, and may allow a party to terminate or renegotiate a transaction if certain adverse developments occur.

However, MAC clauses are typically interpreted narrowly and depend heavily on their drafting.

Parties may wish to consider:

• how MAC provisions are defined and triggered
• whether specific risks are included or carved out
• how MAC clauses interact with termination rights and conditions precedent
• the broader allocation of risk between buyer and seller

In practice, there is often increased focus on tailoring these provisions to reflect specific commercial risks relevant to the transaction.

5. Regulatory Approvals and Cross-Border Considerations

Regulatory approvals are increasingly a key factor in determining transaction timelines and execution risk, particularly in cross-border transactions.

In the UAE, the evolving merger control regime and broader regulatory landscape mean that parties may need to consider whether approvals are required and how long those processes may take.

Key considerations include:

• whether merger control filings or other regulatory approvals are required
• anticipated timelines for regulatory review and approval
• foreign investment and cross-border regulatory considerations
• potential sanctions or trade-related restrictions
• allocation of regulatory risk within transaction documentation

Early identification of regulatory requirements can help avoid delays, manage execution risk and ensure that transaction timelines remain realistic.

Due Diligence and Risk Identification

Due diligence processes may also need to adapt to reflect current operating conditions.

In addition to standard legal, financial and commercial diligence, parties may wish to adopt a more targeted approach to identifying risks that could affect valuation, execution or post-completion integration.

Areas of focus may include:

• supply chain resilience and operational dependencies
• key customer and supplier relationships
• contractual protections and termination exposure
• financial stability and liquidity
• compliance, regulatory and dispute-related risks

A structured and risk-based approach to due diligence can help identify issues early and inform transaction structuring and negotiation strategy.

A Structured Approach to Transaction Risk

Taken together, these considerations highlight the importance of adopting a structured and proactive approach to managing transaction risk.

While each transaction will present its own specific considerations, early identification of key risks and careful alignment between commercial objectives and legal documentation can help support successful deal execution.

In many cases, proactive engagement between parties, supported by clear documentation and careful risk allocation, can help preserve deal value while managing uncertainty.

How CVML Can Assist

CVML advises regional and international clients on all aspects of transactions and M&A, including acquisitions, disposals, joint ventures and strategic investments.

Our team works closely with clients to:

• assess transaction risk and deal structuring considerations
• advise on contractual protections and risk allocation
• navigate regulatory and cross-border requirements
• support transaction execution and completion

If you or your organisation would like to discuss any aspect of this guidance note further, please don’t hesitate to reach out to your usual CVML contact, or email:

Naji Khairallah, Partner, CVML (n.khairallah@cvml.ae)