Due Diligence for Partnerships & Acquisitions in UAE: A Checklist

You may be acquiring a company, having a JV, or investing in a start-up, or may be bringing a strategic partner on board in the UAE, due diligence is how you escape costly surprises. The idea is not to go out to identify the problems but to ensure that the story behind the numbers, contracts, compliance, and operations is correct to ensure that you price risk in a proper manner and structure the deal in a safe manner.

The following is an actual checklist that you may apply prior to signing an LOI, in the due diligence process, and just before closing. For professional support (financial, tax, legal coordination, risk assessment), explore due diligence services.

1) Deal basics and scope (set this first)

Before you request documents, define:

• Transaction type: acquisition (asset vs share), partnership/JV, minority investment
• Time period to review: typically last 2–3 years + current YTD
• Key risks to test: revenue recognition, customer concentration, tax/VAT, related parties, cash quality, liabilities
• What “success” looks like: synergy assumptions, operational integration, staffing plan

Output you want: a diligence report that clearly says what’s true, what’s uncertain, what’s risky, and how it affects price/terms.

2) Corporate and legal due diligence

Checklist

• Trade license(s) and activity list (ensure the company is licensed for what it actually does)
• Memorandum/Articles of Association, share register, ownership history
• Beneficial ownership documentation
• Board resolutions and signing authority
• Subsidiaries/branches and intercompany agreements
• Material contracts (customers, suppliers, leases, franchise agreements)
• Ongoing or threatened litigation and disputes
• IP ownership (brand, domain, software, trademarks)
• Insurance policies (coverage limits, claims history)

Red flags

• activities on license don’t match operations
• key contracts not in the company name
• unsigned agreements or “handshake” arrangements

3) Financial due diligence (quality of earnings)

This is where most value—and most hidden risk—lives.

Checklist

• Audited financials (if available) + management accounts
• Trial balance, general ledger, and chart of accounts
• Revenue breakdown by product/service, region, and channel
• Gross margin analysis and variance explanations
• EBITDA normalization (one-offs, owner expenses, non-recurring items)
• Working capital analysis (A/R, A/P, inventory, accruals)
• Cash flow vs profit reconciliation
• Bank statements and bank reconciliations
• Debt schedule and contingent liabilities
• Fixed asset register and depreciation policy

Red flags

• profit looks good but cash is consistently weak
• big “other income” line items
• aggressive revenue recognition (booking revenue early, weak documentation)
• unexplained related-party balances

4) Tax and VAT due diligence (UAE-focused)

Tax risk can follow you after closing if not addressed in warranties/indemnities.

Checklist

• VAT registration status, TRN, filing history, and payment evidence
• VAT returns reconciled to sales and purchase ledgers
• Treatment of discounts, refunds, credit notes
• Reverse charge exposure (overseas suppliers/services)
• Corporate tax readiness: profit calculations, documentation, policies
• Transfer pricing / related-party transactions (if applicable)
• Any penalties, audits, or correspondence with authorities

Red flags

• VAT returns don’t match accounting records
• missing tax invoices and weak document retention
• frequent late filings or penalties

5) Commercial due diligence (the business reality)

Checklist

• Customer concentration (top 10 customers % of revenue)
• Contract renewal terms and churn rates
• Sales pipeline, win/loss analysis, and pricing power
• Competitive positioning and market risks
• Dependency risks (one big supplier, one platform, one founder)
• Unit economics (CAC, LTV, gross margin by product line)
• Claims, refunds, warranties, and customer disputes

Red flags

• “handshake” customer relationships
• discounts required to close most deals
• revenue heavily tied to one person’s relationships

6) Operational due diligence (can it scale and survive?)

Checklist

• Core processes and SOPs (sales → delivery → billing → collections)
• Internal controls (approvals, segregation of duties, fraud prevention)
• IT systems: accounting, CRM, ERP, POS, logistics tools
• Data access and backups, cyber hygiene
• Vendor management and procurement controls
• Key operational KPIs and dashboards
• Compliance with industry regulations (if relevant)

Red flags

• heavy manual operations without audit trails
• no backups, weak access control
• undocumented processes that rely on tribal knowledge

7) HR and staffing due diligence

Checklist

• Organization chart + headcount by function
• Key employee contracts and notice periods
• Payroll records, leave provisions, end-of-service benefits accruals
• Visa status and compliance for employees
• Incentive and commission plans (and liabilities)
• Any HR disputes or pending claims

Red flags

• unpaid commissions or unclear commission terms
• end-of-service benefits not properly accrued
• “contractors” who function like employees without documentation

8) Related-party transactions (often where risk hides)

Many UAE businesses have related entities involved in:

• rent/office sharing
• payroll outsourcing
• management fees
• supplier arrangements
• revenue routing

Checklist

• Related-party list + nature of relationships
• Contracts for related-party charges
• Market-rate benchmarking
• Identify which costs/revenues will change post-acquisition

Red flags

• major expenses paid by owner personally or by another entity
• revenue billed by one entity but delivered by another

9) Deal protections you should consider

Due diligence is only useful if it impacts deal terms.

Common protections include:

• purchase price adjustments (working capital, debt-like items)
• escrow/holdbacks for uncertain liabilities
• warranties & indemnities for tax, legal, and financial risks
• earn-outs tied to verified performance metrics
• conditions precedent (renew a key contract, clear a dispute, settle VAT risk)

10) A clean Due Diligence “Request List” (starter pack)

Use this to start fast:

Corporate

• Trade license, MoA/AoA, share register, signatory list

Finance

• Last 2–3 years financials, YTD accounts, trial balance, GL, bank statements, bank recs

Revenue

• Customer list + contracts, top customers breakdown, pricing/rate cards

Expenses

• Supplier list + contracts, major invoices, lease agreements

Tax/VAT

• VAT certificate, VAT returns + workings, tax invoices samples, penalties/audit letters

HR

• Payroll, key contracts, headcount list, EOSB accruals

Legal

• Litigation/dispute list, insurance policies, IP docs

Operations/IT

• Systems list, access controls, backup policies, process maps

Final note

The best due diligence doesn’t drown you in documents—it gives you:

• a clear risk map,
• verified financial reality (cash, margins, liabilities),
• and deal terms that protect you.

If you want support conducting a structured, UAE-specific review, explore professional due diligence services for end-to-end diligence, reporting, and deal-risk guidance.