LEBANON Trends and Developments Contributed by: Joseph Nasrallah, Jad Skaff and Mia Chbeir, HNS Legal
Impact of local and international policies IMF relationship Since 2020, Lebanon has intermittently negotiated with the International Monetary Fund (IMF) over a bailout programme. While partial accords empha - sise structural reforms, including improved govern - ance and financial sector audits, implementation has stalled. In principle, an IMF agreement could unlock billions in international aid, significantly enhancing investor confidence. Until that happens, M&A trans - actions remain overshadowed by uncertainty about future regulations, capital controls and economic sta - bilisation measures. International sanctions Various individuals and entities in Lebanon have been sanctioned by foreign governments, particularly the US, due to alleged links with terrorist organisations or corruption networks. Such sanctions increase compliance costs for foreign investors, as they must ensure target companies have no hidden ties to sanc - tioned individuals or entities. As a result, deal time - lines lengthen, and thorough due diligence becomes essential, adding another layer of complexity to the M&A process. In conclusion, the question remains: where does all this leave Lebanon’s M&A market? It is a complicat - ed picture, full of both opportunities and significant challenges. Since the 2019 crisis, the country’s finan - cial system has been severely affected, putting local businesses and potential foreign investors to the test. Political gridlock, economic instability and currency volatility have taken a toll on transaction volumes. However, distressed valuations are creating open - ings for investors, particularly in the technology, real estate and healthcare sectors, where growth potential remains. At present, however, transaction activity is increasingly conditioned on security developments. Investors are not only assessing regulatory and financial reforms, but also the stability of the operating environment. The timing, valuation and completion of transactions often depend on an absence of escalation and the predict - ability of business operations, making security condi - tions a central factor in investment decision-making.
Political developments have also influenced inves - tor expectations. The election of President Joseph Aoun in 2025 generated cautious optimism regarding institutional stabilisation. Moreover, with parliamen - tary elections scheduled for May 2026, certain inves - tors have positioned themselves in anticipation of a potential “stability premium”, expecting valuations to increase should reforms materialise. Recent hostilities have further increased uncertainty in the market. The additional layer of risk affects inves - tor confidence and deal flow in the short term, while reconstruction priorities and shifting economic focus may delay recovery. The impact varies across sectors, but overall recovery prospects remain linked to both institutional reform and stability conditions. If Lebanon manages to implement effective regulatory reforms, confidence could gradually improve. Modern - ising corporate laws, strengthening governance and clarifying capital movement rules remain important. An agreement with the IMF, combined with transpar - ent banking sector restructuring, could unlock financ - ing and support investor sentiment. In the meantime, investment is likely to remain driven primarily by the Lebanese diaspora and selective foreign inflows. Moving forward, parties seeking to complete transac - tions in Lebanon will need to structure deals carefully, conduct enhanced due diligence and remain prepared to navigate political and economic uncertainty. The post-2019 crisis environment, compounded by recent hostilities, creates substantial risks but also encourag - es the emergence of lean, technology-oriented busi - nesses capable of expanding once stability improves. Strategic use of M&A, whether for consolidation, dig - ital transformation or market expansion, may allow businesses not only to endure current conditions but also to position themselves for long-term growth. The future of Lebanon’s M&A market will therefore depend on a combination of reform implementation and security stability. Investors willing to navigate short- term uncertainty may find opportunities, but sustained transaction growth will ultimately require a predictable operating environment. The market remains active, though cautious, and its trajectory will evolve alongside broader economic and security developments.
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