The MENA exit playbook: turning liquidity into legacy

Abdullah Mutawi

Partner and Head of Corporate, MENA

Samy Elsheikh

Senior Associate

In every venture journey, the measure of success is not simply growth but liquidity – the point at which years of risk, capital, and execution convert into realised value. For founders, it’s the validation of vision and effort. For investors, it’s the return on conviction.

Yet in the Middle East, the path to liquidity is distinctive. The region’s exits are shaped by an evolving legal landscape, multijurisdictional corporate structures, and a regulatory environment still converging with global norms. Transactions often require as much diplomacy as they do documentation.

The good news is that the ecosystem is maturing quickly. Sovereign funds, regional exchanges, and sophisticated capital providers are redefining what successful exits look like. Each transaction builds precedent, strengthens investor confidence, and expands the region’s playbook for liquidity.

This article sets out the strategic and legal frameworks founders and investors need to understand to position their companies for successful exits in the MENA region.

The MENA exit spectrum: global forms, regional realities

The familiar exit routes – IPOs, M&A sales, and secondary transactions – all exist in the region, but each behaves differently.

Initial public offerings (IPOs)

Regional exchanges such as Tadawul, ADX, and EGX are actively developing growth-market segments and tech-friendly listing rules. The frameworks are promising but less tested than NASDAQ or the LSE. Liquidity remains narrower, and disclosure and lock-up rules can be more restrictive. Preparing for a regional IPO requires founders to think two years ahead: embedding governance, IFRS reporting, and investor relations disciplines early.

M&A transactions

Trade sales remain the most common exit path. Acquirers are often regional conglomerates, sovereign-linked entities, or family groups rather than multinational strategics. Their appetite for consolidation is strong, but execution is complicated by foreign-ownership limits, licensing transfers, and antitrust filings. Cultural and decision-making dynamics also play a significant role in timeline and pricing.

Secondary sales

Once rare, secondaries are now central to the region’s liquidity story. They provide partial exits for founders and early funds while allowing later-stage or private equity (PE) investors to enter. However, these transactions frequently trigger approval requirements under local company laws or free zone regulations. Clean corporate structuring and early regulatory mapping are key to making them work.

Structuring for exit: offshore logic, onshore reality

The vast majority of venture-backed MENA companies are held through offshore vehicles – most commonly in ADGM, DIFC, Cayman, or BVI – to provide predictability and investor comfort. But an offshore wrapper does not replace local compliance.

At exit, buyers and regulators will still scrutinise:

licensing and foreign-ownership compliance for operating subsidiaries
approvals from sector regulators or economic departments
ultimate beneficial ownership (UBO) and substance filings.

Founders should think of structure as a dual-system design: offshore law provides contractual certainty, while onshore governance determines enforceability. Success lies in drafting and managing both systems simultaneously.

The legal infrastructure challenge

In established markets, standardised documentation (NVCA, BVCA) and predictable enforcement create frictionless exits. MENA’s legal diversity is less forgiving. Common-law jurisdictions like ADGM and DIFC coexist with civil-law and Sharia-influenced systems.

This fragmentation has three implications for exits.

Contractual enforcement risk: Local courts may resist enforcing drag-along or compulsory sale provisions if perceived to prejudice minority shareholders or employment interests.
Regulatory uncertainty: Competition, data protection, and foreign-investment regimes are evolving and often interpreted differently between regulators.
Executional complexity: Notarial procedures, split signing and completion, and power-of-attorney logistics can add weeks to timelines.

For founders, understanding these constraints early allows structuring of shareholder agreements and sale processes that are both globally credible and locally executable.

Preparing for liquidity: lessons from our Founders' Guide

While the legal environment defines the boundaries, deal readiness determines success. Drawing on Taylor Wessing’s Founders' Guide to Selling Your Company, the essentials are:

Corporate housekeeping: Up-to-date registers, IP assignments, clear employment contracts, and formalised commercial relationships.
Vendor due diligence: Proactively identify issues before the buyer does; this strengthens valuation and shortens timelines.
Cap table clarity: Model return waterfalls and consent requirements early; identify where drag-along rights or liquidation preferences may misalign stakeholders.
The advisory team: Choose financial and legal advisers who are experienced in regional exits and comfortable managing both offshore and onshore elements.

In short, founders who behave like sellers long before they sell achieve smoother outcomes and higher multiples.

The investor’s lens: designing for liquidity

Investors entering MENA deals draft exit mechanics carefully to compensate for enforcement uncertainty. Drag-along rights, tag-along rights, and liquidity event provisions are central, but their practical success depends on dual-jurisdiction execution.

Best practice includes:

governing the shareholders’ agreement under a recognised offshore law (eg, ADGM or Cayman) to ensure enforceability
linking contractual rights to realisable mechanisms in local entities (eg, powers of attorney or call options)
defining clear valuation and consent thresholds to avoid disputes at sale.

A well-drafted drag-along provision may be the difference between a clean sale and a stalemate involving multiple shareholder factions.

The deal process: managing complexity

Running a process

Competitive auction processes are now common in the region. They create price tension and control but require careful management of confidentiality – especially with strategic bidders who may also be competitors.

Regulatory timelines

Competition filings in Saudi Arabia, the UAE, and Egypt can take 60-90 days and must often be completed before closing. Split signing and completion, with escrow arrangements, are standard practice to manage this risk.

Warranty and indemnity (W&I) insurance

W&I insurance is rapidly becoming the default mechanism for balancing risk between buyers and sellers. A thorough due diligence package allows insurers to underwrite risk efficiently, giving founders a cleaner exit and buyers contractual certainty.

Execution mechanics

Closing in MENA often involves notarisation, licence transfers, and post-completion filings. These procedural steps should be built into the project plan from the outset; ignoring them can jeopardise deal timing and investor confidence.

Understanding the buyer universe

Strategic buyers

Strategic acquirers buy for synergies and control. They may pay higher valuations but typically integrate operations quickly. Founders staying on should negotiate clear roles, autonomy, and measurable earn-out targets backed by contractual obligations on the buyer.

Private equity buyers

PE investors bring financial discipline and a defined exit horizon. Expect to reinvest part of proceeds (the 'institutional strip') and operate within detailed governance frameworks. Leaver provisions, vesting schedules, and restrictive covenants should be negotiated carefully to align incentives.

US and cross-border buyers

US acquirers often bring more onerous completion conditions, prefer completion-accounts pricing and larger escrows, and are less familiar with local processes. Bridging these differences requires early education and, where possible, hybrid structures combining locked-box pricing with limited post-closing adjustments.

The future of exits in MENA

The MENA venture ecosystem is no longer defined by aspiration; it is now producing repeatable exit outcomes. Regional exchanges are deepening liquidity, sovereign funds are anchoring late-stage rounds, and private markets are developing secondary channels for founder and investor liquidity.

Each transaction sets precedent and moves the region closer to global norms of predictability and sophistication. Legal frameworks are converging, but success will continue to depend on rigorous structuring and disciplined execution.

Key takeaways
Phase	Founders should focus on	Investors should focus on
Preparation	Governance, IP, due diligence readiness, and shareholder alignment	Drafting clear exit provisions enforceable under dual jurisdictions
Structuring	Balancing offshore efficiency with onshore compliance	Ensuring enforceability and regulatory mapping
Deal execution	Managing process, timing, and disclosure	Deploying W&I insurance and anticipating local approvals
Completion and post-closing	Executing filings, licences, and UBO updates	Monitoring integration and ensuring contractual protections

Conclusion

Liquidity in the MENA region is attainable but requires forethought. The most successful founders treat structure as strategy and plan for exit from day one. The most effective investors build enforceability and alignment into every term sheet.

As the ecosystem matures, exits will continue to shift from complex exceptions to well-trodden precedents. With careful design, informed advisers, and proactive legal planning, founders and investors alike can turn liquidity from an aspiration into an achievable endgame.