The US Government’s Debt-to-GDP Ratio Is Worse Than Greece’s Before the 2008 Crash

The US Government’s Debt-to-GDP Ratio Is Worse Than Greece’s Before the 2008 Crash

The USA’s Debt-to-GDP Ratio is rising. The managing editor of the Foundation for Economic Education (FEE), Jonathan Miltimore, quotes our managing director, Joshua Jahani.

Global Trade Analysis: MENA, UAE, and KSA 

Global Trade Analysis: MENA, UAE, and KSA

MENA Imports and Exports

This article focuses on imports and exports for the MENA region as they relate to other major economies, the role of the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) in the region, the region’s fuel dependency, the region’s growing focus on food independence, and finally the Gulf Cooperation Council’s (GCC) role for the MENA region and across the world.

The data and analysis contained within this article are taken from the World Bank, World Customs Organization nomenclature, sector classifications for the harmonized system, the International Monetary Fund, the United Nations, the Food and Agricultural Organization of the United Nations, and J&A’s own market intelligence.

The MENA Region Competes With China and the USA on Gross Import and Export Volume

  • The MENA region’s imports and export are approximately half the volume of the USA and China.
  • The MENA region imports approximately 50% as many goods as China.
  • The MENA region exports approximately 60% as many goods as the USA.

MENA Exports Are Steadily Expanding Across All Categories

  • Fuel represents approximately 50% of MENA’s exports, concentrated regionally in just a few countries. This will be discussed in part three of this series.
  • Fuel exports have been steadily increasing from the MENA region since 2015.
  • Only miscellaneous categories of exports have decreased since 2015, suggesting a focusing of MENA economies. Miscellaneous exports include items like watch pieces.

MENA Imports Raw Materials More Than Any Other Category, Suggesting a Focus on Regional Manufacturing

  • The steady decrease of MENA imports coupled with the steady increase of exports is good news for MENA countries seeking self-sufficient economies.
  • Raw materials are a large portion of MENA’s imports, suggesting a focus on refinement and manufacturing for the region.
  • 2018 showed the lowest total imports since 2015.

The chart below identifies the type of products associated with each import and export category based on World Bank nomenclature.

MENA’s trade position is unique when compared to China and the USA. MENA’s dominance is driven by the presence of oil, a natural resource. The USA and China’s imports and exports are not driven by a natural resource and are therefore more easy to replicate. If the MENA countries successfully diversify their economies, the region can become an increasingly powerful player by building on this natural resource foundation and then competing with other regions on services, technology, and other high-growth sectors. Due to current reforms in major MENA countries, the region is actively accomplishing this.

The MENA region is a gateway between the growing economies of Africa and Southeast Asia and more stabilized regions such as North America and Europe. This gives the region a strong value-added position when participating in trade between these other parts of the world.

UAE and KSA Imports and Exports

The Kingdom of Saudi Arabia (KSA) and the United Arab Emirates (UAE) are the two most dominant countries in the MENA region. These countries possess advantageous economic, cultural, financial, trade, and religious positions. The countries also represent almost half of the imports and exports for the entire region.

The UAE and KSA Make up 50% of MENA’s Imports and Exports

  • The UAE and KSA are the most dominant players in MENA, accounting for over 50% of the region’s imports and exports.
  • Exports for the UAE, KSA, and MENA region have been steadily increasing while imports have been steadily decreasing, suggesting increasing independence of MENA economies.

The UAE and KSA Are Relatively Equal When It Comes to Import Diversity

  • The UAE and KSA import goods and services in relatively equal proportions.
  • The UAE imports more than KSA by approximately 60%.
  • Both the UAE and KSA import and export transportation, machinery, and raw materials more than any other category.

KSA Dominates the Region’s Fuel Exports; the UAE Leads in Transportation Exports

  • KSA is by far the region’s leader in fuel exports, which serve as a major differentiator for the country and economy; there has been no year since 2015 where the UAE exported more fuels than KSA.
  • Fuel is less than 50% of the UAE exports on average while fuel makes up nearly 80% of KSA’s exports in any given year.
  • KSA’s second most common export is raw materials, accounting for approximately 10% of the kingdom’s exports.

The UAE and KSA are the most dominant players in the MENA economy. They account for the majority of imports and exports as well as most of the region’s economic activity. The UAE has been removing barriers to trade that are not tariff-related, such as allowing expedited customs and the use of technology to create more efficient government organizations. KSA has recently started opening trade policies that reflect UAE standards.

Fuel Dependency in the MENA Region

Fuel has been, is, and will continue to be the MENA region’s most dominant export category. MENA countries export nearly 40% of the world’s fuel supply, and fuel makes up approximately 50% of the region’s exports. Global consumption of fuel has allowed the MENA region to grow in power over the last 50 years. However, these opportunities bring risks; fuel volatility can affect the region disproportionately to other more diversified economies. Therefore, the MENA countries are seeking immediate diversification.

Today, the MENA Region Is Dependent on Fuel Exports

  • Fuel is consistently just over 50% of the entire MENA region’s exports.
  • There are major government initiatives within all MENA countries to continue diversifying their economies away from fuel dependence.
  • In 2020, fuel remained the region’s top export.

KSA Is More Dependent on Fuel Exports Compared to Other MENA Countries, Including the UAE

  • Fuel is approximately 80% of KSA’s yearly exports.
  • Saudi Arabia’s 2030 vision is to reduce KSA’s dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation, and tourism.
  • Saudi Arabia’s economic evolution will also come with political considerations, as the kingdom continues to enhance its global positioning.

The UAE Is Least Dependent on Fuel as Its Major Export Compared to Other MENA Countries

  • Fuel is approximately 20% of the UAE’s yearly exports.
  • This is a result of the UAE’s ability to diversify its economy and increase its services, technology, and trading value.
  • The UAE’s investment in free zones and open economic policies have attracted businesses to the region. These free zones include Abu Dhabi Global Markets (ADGM), Dubai International Financial Centre (DIFC), Dubai Multi-Commodities Centre (DMCC), and many more with specific industry focuses.

KSA Is Expected to Follow the UAE’s Diversification Strategy Through Its Vision 2030

KSA’s Vision 2030 is a framework to reduce Saudi Arabia’s dependence on oil and diversify its economy. This will be accomplished through investments in health, education, infrastructure, recreation, and tourism. The Vision 2030’s goals include reinforcing economic and investment activities, increasing non-oil international trade, increasing government spending on the military, and promoting a more secular image of the kingdom.

The Crown Prince Mohammed bin Salman Al Saud announced Vision 2030 on April 25, 2016.

Food Independence in the MENA Region

So far this series has covered the MENA region’s global import and export position, the dynamics between KSA and the UAE, and the region’s general dependence on fuel that drives the need for diversification.

As part of their effort to diversify, MENA countries are seeking food and agriculture independence. The UAE and KSA are minor contributors to food and agriculture MENA export totals. Food and agriculture imports and exports make up a relatively small portion of total MENA numbers, but they are essential to the long-term stability of the region. The following data indicate the current state of food imports and exports in the MENA region, the UAE, and KSA, as well as key steps being taken to improve food production capability through technology.

The UAE and KSA Are Minor Players in MENA’s Total Food and Agriculture Exports and Imports

  • The UAE and KSA export less food and agriculture products than the average MENA country.
  • Food and agriculture account for approximately 4.5% and 3.5% of MENA’s imports and exports respectively; these percentages are expected to grow over the next five years.
  • UAE food and agriculture exports are growing; imports have remained stable.
  • KSA food and agriculture exports have remained stable; imports have slowly decreased.

KSA Imports More Agriculture and Food Products Than Other MENA Countries

  • KSA imports approximately 2% more food and agriculture products compared to other MENA countries.
  • The UAE imports 50% less food and agriculture than other MENA countries.
  • This stark contrast between the two countries highlights the UAE’s investments in food production capacity and technology.

The UAE and KSA Export Less Food and Agriculture Products Compared to Other MENA Countries as a Percentage of Total Exports

  • The UAE and KSA both export less food on average than other MENA countries as a percentage of total exports.
  • This is less significant than import disparities since food independence is a major driver but not necessarily food production and distribution.
  • KSA and the UAE are expected to continue producing less food and agriculture products than MENA countries in the near future.

The UAE’s Commitment to Food and Agriculture Leadership Is Evidenced in Its Tech Investments

As shown in the previous J&A series, tech investments are on the rise in the MENA region. The UAE has recently made 10 major food-tech investments as part of its continued commitment to food independence and leadership. These food-tech investments include smart farms, food delivery, curated menus, and more. The image above shows three examples of these investments from different categories.

In the final part of our series, we will investigate the Gulf Cooperation Council’s role in global trade for the MENA region as well as steps the council is taking to increase its cooperation and cumulative strength.

The Role of the GCC in Long-Term MENA Development

The Gulf Cooperation Council (GCC) includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. The GCC was formally established on May 25, 1981. The council’s purpose is to unify the countries’ currency, trade markets, and other economic markets. There have been discussions to turn the council into a union with closer unity through a single currency and other economic integrations.

The GCC has made several changes to its policies that support its continued openness to trade. These policy changes include generating unified technical standards, harmonized customs administration procedures, and reduced clearance requirements to lower the amount of non-tariff barriers within the GCC. There are a number of special agencies in charge of creating and implementing technical standards, undertaking commercial arbitration, and registering patents: the Standardization and Metrology Organization for GCC in Saudi Arabia, the Technical Telecommunications Bureau in Bahrain, and the Regional Committee for Electrical Energy Systems in Qatar. These organizations have focused on making trade organizations more efficient.

The GCC Will Continue to Play a Crucial Role in International Trade

The following chart shows the trade openness of the GCC. This index is calculated by adding imports and exports in goods and services and dividing by the total GDP. The larger the ratio, the more the country is open to international trade.

  • All GCC countries are more open to trade than the world average.
  • The UAE has significantly increased its trade openness since 2006 and is currently the most open GCC country.
  • This openness to trade remains a significant strength of the region to attract new companies to offer products and services in and around the region.
  • Bahrain has maintained a historical and current openness to trade in excess of its GCC counterparts, this is likely due to the countries limited oil reserves.

The GCC’s Greatest Long-Term Sustainability Risk Is Lack of Diversification

  • GCC countries remain wealthy due to their dominance of the global fuel market.
  • As global economies move towards renewable energies, the GCC can expect a reduction in oil revenue.
  • Therefore, for GCC countries to continue growing, they must diversify into non-fuel areas such as technology and services.
  • Factoring the oil industry into the GCC’s GDP increases its real GDP by 50%.

The UAE Has Implemented a Successful Path to Diversification and KSA Is Set to Follow

  • As evidenced in this series, the UAE has diversified its economy and will continue to do so as a hub for global trade, technology, and services—particularly in the MENA region.
  • The UAE’s investment in free zones and open economic policies have attracted businesses. These free zones include Abu Dhabi Global Markets (ADGM), Dubai International Financial Centre (DIFC), Dubai Multi-Commodities Centre (DMCC), and many more with specific industry focuses.
  • KSA will be a rising force in the GCC. The kingdom’s Crown Prince, Mohammed bin Salman Al Saud, has made a commitment to the country’s Vision 2030, which includes significant steps to diversify the economy.
  • Saudi Arabia’s debt as a percentage of GDP remains very favorable, in 2019 the Kingdom’s debt was only 20% of the GDP, whereas countries like the USA and the UK have over 100% debt-to-GDP ratios.

The region represents approximately half the volume of imports and exports compared to the USA and China, but produces nearly 40% of the world’s fuel supply. The general volatility of fuel has pushed leaders to diversify the economy.

Food independence is a major objective of MENA leaders. The GCC’s trade openness as measured by the World Economic Forum has significantly increased over the last 10 years. J&A anticipates trade openness to continuously increase in the region, particularly with the anticipated expansion of the Kingdom of Saudi Arabia and its Vision 2030 program.

Sources: IAGS | The World Bank | IMF GCC Banking | IMF GCC Markets | IMF Trade and Foreign Investment | Saudi Arabia Vision 2030 | UAE Ministry of Finance

Joshua Jahani on S&P Reaching 4,000

Joshua Jahani on S&P Reaching 4,000

In this episode of BBC Newsday Joshua Jahani talks about the S&P 500 reaching 4,000 (11:30).

Also in this episode:

Taiwan’s rail company says 36 people are known to have died, and dozens injured. Myanmar’s deposed leader Aung San Suu Kyi had already been accused of breaking COVID-19 rules and illegally possessing walkie-talkies—now she’s been charged with violating the country’s official secrets act. And the story of the Italian businessman who tried to fake his own kidnapping for financial gain, but ended up as a prisoner of a jihadist group for three years.

Analyzing Middle East Investment

Middle East Investment: Venture Funding in MENA by Country and Industry


The United Arab Emirates (UAE): The majority of venture capital Middle East and Northern African (MENA) investments in 2019 were made by United Arab Emirates (UAE) investors, accounting for 62% of total MENA investment.

Figure 2: Total Investment and Deal Count by Region

We expect this trend to continue due to the more robust investment infrastructure in the UAE. Although the percentage of deals completed did not change from 2018 to 2019, the UAE’s percentage of total MENA investment increased 21%. This signifies the continuing growth in UAE investment size.

Egypt: A distant second in terms of total MENA investment (13%), Egypt completed seven more deals in 2019 compared to the UAE, confirming the assumption that due to its size the country is investing less money in more deals.

Saudi Arabia: Rounding out the top three in terms of deal value closed is Saudi Arabia. Saudi Arabia’s position is expected to increase in the upcoming years due to the government’s efforts to diversify the economy.


Real estate held the top spot in terms of investment dollars in 2019 but did not rank in the top five for deal count. This is a result of the capital-intensive nature of the investments. Fintech remained the leader in number of deals despite the moderate industry slowdown near the end of 2019. These investments include those in blockchain and crypto-related businesses.

Although funding for fintech was number five in terms of investment dollars, these numbers signify an interest that investors like to enter the market early.

E-commerce took second place in terms of funding value (17%) and deals (10%). As the industry continues to grow globally and key players continue to make acquisitions, this is an interesting market to watch. These numbers are bolstered by a $6.2 million seed round investment in the e-commerce wholesale food and grocery marketplace MaxAB.

Delivery and transport realized large growth in investment dollars with 10% growth from 2018. This mimics trends from USA investments as delivery startups continue to compete for the expanding market.

Middle East Investment: Strategies for Bringing Innovation to the MENA Region

Previously, we detailed the recent venture funding the region by industry and country. Now that the Middle East investment landscape has been outlined, we will walk through how to use a joint venture (JV) strategy for bringing innovation to the MENA region.

Paths to Driving Revenue Growth

PwC recently conducted a survey of business executives in the Middle East asking them which activities, if any, they were planning in the next 12 months to drive revenue growth.

Results from PwC survey

Entering a new market or forming a joint venture was identified as a top priority for 83% of business executives in the Middle East.

Additionally, 17% of business executives identified collaborating with a startup or innovative company as a top priority.

These three objectives (entering a new market, forming a JV, or collaborating with startups) presents powerful opportunities for companies seeking capital and financial partners in the region.

Note: J&A utilizes a broad definition of joint ventures that includes distribution agreements, franchising agreements, reseller agreements, and traditional joint venture agreements in which multiple entities own equity positions in a new entity.

Reasons to Consider a JV

Joint ventures can be an ideal investment structure in certain situations, especially in fast-growing markets like MENA. Below are some common advantages associated with JVs.

Reasons to Consider a JV

Components of Successful JV

We have seen great success with North American and MENA JVs in recent years when a clear strategy, detailed planning, and strong execution is at the center of the deal. Below are components of success for long-term value creation.

Components of Successful Joint Ventures

Define objectives: Starting with the end in mind, defining the objectives and aligning to them will ensure the feasibility and strategic fit of the JV.

Choose the right partner: Due to the collaborative nature of JVs, selecting the right partner is critical to its success. Defined objectives inform selection criteria based on the needs of the partners (i.e. ownership of a critical asset such as presence in a market or intellectual capital). Other selection criteria to support the JV may include company culture, decision making, communication, trust, and financial drivers.

Determine contributions and operating model: Clearly articulating the link between asset contributions and ownership will drive success. Selecting a valuation methodology and layering in industry and region nuances will help guide the contribution discussion. Understanding the level of support, involvement, and key target dates for each company will act as a guide to ensure objectives are met.

For more information on MENA investments, please contact us at or visit our website

Originally published February 18, 2020. Updated March 20, 2020.
Sources: PWC Middle East CEO survey | McKinsey and Company | Magnitt | The World Economic Forum[/vc_column_text][/vc_column][/vc_row]

MENA Investor Analysis

MENA Investor Analysis

MENA Investor Analysis: Investor Location

J&A has collected investor data to generate a summary of Middle Eastern and Northern African (MENA) investor location, investment size, investment volume, and investment location. This article provides data and insights on these topics. It is important to know that many transactions in the MENA region are not announced, therefore the metrics here report less activity than what is truly taking place. The date herein is collected from 2000 to 2018.

The United Arab Emirates Makes the Most Investments

  • The United Arab Emirates (UAE) made the most investments in the MENA region by nearly double its leading competitor (Turkey) and nearly four times its closest Gulf Cooperation Council counterpart (Saudi Arabia).
  • The UAE’s focus on technology and innovation comes as no surprise to people familiar with the region, as cities such as Dubai and Abu Dhabi continue to pioneer free zones and technology-forward cultures through economic incentives.

The Number of VC Firms Is Increasing in the MENA Region

  • Over 50% of existing MENA VC investors were started between 2011 and 2018. The below figure shows the growth of MENA investors by type since the year 2000.
  • There has been a steady development of private equity funds in the region. Firms that identify as venture capital skyrocketed since 2011. Angel investors and incubators also increased dramatically in the same period. Venture capital firms, incubators, accelerators, and angel groups make up 80% of new investment firms in the region since 2011.

VC Investments Are Concentrated by Country

  • Not surprisingly, the UAE leads the MENA region in the number of investments made and the number of investors within the country.
  • The mix of private equity investors, venture capital investors, angel groups, accelerators, and incubators remains fairly consistent among the leading countries. VC firms and angel groups are the two most common firm types.
  • Private equity growth is expected to continue as the market matures.

The insights and data herein signify strong growth in a maturing investment region. Next, we will review the amount of invested capital per deal, the number of deals invested in by MENA entities, and investment locations.

MENA Investor Analysis: Investment Size and Volume

In this section, we will analyze the average money raised from MENA investors by round, the number of companies invested in by round, and briefly review where MENA portfolio companies are headquartered. All data is from the years 2000 to 2018.

Investment Dollars Increase as Rounds Advance in Stage
  • The amounts raised in early-stage rounds from MENA investors (pre-seed, angel, and seed) are similar to the amounts raised in the same rounds from North American investors.
  • Series D and E amounts raised per round were higher on average than North America rounds. This is likely because more popular brands raise money from MENA investors on their way to “unicorn” status. This also reflects the relative scalability of the market due to the consolidation of decision-makers.
  • Series F, G, and H were not analyzed due to the limited amount of data available and relative skewing of results.
Investors Make Angel and Seed Investments Most Often
  • The number of investments made in angel and seed rounds was more than all other rounds combined. This is likely due to the relatively high concentration of high net worth individuals in MENA countries.
  • The number of investments made decreases as rounds advance in stage, though the total money invested in each round increased. This is identical to what is seen by North American investors.
  • This data is based on 1,381 investments made from 2000 to 2020.
Investments are Globally Diverse
  • Only 32% of companies invested in by MENA investors are based in the MENA region, showcasing a desire for portfolio diversification.
  • North American and European companies make up over 56% of MENA investments.
  • J&A expects investments in South America and the MENA region to increase significantly over the next five years.

The following section will highlight where investments are located, as MENA investments are more diverse than North American investments. J&A will also highlight regions where growth and opportunity are expected.

MENA Investor Analysis: Investment Locations

As shown in the previous section, investments are globally diverse for MENA investors. The data herein showcases which investments have taken place over the last 15 years. J&A expects strong South American and MENA investment growth due to government initiatives. We also expect Eastern African and Southern African investments to grow disproportionately in deal count five to 10 years from now.

MENA Investors Favor North American Investments by Both Dollar and Count
  • North American (NA) investment round sizes are uniquely large, showing a strong value placed by the MENA investor in NA deals.
  • Asia is not analyzed due to several exceptionally large investments that skew results.
  • Investments by industry were relatively broad, with no single industry commanding a majority of investment dollars.
  • J&A anticipates that both the number of deals and the dollar volume per deal will increase for MENA-based companies in 2020 and beyond.

The chart below shows the average investment dollar amount made by MENA investors in each region.

Mapping Deals Over $50 Million Made by MENA Investors Across the World

The map below shows the brands that raised over $50 million and their respective locations.

  • North America: Not surprisingly, North America took the top spot with leading tech investments and brand names familiar to everyone such as Lyft, Uber, and Collective Health.
  • Europe: Spain, Germany, and the United Kingdom commanded the largest deals with brands like Babylon and Wefox.
  • MENA: Most of the deals made by MENA investors were in the MENA region and include brand names such as Careem, TruKKer, and Fetchr.
  • Asia: Asia was home to some giant deals, namely Koudai and BigBasket, that were removed from this data set because they skewed results.
  • Oceania and South America: J&A anticipates these regions will grow in both investment dollars and size due to advancements made by local technology companies and relative maturing of economies. Both regions are not without struggle. As North American markets become more mature and saturated, Oceania and South America will play increasingly important roles in the global technology landscape.

Key Takeaway: The Importance of Saudi Arabia

It is important to note the anticipated growth of Saudi Arabia in the MENA region. Based on the kingdom’s initiatives and relative wealth, J&A and other authorities expect the Kingdom of Saudi Arabia (KSA) to experience tremendous growth over the next 10 years. Investments in technology and innovation will be a major part of this growth. KSA is relatively small within MENA, but the country’s power in fuel and geopolitical posturing will likely lead to meaningful activity in the near term.

Sources: Crunchbase | McKinsey | International Monetary Fund | World Bank | PwC MENA

Responding to an Economic Downturn: General and Specific Strategies

Responding to an Economic Downturn: General and Specific Strategies

A potential economic downturn brings both opportunities and risks for businesses. J&A has collected a set of specific and general strategies that business owners may use to evolve and thrive in changing economic conditions. We provide examples of which companies utilized the specific strategies and how the general strategies can be incorporated into a more complex corporate charter.

Specific Strategies for Responding to an Economic Downturn

Consider International Expansion

Global economic conditions affect areas of the world differently. In times of pandemic, strong governments will be able to respond in ways that hold or rejuvenate investor confidence and capital markets in ways more democratic governments do not. J&A expects this confidence to be reflected in countries with more centralized political power by continued investment in core industries, such as food and security, as well as an increase in special situation investments.


Starbucks famously increased its revenue growth by opening more licensing opportunities for the brand during the 2000 recession. This is also an effective way to expand internationally.

Leverage a Part-Time Workforce

Talbots hired more than twice as many part time workers as its competitors before and during the 2000 recession. This allowed them to maintain a high amount of marketing during the recession and emerge as a leader during recovery.

Focus on Selling Products and Services of the Future

Verizon switched from selling phone minutes to more expensive broadband services during the 2000 recession. Cost per customer acquisition often increases during an economic downturn while sales decrease, creating a very risky cash position for companies. Firms should double down on products and services of the future that customers are already paying for.

Reduce Costs Early to be a Resilient Company

In addition to the above specific strategies, companies can incorporate more complex thinking into their corporate charter that includes debt financing, better inventory management, and diversification. J&A identified which of these strategies should be part of the conversation with your financial and banking advisors.

General Strategies to Prepare for and Manage a Potential Economic Downturn

Lean Inventories

Focusing on having the right inventory levels will reduce the amount of needed committed capital and can lead to the ability to pay suppliers more quickly. This combination will drive to securing more favorable contact terms.

Deliberate Cost Reductions and Productivity Increases

Being prepared to preemptively cut costs as the economic downturn steepens will support the ability to refocus spending. A delicate combination of reduction in spending at the right time will support positioning through the downturn. Ensuring the right resources are fully utilized will ensure quality talent is retained and offer the ability to capitalize on opportunities during the downturn.

The Bottom Line

Companies that perform best in an economic recession do two things well. First, they strategically position themselves before a recession becomes a reality (as identified in the above specific strategies), and second, they react definitively and swiftly to cut costs and streamline operations when the recessions begin.

Originally published April 7, 2020.
Sources: Harvard Business Review | McKinsey and Company
Graphic taken from: McKinsey Quarterly, May 2019

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Digital Health: The Competitive Advantages of Tomorrow’s Healthcare Companies

Digital Health: The Competitive Advantages of Tomorrow’s Healthcare Companies

Digital Health: Competition for VC Dollars

Digital health is an exciting area, ripe with growing Medicare reimbursements, new technologies, and a real potential to improve the frustrating healthcare consumer experience in the USA.

Jahani and Associates analyzed over 200 M&A transactions and equity investments in digital health from 2013 to 2016. Our results showed a 20% decrease in investment funds per company in 2016 versus 2015. Despite a 604% growth in Medicare reimbursements from 2006 to 2016 and a 62% increase in telehealth consultation over the same period, digital health companies must carefully develop their competitive advantages to both increase access to capital and decrease their cost of capital.

By analyzing companies that maintain competitive advantages such as Welltok, SnapMD, Pager, and Teladoc, we elicited two opportunities for creating value:

There are opportunities for digital health returns, but companies must respond to a saturating market by focusing on improving the customer experience while at the same time optimizing the business model of existing healthcare giants. Jahani and Associates (J&A) recommend digital health companies focus on four major intangible assets to accomplish the value goals listed above:

  1. Optimize member access via subscription contracts, members per client, providers per network, and the visits offered to members based on contracts.
  2. Create a revenue model driven by customer engagement. Digital health companies are much closer to their consumers than traditional healthcare companies.
  3. Create a scalable and flexible business model that responds to seasonality, subscription fee, and access fee changes.
  4. Consistently provide regulatory compliant solutions in response to existing and expected reforms such as HIPAA 1 and 2, HITECH, ACA, and BPCI.

This is all predicated on the business’s ability to identify, develop, and monetize intangible assets.

Digital Health: Reviewing Competitive Advantages in the Marketplace

J&A mapped a selection of these digital health companies onto a four-quadrant plane to understand how they fit in the marketplace. We considered both the scope of care delivery (for example, an urgent care company versus a software analytics company) as well as headcount and financial size of the business. A summary and description of our findings is presented below.

Quadrant 1: Social Players

These digital health companies typically have a large customer base, but are relatively lean due to the simplicity of their products. These are socially themed companies like FitnessKeeper and b.well.

Quadrant 2: Analytics Leaders

These are software companies whose businesses provide automation, simplicity, and streamlined data solutions for other players in the complex healthcare ecosystem.

Quadrant 3: Agile Players

Our research indicates that these digital health companies are largely transitioning to quadrant four, Tomorrow’s Healthcare Providers. They have strong customer relationships and are starting to scale.

Quadrant 4: Tomorrow’s Healthcare Providers

These are the dominant players of today and tomorrow. These digital health companies have the ability to scale, are generally profitable, and have strong brand recognition. They continuously evolve by providing new and innovative solutions to the market or by acquiring other innovative companies.

Originally published August 2017. Updated July 2018.
Sources: Crunchbase | McKesson 10K | PwC Money Tree Report | Pitchbook | Bloomberg

How to Perform a Disciplined Sell-Side M&A Process to Maximize Results

How to Perform a Disciplined Sell-Side M&A Process to Maximize Results

A Step-by-Step Guide to the Sell-Side M&A Process

The sell-side M&A process is long and complex. Bringing a company to market does not guarantee the company will achieve its M&A goals. The M&A process is challenging for three reasons:

  1. It is difficult to build consensus among a large number of stakeholders
  2. Gathering relevant, transparent, and adequate data is complicated, particularly in private markets
  3. The M&A process contains many steps, and within each step there are many opportunities for things to go wrong

This report contains the step-by-step guide Jahani and Associates (J&A)—an NYC-based global independent investment bank—uses to maximize results for its clients. Each step in the sell-side M&A process is driven by activities, deliverables, and solutions.

STEP 1: Preparation to Solicitation

Preparation to solicitation requires the company and their investment banker to generate the artifacts buyers need to make an offer for the company. This information includes but is not limited to financial information, the growth history of the company, intangible asset information (e.g., customer relationships and proprietary technology), and the reasons the owners are selling the business.1 This information must be woven together and organized correctly so buyers can efficiently formulate their offers.

Industry-standard deliverables, such as a confidential information memorandum (CIM) and audited financial statements, are used in this phase to market the business to potential buyers.

STEP 2: Solicitation to Indication of Interest (IOI)

This is arguably the most important part of the sell-side M&A process. Reaching the sufficient number of solicitations to ultimately find an interested buyer is difficult and incredibly important, particularly in the lower-middle and middle markets. The volume of solicitations necessary is higher than most professionals expect. The methods to generate qualified buyer leads also vary based on the industry, region, and type of investment bank (e.g., healthcare investment bank, agritech investment bank, etc.). Solicitation is initiated with a blind teaser, using a code name in lieu of the company’s name. Buyers may request more information after the teaser—at which point a nondisclosure agreement (NDA) is required. J&A recommends only sending detailed material during the preparation phase to potential buyers after they have signed the NDA. For sellers to create a succinct and consistent story for all potential buyers at this stage, it is very important not to provide too much information.

Common sources of buyer solicitations include direct connections from an investment banker’s warm network, introductions and referrals from partners in the investment banker’s network, direct solicitations of qualified buyers determined from research (e.g., PitchBook), and target emails to qualified lists of buyers. Coordinating all four types of outreach is a complicated task. Figure 2 demonstrates common reasons for failure and how J&A recommends sellers and their advisors avoid them.

IOIs contain valuation ranges and general expectations of earnout. These should be negotiated as necessary to have a smooth transition from an IOI to an executable letter of intent (LOI). IOIs are nonbinding.


A site visit usually occurs while transitioning an IOI to an LOI. The visit is an opportunity for the buyer and seller to meet and conduct a deep dive into any outstanding items that need to be settled before executing an LOI. Since LOIs are legally binding, many buyers will require exclusivity after an executed LOI, which is also referred to as a “no-shop clause.” This means the seller will not be able to conduct sale-related conversations during the no-shop period and must ensure the upcoming due diligence will be satisfactory in order to close the deal.

STEP 4: LOI to Purchase Agreement, Including Due Diligence

Due diligence is often the longest part of the sell-side M&A process. Depending on the size and complexity of the deal, it may take up to 120 days.2 Due diligence is the process of affirming the information the buyer has used to make its offer and determining whether or not the company is in good standing with the relevant administrative, legal, financial, technological, security, operational, and other information in its possession.

Once due diligence is complete, executing the purchase agreement is the final step in the sell-side M&A process. These agreements can either be asset purchases or stock purchases. The purchase agreement is the binding contract where ownership officially changes hands. If due diligence went as expected, this step should be relatively simple. The changes that may affect purchase agreement negotiations are material discoveries in due diligence, economic forces, material alterations in the business’ operations, and management changes. It is very important for business activities to go according to plan during due diligence.

Problems and Solutions: Quickly Resolving Challenges Requires Deep Thinking and Preparation

Jahani and Associates collected common challenges that exist in each step of the sell-side M&A process and the best way to resolve them. It is important for M&A stakeholders to plan ahead and know where expected weaknesses may lead to exacerbated challenges.

It is imperative the investment banking team has a plan to resolve these challenges before they even arise in order to avoid disruptions or delays in the M&A process.

Preparation to Solicitation

Companies most often do not go from preparation to solicitation when seller management teams are not aligned or properly prepped for the sell-side M&A process. This can occur when multiple stakeholders are involved, particularly in companies boasting a significant capital raise. A seller may also not move to the solicitation phase due to major market forces negatively affecting business performance. If a business undergoes a change that materially reduces the company’s desired valuation, management often decides to postpone the process.

Solicitation to IOI

Fundamentally, solicitation to IOI is a sales process. Therefore, sellers and their teams are most prepared when they view this as a sales exercise. This is often the most difficult step in the process for unprofitable companies in the lower-middle market.


Moving from an IOI to LOI is a matter of negotiation and mutual understanding between the buyer and seller. A site visit is often used in between the IOI and LOI to develop a relationship between the buyers and sellers.

LOI to Purchase Agreement, Including Due Diligence

Due diligence is the process of confirming the buyer’s understanding of the business at the time they made their offer. Due diligence is time-consuming. Material information that changes the valuation and earnout identified in the LOI may be discovered during due diligence. This will be negotiated as part of the purchase agreement. Purchase agreements may be made for either cash or stock, each of which has its own tax, legal, and strategic considerations.

The Sell-Side M&A Process Is Challenging, but the Seller’s Success Will Be Maximized When a Disciplined Process Is Followed

The challenges, solutions, and KPIs in this paper are not exhaustive, but they provide an overview of the way to maximize success in sell-side M&As. It is important that all stakeholders understand the challenges they will face and how to alleviate them as quickly as possible. Establishing a consensus among stakeholders from the outset will also help mitigate any issues that may unfold. Focusing on a problem-solution-KPI framework gives transparency to the client and allows the investment banker to increase the size of their team while preserving client service and information sharing. Experience in dealing with these issues is paramount to successfully delivering M&A results, and that experience must be coupled with actionable outcomes.

Any business owner seeking to sell their business must carefully consider all these factors. Being aware of expected obstacles and how to overcome them early will significantly increase the likelihood that a company successfully completes a sell-side M&A transaction. The analysis contained herein is based on decades of experience and is included to support business owners across the world as they achieve a maximally successful exit.


In 2019, Jahani and Associates surveyed hundreds of business owners about successful and failed M&A deals, why they failed, and how those failures could have been avoided. J&A then compared these stories with its own processes and tools to determine the best way to anticipate and avoid these failures in any M&A scenario. The resulting analysis is this document that outlines common reasons for failure and how to avoid them. This document is meant to serve as a resource to business owners and other service providers to give the best strategic advice and service for their businesses or clients.


Jahani and Associates (J&A) is an independent investment bank located in New York, New York. The firm specializes in healthcare and technology and provides specialized M&A and capital markets advisory services. The combination of J&A’s unmatched skills in technology, engineering, and business operations allows the firm to create sustainable value for its clients. J&A works at the intersection of cutting-edge financial theory and business practicality. Creativity is highly valued within the firm, which allows J&A to continually improve the way businesses thrive.


1. Baird, Les, David Harding, Peter Horsley, and Shikha Dhar. “Using M&A to Ride the Tide of Disruption.” Bain & Company, January 23, 2019.

2. Buesser, Gary. “For the Investor: Internally Generated Intangible Assets.” Accessed November 22, 2019.

3. Corporate Finance Institute. “What is the No Shop Provision?” No Shop Provision. Accessed November 22, 2019.

4. Deloitte. “Cultural issues in mergers and acquisitions.” Leading through transition: Perspectives on the people side of M&A. Last modified 2009.

If Biden Wants to Improve Relations With China, He Should Look to the Middle East

If Biden Wants to Improve Relations With China, He Should Look to the Middle East

President Biden’s first moves in the Middle East—bombing Iran-backed militias in Syria, for instance, while deprioritizing much of the rest of the region—neglect the bigger picture of a region that is leading the world out of the pandemic. And with the first US-China meeting under the Biden administration getting off to a tough start this week, that’s more important than you might think.

The Gulf states and Israel provide an opportunity for the US to participate in a global economy that will be more centered on the Middle East than it was before the virus. This future must be a cornerstone of US policy, as well as the legacy issues around security.

The COVID-19 pandemic has threatened the mature economies of the US and Europe, accelerated China’s inevitable rise, and given opportunities to the region’s often more agile and adaptable countries.

There are few countries in the world that have (almost) put the pandemic behind them and are on good terms with both the US and China. Those are the countries that are set to lead the world in the 21st century. They are almost exclusively in the Middle East.

The rise of the Middle East as a gateway between the US and China presents an opportunity for Biden to re-engage with Beijing through the neutral soil of Israel and the Gulf states. Biden should not be afraid of celebrating and building on the diplomatic progress achieved under the Trump administration through the end of the GCC rift and the Abraham Accords.

Being the “new Europe” is something that Middle Eastern leaders are understandably motivated by, particularly in light of their relations with both DC and Beijing. Europe was the middle ground for the Soviet-US Cold War, and the Middle East is the same for the China-US relationship—geographically, politically, and economically.

Rather than continue to fight yesterday’s conflicts and ignore today’s achievements (perhaps focused on distancing himself from Trump’s policies), Biden should craft policy based on the reality that the Middle East is transitioning from a 20th century defined by conflict and insecurity to a 21st century where the Silk Road is once again the social, economic, cultural, and political center of the world.

This is a future into which the Middle East is rapidly progressing. Three of the top five countries with the most COVID-19 vaccinations (excluding the Seychelles and the Maldives) are in the Middle East—namely the UAE, Israel, and Bahrain. In addition to a successful vaccination campaign, total death rates in these countries and others in the region have remained low. All this while key industries, including tourism, have often remained open.

Saudi Arabia has been working to almost triple its non-oil revenues, and is investing billions into futuristic cities like NEOM and “The Line.” The UAE successfully completed a mission to Mars during the pandemic and recently announced plans to double Dubai’s population, all while commentators in London and New York discuss the “death of cities.”

Gulf economies also benefit from a low debt-to-GDP ratio, which will allow them to maintain growth while more developed and leveraged economies struggle in the wake of the pandemic. The US currently has a debt-to-GDP ratio of over 100%; in Saudi Arabia and the UAE, the debt-to-GDP ratio is only 20%, meaning those governments will have spending power well into the future for public and private projects.

China is busy building deeper links in the region, where doing business is more important than talking politics. It is important to Biden’s legacy that US policymakers and investors do the same, and foster both cultural and economic connections to the new Middle East rather than allowing themselves to be crowded out.

To this day, too many American political and business leaders are driven by the impulses that impacted actions between them and the Middle East at the start of the millennium. Twenty years on, the White House should look to the future. It must adapt to the rise of China by utilizing the Middle East’s neutral ground to increase cooperation with Beijing.

It’s high time an American president looked to the Middle East for its entrepreneurship, adaptability, and its e-governance, rather than simply for its oil.

Joshua Jahani is a Cornell alum, public speaker, and an investment banker with a focus on the Middle East and Africa.

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