Companies in GCC states likely to consolidate amid COVID-19: KPMG | ZAWYA MENA Edition

Companies in GCC states likely to consolidate amid COVID-19: KPMG | ZAWYA MENA Edition:

Companies in the Gulf Cooperation Council (GCC) region are expected to consolidate as the downturn caused by the coronavirus pandemic continues to deepen, global audit, tax and advisory firm KPMG said on Tuesday.

Several small and medium enterprises (SMEs), as well as large companies in the region are likely to raise cash to keep the business going, hence merger and acquisition (M&A) activity in Saudi Arabia and other Gulf countries will pick up, according to Ali Maabereh, head of M&A at KPMG in Saudi Arabia.

“The current pandemic is creating a lot of uncertainties and contradictions in what to expect after the dust settles. The expected key impacts on companies are shortages of liquidity and working capital requirements. Though companies might be running a healthy profit and loss, there will be significant pressure on working capital requirements,” he added.

The deals will most likely be in favour of the buyers, and companies who are looking to consolidate will likely accept a low valuation.