Due Diligence Audit

Buying a business, investing in a company, or entering a major strategic transaction involves more than reviewing revenue and profit.

You need to understand what sits behind the numbers.

Our due diligence services in the UAE help buyers, investors, shareholders, and management teams assess the financial, tax, commercial, operational, and other relevant risks of a proposed transaction before committing.

Depending on the scope, we review historical financial performance, working capital, debt, tax exposure, contracts, ownership information, employee obligations, operational risks, and other matters that could influence valuation, deal terms, or post-acquisition planning.

The objective is straightforward: identify material risks before they become your responsibility.

What Is Due Diligence in the UAE?

Due diligence is a structured investigation of a business or transaction before an acquisition, investment, merger, partnership or other significant commercial decision. For buyers assessing a merger or acquisition, M&A due diligence UAE helps evaluate the financial, tax, operational and commercial information behind the proposed transaction.

It helps answer questions such as:

• Are the reported profits sustainable?
• Is revenue supported by reliable records?
• Are there unusual liabilities or outstanding debts?
• Are there UAE Corporate Tax or VAT risks?
• Are related-party transactions properly understood?
• Does the company have significant legal or contractual obligations?
• Are employee-related liabilities properly recorded?
• Is working capital sufficient?
• Are there customer or supplier concentration risks?
• Does the asking price reflect the underlying financial performance?
• Could regulatory approvals affect the proposed transaction?

A good due diligence exercise does not simply confirm information supplied by the seller. It tests assumptions, identifies gaps and gives the buyer or investor a clearer basis for negotiation and decision-making.

Is Due Diligence the Same as an Audit?

No. A financial statement audit is an assurance engagement designed to enable an auditor to express an opinion on historical financial statements. Businesses looking for a due diligence audit firm UAE should understand that financial due diligence is transaction-focused and does not replace a statutory financial audit.

It investigates the financial and commercial factors that matter to a proposed deal, such as:

• Quality of earnings
• Sustainable EBITDA
• Working capital
• Debt and debt-like items
• Cash generation
• Revenue concentration
• Tax exposure
• One-off transactions
• Forecast assumptions
• Potential purchase-price adjustments

Due diligence may use audited financial statements as evidence, but an audit does not replace transaction due diligence.

What UAE Laws and Regulations Can Affect Due Diligence?

The legal and regulatory areas relevant to a transaction depend on the target company’s industry, legal structure, ownership, jurisdiction, and activities.

Key areas commonly considered in a UAE transaction include the following.

UAE Commercial Companies Framework

Corporate records should be reviewed to understand:

• Legal ownership
• Shareholding
• Company structure
• Authorised activities
• Constitutional documents
• Management authority
• Share transfers
• Existing commitments
• Corporate approvals

The specific requirements can vary between mainland entities, free-zone entities, and businesses operating in jurisdictions such as DIFC or ADGM.

UAE Corporate Tax

Corporate Tax has made tax due diligence significantly more important in UAE transactions.

A buyer may need to understand:

• Corporate Tax registration status
• Filed or outstanding returns
• Taxable income calculations
• Tax losses
• Related-party transactions
• Transfer pricing
• Tax Groups
• Free-zone tax position
• Available elections or reliefs
• Participation Exemption considerations
• Potential historical tax exposures

The FTA continues to update UAE Corporate Tax legislation and administrative requirements, including decisions issued during 2026.

UAE VAT

Where the target is VAT registered, due diligence may examine areas such as:

• VAT registration
• Return history
• Output tax
• Input tax recovery
• Zero-rated transactions
• Exempt supplies
• Import records
• Tax invoices
• Adjustments
• Voluntary disclosures
• Outstanding FTA matters

VAT issues can create financial exposure that should be understood before completion.

Beneficial Ownership

Ownership due diligence should go beyond the immediate shareholder register.

The UAE’s beneficial-owner framework requires relevant legal persons to maintain information concerning their real or ultimate beneficial owners under Cabinet Resolution No. 109 of 2023.

A transaction review may therefore consider whether ownership records are consistent with the corporate information provided during the deal.

UAE Competition and Economic Concentration Rules

Certain acquisitions and mergers may also trigger UAE competition-law considerations.

Under the current framework, an economic concentration may require notification where either:

• The combined annual sales value of the relevant undertakings in the UAE market exceeded AED 300 million in the previous fiscal year, or
• Their combined share exceeded 40% of transactions in the relevant UAE market.

The UAE Ministry of Economy and Tourism applies these thresholds within the framework of Federal Decree-Law No. 36 of 2023 regulating competition.

The competition framework continued to develop in 2026, including new executive regulations and related decisions.

Competition analysis should therefore be considered early in transactions that may materially affect a UAE market.

What Are the Main Objectives of Due Diligence?

Due diligence tests whether the financial information presented by the target reflects the underlying economics of the business. For investors and acquirers, buy side due diligence Dubai can help identify financial risks, assess sustainable earnings, evaluate working capital and understand factors that may influence the transaction value.

Identify Hidden Financial Risk

Due diligence tests whether the financial information presented by the target reflects the underlying economics of the business.

Understand Sustainable Earnings

Reported profit can include unusual, non-recurring or owner-specific items.

Financial due diligence helps distinguish recurring earnings from temporary results.

Assess the Purchase Price

Findings can help buyers understand whether the proposed valuation remains reasonable after considering debt, working capital, liabilities and sustainable profitability.

Identify Tax Exposure

Historical Corporate Tax, VAT and other relevant tax matters can potentially create post-completion exposure.

Support Deal Negotiations

Due diligence findings may affect:

• Purchase price
• Completion accounts
• Earn-outs
• Warranties
• Indemnities
• Conditions precedent
• Holdbacks
• Transaction structure

Improve Post-Acquisition Planning

Due diligence is not only about deciding whether to proceed.

It can also show management what needs attention immediately after completion.

Types of Due Diligence Services We Offer

Financial Due Diligence

Our financial due diligence Dubai service examines the target’s historical and current financial performance. Typical areas include revenue, gross margins, EBITDA, expenses, working capital, cash flow, receivables, payables, inventory, debt, capital expenditure, and balance-sheet items.

Typical areas include:

• Revenue
• Gross margins
• EBITDA
• Expenses
• Working capital
• Cash flow
• Receivables
• Payables
• Inventory
• Debt
• Capital expenditure
• Balance-sheet items

The purpose is to understand the quality and sustainability of the numbers behind the transaction.

Quality of Earnings Review

Accounting profit and sustainable earnings are not always the same.

We analyse earnings to identify:

• Non-recurring income
• One-off expenses
• Owner-related costs
• Exceptional gains
• Unusual accounting entries
• Timing differences
• Adjustments affecting normalised EBITDA

This gives investors a clearer view of maintainable earnings.

Tax Due Diligence

Tax due diligence may cover:

• UAE Corporate Tax
• VAT
• Transfer pricing
• Tax Groups
• Tax registrations
• Tax returns
• Outstanding assessments
• Tax correspondence
• Related-party transactions
• Free-zone tax considerations

The exact scope depends on the target’s activities and tax profile.

Legal Due Diligence Coordination

Legal due diligence should normally be performed or led by appropriately qualified legal professionals.

From a transaction-support perspective, relevant information may include:

• Company incorporation documents
• Shareholder agreements
• Material contracts
• Licences
• Litigation
• Intellectual property
• Borrowing arrangements
• Guarantees
• Change-of-control clauses
• Other material obligations

We can coordinate financial findings with the appointed legal advisers where required.

Commercial Due Diligence

Commercial due diligence examines whether the business model and market position support the investment case.

Areas can include:

• Market size
• Customer demand
• Competitive environment
• Pricing
• Customer concentration
• Customer retention
• Product mix
• Growth assumptions
• Sales pipeline

HR and Workforce Due Diligence

People-related liabilities can materially affect transaction value.

The review may consider:

• Employee numbers
• Salary costs
• Employment terms
• Leave balances
• Bonuses
• Employee benefits
• End-of-service obligations
• Key-person dependency
• Workforce cost trends

Detailed employment-law conclusions should be coordinated with appropriately qualified employment advisers.

Operational Due Diligence

Operational due diligence assesses whether the business can continue delivering its products or services efficiently after the transaction.

Areas may include:

• Supply chain
• Procurement
• Production
• Warehousing
• Vendor dependency
• Operational controls
• Capacity
• Business continuity
• Key processes

IT and Technology Due Diligence

Technology can represent both significant value and significant risk.

Depending on the transaction, specialist IT review may consider:

• Core systems
• Software ownership and licensing
• Infrastructure
• Cybersecurity
• Data backups
• Technology dependencies
• System scalability
• Technical debt
• Data-management practices

Specialist cybersecurity or technical testing should be performed by appropriately qualified experts where required.

Compliance and Ownership Due Diligence

Depending on the target, compliance work can include:

• Beneficial ownership
• Corporate records
• Licensing
• Related parties
• Regulatory matters
• Internal policies
• Compliance history
• Industry-specific requirements

The scope should reflect the actual regulatory environment of the target rather than applying the same checklist to every UAE business.

What Does Financial Due Diligence Examine?

A professional financial review goes beyond confirming that the balance sheet adds up.

Revenue Quality

We examine:

• Revenue trends
• Customer concentration
• Recurring versus non-recurring revenue
• Sales growth
• Credit notes
• Returns
• Major customer movements
• Revenue recognition patterns

Profitability

We analyse:

• Gross profit
• EBITDA
• Operating profit
• Expense trends
• Margin changes
• Normalisation adjustments

Working Capital

Working capital can directly affect transaction value.

We assess:

• Trade receivables
• Trade payables
• Inventory
• Accruals
• Prepayments
• Seasonal movements
• Normal working-capital requirements

Debt and Debt-Like Items

The headline bank debt may not represent the target’s complete financial obligations.

Depending on the transaction, due diligence may identify:

• Bank borrowings
• Shareholder loans
• Accrued liabilities
• Unpaid bonuses
• Certain employee liabilities
• Outstanding taxes
• Finance arrangements
• Other potential debt-like items

Classification ultimately depends on the agreed transaction terms.

Cash Flow

Strong accounting profit does not necessarily mean strong cash generation.

We analyse how effectively earnings convert into cash and identify areas that consistently absorb working capital.

Our UAE Due Diligence Process

Step 1: Understand the Proposed Transaction

We begin with the deal itself. Whether it is a full acquisition, minority investment, merger, joint venture, strategic partnership, business sale or internal restructuring, the scope of due diligence for company acquisition UAE should reflect the structure and risks of the proposed transaction.

Is it:

• A full acquisition?
• Minority investment?
• Merger?
• Joint venture?
• Strategic partnership?
• Business sale?
• Internal restructuring?

Understanding the transaction determines what needs to be reviewed.

Step 2: Define the Scope and Key Risks

Not every deal needs every type of due diligence. We agree on the areas that matter most based on transaction value, industry, target size, buyer concerns, available information and deal timetable. These factors also influence the due diligence services cost UAE, because the required work can vary significantly from one transaction to another.

We agree on the areas that matter most based on:

• Transaction value
• Industry
• Target size
• Buyer concerns
• Available information
• Deal timetable

Step 3: Issue the Information Request

The target or seller receives a structured information request. Documents may include financial statements, management accounts, general ledgers, tax returns, bank information, customer reports, supplier information, debt schedules, contracts, payroll information, corporate records and forecasts. This information also forms the basis of a practical due diligence checklist UAE business before detailed analysis begins.

Documents may include:

• Financial statements
• Management accounts
• General ledgers
• Tax returns
• Bank information
• Customer reports
• Supplier information
• Debt schedules
• Contracts
• Payroll information
• Corporate records
• Forecasts

Step 4: Review the Data Room

We analyse the available information and identify gaps or inconsistencies.

Missing information is followed up through additional requests or management questions.

Step 5: Analyse Financial Performance

We assess revenue, margins, EBITDA, working capital, cash flow, debt and other material financial areas.

Step 6: Review Tax and Transaction Risks

Where included in scope, we analyse Corporate Tax, VAT and relevant transaction-tax considerations.

Step 7: Conduct Management Discussions

Management explanations can provide important context behind movements in:

• Revenue
• Margins
• Expenses
• Customers
• Working capital
• Forecasts
• Operational changes

The explanations are then considered alongside the supporting financial information.

Step 8: Identify Red Flags and Deal Issues

Findings are prioritised according to their relevance to the proposed transaction.

Instead of simply presenting hundreds of observations, the objective is to identify what could materially affect:

• Value
• Deal structure
• Negotiation
• Completion
• Post-acquisition plans

Step 9: Deliver the Due Diligence Report

The final report explains the findings in a structured format.

Depending on scope, it may include:

Area	What the Report May Cover
Executive summary	Main findings and transaction considerations
Financial performance	Revenue, profitability and trends
Quality of earnings	Normalised or sustainable earnings analysis
Working capital	Historical trends and potential normal level
Debt	Borrowings and potential debt-like items
Cash flow	Cash conversion and funding requirements
Tax	Material Corporate Tax and VAT findings
Key risks	Issues requiring attention before completion
Deal considerations	Matters that may affect negotiation or transaction terms

Due Diligence vs Financial Audit

Area	Due Diligence	Financial Audit
Primary purpose	Support an investment or transaction decision	Express an opinion on historical financial statements
Main user	Buyer, investor or transaction stakeholders	Shareholders and other financial-statement users
Focus	Transaction risks and value drivers	Financial statement accuracy and applicable reporting framework
Quality of earnings	Common focus	Not normally the primary objective
Working capital analysis	Common	Limited to audit relevance
Purchase-price considerations	Yes	No
Future performance	May analyse forecasts and assumptions	Audit is primarily historical
Tax risks	May form a dedicated workstream	Considered only within the audit scope
Final output	Transaction-specific findings report	Independent audit report
Assurance opinion	Generally no	Yes

How Can Due Diligence Affect the Purchase Price?

Due diligence can materially influence deal economics.

For example, findings may lead to discussions around:

EBITDA Adjustments

One-off or non-recurring income and costs may change the maintainable earnings used for valuation.

Working Capital Adjustments

If the business requires more normal working capital than expected, the purchase price mechanism may need to reflect it.

Debt Adjustments

Previously unidentified debt or debt-like obligations may affect equity value.

Tax Exposure

Historical tax liabilities may result in additional warranties, indemnities or other deal protections.

Earn-Out Structures

Where future performance is uncertain, part of the consideration may be linked to future results.

The final legal and commercial treatment is determined by the transaction parties and their advisers.

When Should Due Diligence Start?

Ideally, due diligence should begin once there is sufficient transaction interest and access to meaningful information but before the buyer becomes unconditionally committed to the deal.

Starting too late can reduce the buyer’s ability to react to important findings.

The timing will usually depend on:

• Letter of intent
• Exclusivity arrangements
• Data-room availability
• Deal structure
• Financing requirements
• Regulatory approvals
• Expected completion date

What Documents Are Usually Required?

Financial due diligence commonly requires some combination of:

• Historical financial statements
• Management accounts
• Trial balances
• General ledgers
• Budgets and forecasts
• Bank and debt schedules
• Accounts receivable ageing
• Accounts payable ageing
• Inventory reports
• Fixed asset information
• Customer revenue analysis
• Supplier information
• Corporate Tax records
• VAT returns
• Related-party schedules
• Payroll summaries
• Significant contracts
• Corporate documents

Additional documents may be requested as new issues emerge.

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