REVERSE DUE DILIGENCE: HOW UAE FIRMS CAN GET DEAL-READY IN TODAY’S TAX ENVIRONMENT M&A LANDSCAPE IN THE UAE

This article has been researched and written by the Business Development team at Creation Business Consultants. AI has not been used in generating this article.

INTRODUCTION: THE NEW M&A LANDSCAPE IN THE UAE

The UAE’s M&A scene has changed a lot over the years. Foreign investors are increasingly eyeing local businesses, and cross-border deals are becoming more common and attractive. UAE’S economic growth and business-friendly environment make it an attractive place for acquisitions.

Things aren’t the same as they used to be. With the introduction of UAE Corporate Tax (UAECT), the days of a “no-tax” jurisdiction are well behind us. Buyers now expect more transparency, stronger compliance, and clearer financial reporting.

So, what does this mean for business owners thinking about selling? Preparation is key and it must start earlier, and it must go deeper. That’s where reverse due diligence comes in: and this is a way for businesses to check themselves before a buyer does, ensuring they are ready for a smooth, confident sale in today’s tax-aware market.

WHAT IS REVERSE DUE DILIGENCE?

Think of it as a dress rehearsal for the real deal. Instead of waiting for a buyer to dig into your financials, contracts, and compliance history, you take the initiative to examine your company from the buyer’s perspective. In other words, you flip the usual process on its head:

Reverse due diligence can accelerate a transaction and improve your assessment. By identifying potential issues early on, you take control. You step into negotiations with a clear understanding of any red flags and more importantly, you’ve already addressed them.

Why Tax Regulations Place Reverse Due Diligence in the Spotlight?

Corporate tax in the UAE has become a key focus area for foreign purchasers who want to know your organisation is prepared for tax implications. They will examine:

• Whether your tax groups are set up correctly
• Whether your Free Zone advantages still apply under current laws
• The strength of your transfer pricing documentation

Each of these factors can raise questions about potential risks and ultimately decrease your company’s value.

At the same time, Global Minimum Tax adds another layer of scrutiny. Under the OECD’s BEPS Pillar Two framework, multinational purchasers must ensure compliance with the 15% global minimum tax, and this makes them even more vigilant.

If your compliance practices do not align and meet global standards, that perceived risk could lead buyers to walk away from buying your business or to revise their business offer.

Confidence is currency. Solid records and clear processes help to reduce risk and signal to prospective buyers that your business is well-run, managed and is capable of further growth. Credibility often translates into stronger negotiating power and better deal terms.

A PRACTICAL CHECKLIST FOR REVERSE DUE DILIGENCE IN UAE FIRMS

What Should Companies in the UAE Check?

Before a potential business sale or investment, UAE companies should conduct a thorough reverse due diligence review to ensure transparency, compliance, and readiness. Below we have complied a basic checklist to guide your review:

1. Tax & Financial Stability

• Corporate tax, VAT, and ESR compliance.
• IFRS-based and relevant financial statements.
• Related-party transactions and transfer pricing.

2. Legal & Governance

• Clearly defined corporate ownership and valid licensing.
• Contracts free from hidden liabilities or restrictive conditions.
• Proper documentation of IP ownership.

3. Operational & Commercial

• Compliance with HR policies, employment contracts, and visa requirements.
• Resilience and cybersecurity of IT systems.
• Vendor and customer dependencies.

THE 4-STEP PROCESS FOR A SUCCESSFUL REVERSE DUE DILIGENCE PROJECT

How to Conduct the Reverse Due Diligence:

1. Build Your Team

Bring together and gather the right mix of expertise and this can be internal or external advisors for example legal, tax, and financial. Work with a strong internal leadership team which will ensure a comprehensive review.

2. Define What Matters Most

Define the most important areas in your industry and those that are most relevant to potential buyers. Focus on any issues that may directly impact value, compliance, or risk.

3. Identify and Address Problems Early

Do not wait for a buyer to identify any problems. Conduct your review proactively and fix any issues within your control, terms and timeline.

4. Prepare a Virtual Data Room (VDR)

Once you are ready, have everything prepared in a managed VDR as this ensures a professional approach, streamlines due diligence, will build confidence and trust and most of all saves everyone time.

CONCLUSION: TURNING PREPAREDNESS INTO PROFIT

Reverse due diligence is not just a compliance check; it is about owning your sale process. By taking the initiative, you can protect the value that you have spent years creating while also providing buyers with reasonable confidence that they are reviewing and purchasing a well-prepared future-facing business.

As the tax and regulatory environment continues to evolve, this level of preparation has become not just optional, but a real competitive advantage. For UAE companies considering a sale or foreign acquisition, the groundwork you do now will determine whether you are closing an average transaction or negotiating an exceptional one.

At Creation Business Consultants, our advisory teams will help business owners manage this journey with confidence. We will conduct tax and legal reviews to corporate governance, operational checks and prepare day-one buyer-ready data rooms, to ensure you are well positioned to attract the right investors and obtain the best terms possible. If you have been thinking of selling your business or just want to be deal-ready, our advisors are here to help you every step of the way. Contact us today on [email protected] for an expert consultation.