Corporate Leverage and Strategic Choices in Mergers and Acquisitions: Evidence from the United Arab Emirates

Abstract

Mergers and acquisitions (M&A) are a vital component of corporate strategy, particularly in dynamic and developing markets such as the United Arab Emirates (UAE). This paper investigates the influence of corporate leverage on strategic choices made during M&A transactions among UAE-based firms. Using empirical evidence from major deals conducted between 2015 and 2023, the study analyzes how leverage levels affect target selection, deal structuring, and post-acquisition integration. It finds that highly leveraged firms tend to pursue asset-light targets, adopt conservative financing structures, and focus on synergies that offer rapid returns on investment. Conversely, firms with lower leverage demonstrate greater strategic flexibility and willingness to undertake riskier acquisitions. The findings have important implications for corporate governance, financial planning, and policy formulation in emerging economies.