Confirm the legal and licensing position
Before spending time on deeper diligence, buyers should confirm the license activity, ownership structure, emirate or free zone jurisdiction, renewal status, and any approvals needed for transfer or share change.
A business can look attractive commercially but still be difficult to acquire if the license, lease, or regulatory approvals cannot be transferred on acceptable terms.
- Review trade license, shareholder documents, MOA or free zone documents, and renewal history.
- Check whether business activity matches actual operations.
- Identify external approvals for regulated activities such as healthcare, education, transport, or food handling.
Test revenue and profit quality
Buyers should reconcile management accounts with VAT returns, bank statements, POS reports, invoices, and customer contracts where available. The objective is to distinguish recurring business performance from temporary or unsupported claims.
If cash sales are material, diligence should be stricter, not lighter. Buyers need enough evidence to understand run-rate revenue and leakage risk.
Review contracts, leases, and staff
Contracts and leases often determine whether a buyer can preserve value after completion. Check assignment clauses, renewal rights, rent escalations, termination rights, supplier exclusivity, customer concentration, and staff obligations.
Employee end-of-service benefits, visa status, commissions, and key person dependency should be reviewed before final price and completion terms are agreed.
Inspect assets and working capital
For asset-heavy businesses, inspect the equipment, vehicles, inventory, deposits, receivables, and maintenance records. For service businesses, working capital and receivables quality may matter more than physical assets.
Buyers should define what is included in the purchase price and what working capital level is expected at closing.
Translate findings into deal terms
Diligence should not only produce a list of problems. It should inform the offer structure, warranties, completion conditions, escrow, seller support period, training commitments, and any price adjustment.
Good diligence improves the chance of closing because both sides know which risks have been accepted, priced, or solved.
This guide is general commercial information, not legal, tax, or accounting advice. Always consult qualified UAE professionals before signing transaction documents.
