Acquiring a company in the UAE can appear straightforward until hidden liabilities, regulatory gaps or undocumented ownership claims emerge after closing. These issues can derail a deal, reduce its value or expose buyers to unforeseen obligations.
Effective M&A due diligence is therefore a critical part of any merger or acquisition. Professional Mergers & Acquisitions Services can help buyers identify legal, regulatory and commercial risks before committing to a transaction.
This article identifies ten legal areas that commonly surface during UAE M&A due diligence and each are capable of affecting the purchase price, transaction structure or post-completion risk allocation.
1. Corporate structure and ownership
The buyer should confirm that the target has been properly incorporated and maintained, including its constitutional documents, shareholding structure, licences, corporate records and authorities of its directors and managers. The ownership of shares should also be verified, including whether any shares are subject to pledges, restrictions or third-party rights.
Defects in corporate structure or ownership can fundamentally undermine a transaction. A buyer may discover that the target was never validly incorporated, that its shares were issued without proper authority, or that a previous transfer was not properly registered. In the UAE, where ownership structures often involve local sponsors, nominee arrangements or multi-jurisdictional holding companies, these issues can be particularly complex and may affect whether the seller can actually transfer what it purports to sell.
2. Regulatory licences and approvals
A target’s right to operate depends on its licences and permits. If these are missing, expired, or held in the wrong entity, a buyer may acquire a business that cannot lawfully continue trading. In the UAE, licensing requirements vary significantly depending on whether the target operates onshore, in a free zone, or across multiple jurisdictions and regulated sectors such as financial services, healthcare, education and technology impose additional layers of approval. A buyer who does not map out the regulatory landscape before signing risks finding that the deal cannot complete as planned, or that the business cannot operate lawfully from day one.
As part of M&A legal services, this regulatory review should also establish whether the proposed transaction requires specific governmental, sectoral or free zone approvals before completion.
3. Material contracts
Material contracts are often the lifeblood of a target’s business, yet they can also be its greatest vulnerability in a transaction.
This is an area where due diligence may reveal contracts that were drafted using AI tools without adequate legal oversight. AI-generated contracts often appear professionally formatted and internally consistent, but may contain critical gaps: ambiguous definitions, missing boilerplate protections, imprecise termination mechanics or limitation of liability clauses that do not actually work. These defects may not be obvious on a first read but they can leave the target exposed to liabilities it thought it had excluded, or without remedies it assumed it had. A buyer inheriting a contract portfolio with these latent defects may find itself bound by terms that are unenforceable, commercially unworkable or simply not fit for purpose. Identifying these issues requires experienced legal review – not just of what the contracts say, but of what they fail to say.
4. Litigation and disputes
Outstanding or threatened litigation can represent significant contingent liabilities that are not always visible on a target’s balance sheet. A buyer may inherit claims that were never disclosed, regulatory investigations that could result in fines or operational restrictions, or disputes that consume management time and resources long after completion.
A thorough review should consider not only current proceedings but also historical claims, settlements and patterns of disputes that may indicate systemic issues. Without this analysis, buyers risk under-pricing the acquisition or failing to secure appropriate warranties and indemnities, leaving them exposed to liabilities they did not anticipate and cannot recover.
5. Employment matters
Employment contracts, remuneration arrangements, end-of-service liabilities, outstanding employee claims and compliance with applicable labour requirements should be reviewed. The buyer should also consider whether the proposed transaction will affect employees or require changes to their contractual arrangements.
The transaction structure itself may also trigger employment consequences. In a share sale, employees generally remain in place, but a change of control may affect incentive arrangements or give rise to constructive dismissal arguments if working conditions change materially. In an asset sale, employees may need to be transferred or made redundant—each option carrying its own legal requirements and costs. A buyer who does not map out these implications before signing may face unexpected liabilities, workforce disruption or regulatory scrutiny after completion.
6. Intellectual property and technology
The buyer should establish what intellectual property the target owns or uses, including trademarks, copyrights, software, domain names and proprietary technology.
It is important to distinguish between IP that is actually owned by the target and IP that is merely licensed. Any restrictions on transferring or continuing to use that IP after completion should also be identified.
The consequences of getting this wrong can be severe. A buyer who cannot establish clear title to the IP it thought it was acquiring may be unable to enforce those rights against infringers, may face claims from third parties who assert competing ownership, or may find that critical licences terminate on change of control. In technology-driven acquisitions, these issues can fundamentally undermine the commercial rationale for the deal.
Thorough IP due diligence should therefore go beyond confirming what is registered. It requires tracing ownership from creation through any assignments, reviewing development and contractor agreements, identifying licensed-in technology and assessing whether those licences will survive completion.
7. Data protection and cybersecurity
Businesses increasingly hold significant amounts of personal and commercially sensitive information. Due diligence should therefore examine how the target collects, processes, stores and transfers personal data, together with its contractual and regulatory obligations. Cybersecurity incidents and weaknesses in data governance should also be considered, particularly where they could result in regulatory exposure or claims following completion.
A buyer who does not conduct thorough data and cybersecurity due diligence may inherit problems that are expensive to remediate, difficult to disclose to customers and damaging to the trust that underpins the target’s business relationships.
For businesses operating in technology, financial services, healthcare and other data-intensive sectors, cybersecurity and data protection reviews can form an important part of comprehensive M&A legal services.
8. Competition law
Competition law, sometimes called antitrust law, exists to protect markets from practices that harm fair competition. In the M&A context, the primary concern is whether a transaction will create or strengthen a dominant market position that could allow the merged entity to raise prices, reduce quality or exclude competitors. This is why regulators require advance notification of certain acquisitions: to assess whether a deal will harm competition before it is allowed to complete.
The UAE’s competition framework is governed by Federal Decree-Law No. 36 of 2023 on the Regulation of Competition, with its Executive Regulations introduced by Cabinet Resolution No. 59 of 2026, effective from 30 July 2026. Under this regime, acquisitions that meet certain thresholds may constitute an “economic concentration” requiring approval from the Ministry of Economy before completion. Proceeding without that approval, or failing to notify when required, can result in substantial fines, orders to unwind the transaction, or other regulatory action.
Engaging competition legal experts at an early stage is essential – not just to determine whether a filing is required, but to structure the transaction in a way that minimises regulatory risk as legal analysis may reveal that the deal cannot proceed at all without restructuring. A buyer who treats competition law as a late-stage formality risks delays, unexpected conditions or deal failure at the worst possible moment.
9. Tax and financial liabilities
The buyer should investigate the target’s tax position, including corporate tax and VAT compliance, outstanding liabilities, assessments, disputes and filing obligations.
Due diligence should therefore go beyond reviewing the target’s most recent tax returns. It requires examining the target’s tax positions, transfer pricing arrangements, related-party transactions, withholding tax compliance and any ongoing or threatened disputes with tax authorities. Where exposures are identified, they must be quantified and addressed – whether through adjustments to the purchase price, specific indemnities from the seller, or funds held in escrow pending resolution.
10. Real estate, assets and security
For many acquisitions, physical assets and real estate form a substantial part of the target’s value. If the buyer cannot confirm that the target actually owns or has secure, transferable rights to these assets, the entire commercial rationale for the deal may be at risk.
In the UAE, property ownership must be verified against official land registry records, and the position can vary significantly depending on whether the property is in a freehold area, a designated investment zone, or a free zone with its own registration system. Leasehold interests should be reviewed to confirm their term, renewal rights, permitted use, and whether the landlord’s consent is required for a change of control or assignment. Equipment, vehicles and other moveable assets should be traced to ownership documentation and checked for encumbrances.
Security interests are equally important. Mortgages over real estate, pledges over shares or equipment, and floating charges over business assets may give lenders or other creditors priority claims that could affect the buyer’s ability to use or dispose of those assets after completion. A buyer who does not identify these encumbrances before signing may find that the assets it thought it was acquiring free and clear are subject to third-party claims it cannot easily discharge.
Get the right advice
The risks outlined in this article are real, but they are also manageable if they are identified early and addressed properly. That requires experienced legal experts who understand UAE transactions, know where the hidden issues lie, and can structure protections that actually work.
Whether you are acquiring a UAE business, selling a company, entering into a joint venture or restructuring an existing business, experienced Mergers & Acquisitions Services can help you navigate the legal and regulatory issues at every stage of the transaction.
At James Berry & Associates, we advise buyers through every stage of the M&A process, from initial due diligence to completion and beyond. Our M&A lawyers provide legal support designed to identify transaction risks, protect our clients’ interests and help ensure that acquisitions are structured and completed effectively.
