A New Chapter: UAE-Based Chabaka Gets Acquired By Universal Music Group

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This year has given Tarek Makki two reasons to celebrate as an entrepreneur– firstly, 2023 marked the tenth anniversary of Chabaka, a digitally-focused music distribution business that he had set up with his brother, Ala’a Makki, in 2013 to empower independent artists and labels in the region. Secondly, the year has also seen him achieve a successful exit by selling Chabaka to California-headquartered music and entertainment company, Universal Music Group (UMG).

In the ten years that have passed since Chabaka launched, the Makki brothers have opened offices in the UAE, Lebanon, Egypt, and Tunisia, signed more than 150 independent artists and local labels across the MENA region, and eventually got Chabaka to become known a go-to-place for regional artists looking for digital distribution, marketing, publishing, and label and artist services.

All of this resulted in UMG deciding that Chabaka was a business worthy of acquiring, and while the details of the consequent deal have not yet been disclosed, Tarek believes that one of the reasons why an international giant like UMG decided to acquire his business was a nod to the MENA region’s recording industry being at an inflection point. Data from the International Federation of the Phonographic Industry shows that this sector in the region recorded the world’s fastest revenue growth of 34% in 2021, and it went on to rank third in the world with a growth of 23.8% in 2022.

As such, when it came to exiting their business, the Makki brothers were on the lookout for a partner who could take the business to new heights, but who would also safeguard the artists’ interests, and bring them new upstreaming opportunities. When asked about his tips for entrepreneurs seeking acquisitions as a way forward for their startups, Tarek replies, “Our advice is to genuinely understand the value of your company, and have a clear vision for your next phase. It is also important to build a strong management team, and delegate responsibilities. This not only ensures a smoother transition, but also demonstrates the potential for growth beyond your leadership.”

Tarek also points to building strong and long-term relationships in the digital content industry as being a crucial aspect for the success Chabaka has seen. “Through our CHBK Group, which includes Chabaka, Concast, and Boomerang Studios, we nurtured relationships with platforms, media outlets, production houses, artists, and labels,” he says. “This not only helped us in building a unique offering, but it also created a sense of trust for Chabaka within the industry.”

(From left to right) Adam Granite, Executive Vice President, Market Development, UMG, Tarek Makki, co-founder, Chabaka, J. T. Myers, Co-CEO, Virgin Music Group, Ala’a Makki, co-founder and CEO, Chabaka, and Patrick Boulos, CEO – MENA, UMG, at UMG’s London office. Source: Chabaka/UMG

Following the acquisition, Chabaka will now become a part of UMG’s Virgin Music Group, where it will work closely with the local Virgin and UMG teams in the region. Co-founder and CEO Ala’a will continue to lead the company and grow its presence across geographies and business lines, and all of Chabaka’s 35-strong staff will remain employed by UMG. Meanwhile, Tarek will act only as an advisor; however, he will also continue to lead Concast and Boomerang Studios, the other two companies within the CHBK Group, which will now rebrand given the acquisition of Chabaka. As for the road ahead, the Makki brothers envision a bright future for the music industry, and especially streaming in the MENA region.

“For example, people living in the UAE listen to an average of 22.5 hours of music a week, 22% higher than the global average,” Tarek says. “More than 480 million Arabic speakers live in the Arab countries, and with a huge global Arab diaspora maintaining its connection to its roots, this market has significant room for growth, particularly as the MENA region only accounts for 0.4% of global music revenues currently.”

Now, with an aim to continue Chabaka’s success story, Ala’a says that he will remain focused on the three pillars that have proved effective for their business to date- these include staying true to their original vision, making sure that they work with the best team, and ensuring that innovation and creativity remain at the centre of their work. “While adapting to an ever-changing and evolving industry is crucial, staying true to our vision has been equally important,” Ala’a says. “We’ve remained committed to our goal of empowering independent artists in the MENA region, and this focus has guided our decisions and actions throughout the years. The journey with Chabaka also emphasized the importance of assembling a talented, dedicated, and passionate team. And lastly, staying innovative is key.”

This article is from Entrepreneur.com