United Arab Emirates – 28 August 2023 - Leading global professional services firm Alvarez & Marsal (A&M) today unveiled the Q2 2023 edition of its Middle East Turnaround and Restructuring Survey. The report indicates that Gulf CEOs and business leaders who participated in the survey are feeling lower levels of concern about the economic environment, while still acknowledging continued headwinds around cost of capital and inflation.

The key findings from the survey include:

• The number of respondents who foresee a deterioration in the macro-economic climate over the next 12 months has fallen from 75 percent to 48 percent. The main areas of concern remain cost of capital and inflation.

• Although lower than the Q1’23 survey, a significant majority (70 percent) of respondents still expect an increase in the number of distressed businesses over the next year.

• Almost unchanged was the number of respondents (73 percent) who advocate that financial restructuring should be accompanied by operational restructuring. Similarly consistent is the number who say that this is not frequently happening (76 percent).

• Tax and regulatory changes were identified by 27 percent of respondents as a business challenge, perhaps unsurprisingly given the introduction of the Corporate Tax in the United Arab Emirates (UAE).

• While the outlook for most sectors appears to have improved, retail remains a key sector of concern, with 69 percent of respondents anticipating continued pressures due to tightening consumer wallets and the ongoing shift to digital platforms.

As noted above. while almost three quarters of respondents emphasised the need for operational restructuring alongside a financial restructuring, fewer than a quarter reported frequently witnessing it in practice. Repayment extension and temporary relief were identified as more common outcomes than formal debt restructuring.

Paul Gilbert, Managing Director, and Co-Head of Alvarez & Marsal in the Middle East, commented: “The survey suggests that, while there is less concern (or perhaps more understanding and acceptance) of the macro-economic environment, there remain many business that are likely to become stressed or distressed in coming months. Cash and liquidity management, cost reduction, digitalisation enhancements and revenue/sales improvement were identified by respondents as top priorities. A period of higher interest rates than businesses have experienced in recent years combines with an anticipation by respondents of a stricter stance among lenders toward businesses engaging in perpetual restructuring without a clear repayment strategy.”

The Survey series aims to help businesses and restructuring and law specialists to keep a finger on the pulse of anticipated trends and be prepared to act. A&M surveyed C-suite executives based in the UAE, Kingdom of Saudi Arabia, Qatar, Oman, Kuwait, and Bahrain.

About Alvarez & Marsal

Companies, investors and government entities around the world turn to Alvarez & Marsal (A&M) for leadership, action and results. Privately held since its founding in 1983, A&M is a leading global professional services firm that provides advisory, business performance improvement and turnaround management services. When conventional approaches are not enough to create transformation and drive change, clients seek our deep expertise and ability to deliver practical solutions to their unique problems.

With over 8,000 people across six continents, we deliver tangible results for corporates, boards, private equity firms, law firms and government agencies facing complex challenges. Our senior leaders, and their teams, leverage A&M’s restructuring heritage to help companies act decisively, catapult growth and accelerate results. We are experienced operators, world-class consultants, former regulators and industry authorities with a shared commitment to telling clients what’s really needed for turning change into a strategic business asset, managing risk and unlocking value at every stage of growth.

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