LEBANON Law and Practice Contributed by: Joseph Nasrallah, Jad Skaff and Yasmina Ballout, HNS Legal
HNS Legal 3221 Bldg, Presidential Palace Rd., Baabda, Lebanon Tel: +961 5 455 199 Email: info@hnslegal.com Web: www.hnslegal.com
1. Trends 1.1 M&A Market
1.2 Key Trends M&A activity continues to function primarily as a restructuring mechanism. Transactions focus on stabilising operations and rationalising costs, rather than expansion. Groups are increasingly streamlining to eliminate operational duplication – a logic that has driven defensive deals across several sectors. In this context, fiscal incentives remain a key driv - er for these moves. Ministry of Finance Decision No 907/2023 provides income tax exemptions and reduced rates on fixed asset revaluation, offering a practical pathway for balance-sheet management. A rising trend of “carve-outs” has also emerged, where diversified conglomerates divest non-core Lebanese assets to focus on regional growth or to settle local liabilities. Looking ahead, the banking sector remains the antici - pated catalyst for future deal flow. Under the Law on the Reform and Restructuring of the Banking Sector in Lebanon No 23/2025 (the “Banking Reform Law”), consolidation is no longer solely left to the initiative of banks. The law formally empowers a bicameral Higher Banking Commission (HBC) to determine, oversee and implement the restructuring, merger, or liquida - tion of institutions. Overall, the market reflects strategic re-calibration and portfolio optimisation rather than organic expansion. 1.3 Key Industries M&A activity has been concentrated in sectors dem - onstrating relative resilience and operational adapt - ability despite Lebanon’s economic constraints.
The Lebanese M&A market remains cautious and constrained rather than expansionary compared to 12 months ago. Activity has stabilised, but has not materially accelerated, and transactions continue to take place within an environment shaped by banking sector dysfunction, currency volatility, and geopolitical uncertainty. Deals are thus primarily equity-funded, often support - ed by offshore liquidity, with limited use of leverage. Acquisition structures remain conservative. Investors avoid financing exposure and instead rely on deferred consideration, most commonly through earn-outs. In large and cross-border transactions, parties may also seek international warranty and indemnity insurance to mitigate the risk of contingent liabilities. Against this backdrop, regulatory measures encour - aging corporate consolidation, including favourable tax treatment for qualifying mergers under the Budget Law (Law No 10/2022), as implemented by Ministerial Decision No 907/2023, (the “2022 Budget Law”), have introduced a tax framework facilitating restructuring transactions. At the same time, Competition Law No 281/2022 (the “Competition Law”) has formally introduced a merger control regime, adding a layer of procedural consideration for certain transactions. However, these regulatory developments have not materially altered deal flow.
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