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Evaluate a GCC acquisition by tracing what the buyer would actually acquire, testing whether the business converts reported earnings into cash, identifying local legal and regulatory requirements, and turning each material finding into a deal action. The Gulf Cooperation Council is not one legal regime: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE have distinct rules, authorities and sector requirements. Start with the target’s country, activity, legal entities and ownership structure, then verify the rules that apply at signing and closing with local advisers.
How to use this checklist
Run diligence in workstreams, but connect the results. An ownership issue can affect whether the target holds a licence; a contract consent can affect closing timing; an unrecorded employee obligation can change the purchase-price calculation. For every issue, record the evidence, the responsible person, the likely financial or operational impact, and the action needed before or after closing.
- Set the perimeter: define the entities, assets, liabilities, business lines and jurisdictions included in the proposed transaction.
- Request and reconcile evidence: compare documents with registers, ledgers, bank records, operating data and actual business practices.
- Screen approvals and consents early: identify competition, sector-regulator, shareholder and counterparty requirements before the transaction timetable is fixed.
- Translate findings into terms: decide whether each issue affects price, closing conditions, contractual protection, integration or the decision to proceed.
This is a general diligence framework, not legal, accounting, tax, valuation or investment advice for a specific transaction.
1. Define exactly what is being acquired
Map the legal group and ownership
Obtain a current organization chart and trace direct and ultimate beneficial ownership through subsidiaries, branches, nominee or side arrangements, onshore and free-zone entities, and offshore holding companies. Reconcile it against commercial registrations, constitutional documents, shareholder records, board approvals and licences. A group chart is a starting point, not proof that the presented target owns the business’s rights or obligations.
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Build an entity-and-asset map
For each material asset or relationship, identify the legal entity that owns, employs, holds, invoices or contracts for it. Include property, equipment, inventory, customer and supplier contracts, licences, intellectual property, bank accounts, employees and debt. Compare that map with the proposed deal perimeter. If an essential asset, licence or contract sits outside the acquired entity, determine whether it can be transferred, assigned, licensed or otherwise made available after closing, and what approvals or consents that requires.
2. Test earnings, cash and liabilities
Verify the financial picture
Reconcile audited accounts and management accounts to general ledgers, bank statements, tax filings and operating data. Test revenue recognition, margins, customer concentration, one-off items, owner expenses, forecasts and related-party dealings. Ask whether reported revenue is supported by contracts, invoices, delivery evidence and collections, and whether costs have been recorded in the correct period.
Assess cash conversion and the purchase-price mechanics
Examine working-capital seasonality, overdue receivables, inventory, unpaid suppliers and capital expenditure. Establish the basis on which working capital will be measured at closing and identify any seasonal pattern that makes a single snapshot misleading. Reconcile cash, borrowings and other debt-like items, including guarantees, lease obligations and employee-benefit accruals, then compare the findings with the proposed net-debt and working-capital adjustments.
Look beyond booked debt
Review contingent liabilities, guarantees, commitments, disputed balances and obligations that may not appear as conventional borrowings. Financial diligence commonly focuses on quality of earnings, working capital, net debt and debt-like items, tax and regulatory exposure, and related-party transactions. Use those categories to organize findings, not as a substitute for checking the underlying records.
3. Review tax, customs and accounting exposures
Reconcile tax returns, assessments, audit correspondence, objections, payments and provisions. Test both historical exposure and the consequences of the transaction and post-close structure.
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- Corporate income tax, VAT and withholding taxes.
- Transfer pricing and related-party arrangements, including dealings with owners or family businesses.
- Customs treatment and any relevant group relief, tax grouping or free-zone treatment.
- Saudi-specific Zakat and social-insurance (GOSI) exposure.
- UAE-specific VAT and corporate-tax exposure, alongside payroll and end-of-service obligations where relevant.
Do not apply a rate, threshold, exemption or treatment from one GCC country to another. Confirm the target’s jurisdiction, entity type, activity and applicable periods with local tax advice.
4. Confirm corporate authority, ownership rights and licences
Check legal status and transaction authority
Verify the good standing and legal form of every in-scope entity. Compare constitutional documents and shareholder agreements with the proposed sale, and identify security interests, transfer restrictions, pre-emption rights, vetoes, shareholder consents and board approvals. Confirm that the people approving and signing the transaction have authority to do so.
Create a licence and permit register
For each licence or permit, record the issuing authority, named entity, covered activity and geography, expiry date, conditions and any notification or consent requirement triggered by a change of ownership or control. Test whether the business’s actual operations fit its permissions, not just whether a document exists.
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Check foreign-ownership rules for the actual activity
Foreign-ownership eligibility depends on the country, activity and structure. As a Qatar-specific example, the Ministry of Commerce and Industry says Law No. 1 of 2019 permits foreign investors to own up to 100% in permitted economic sectors, while excluding banks, insurance, commercial agencies and other restricted sectors; it directs investors to check the activity against the official positive list. That framework is not a GCC-wide rule, and the target’s specific activity must be checked against current requirements.
5. Screen competition and sector approvals before signing
Competition review and sector-regulator approval are separate questions. For each relevant jurisdiction, establish whether the transaction changes control, whether notification is required, which thresholds and filing timetable apply, and whether a sector regulator must separately approve the acquisition. Analyze minority protections, veto rights, board appointments and joint-control arrangements as well as majority ownership. Get local advice early where a filing or consent could affect signing, closing or the ability to operate while approvals are pending.
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Saudi Arabia: treat thresholds and statistics as dated, local guidance
Chambers’ 2026 Saudi merger-control guide summarizes the General Authority for Competition framework, including its discussion of decisive influence and the updated guidelines from April 2025. It describes a SAR 200 million combined annual-sales threshold together with additional target and local-sales conditions. The figure is not a stand-alone test, does not apply across the GCC, and should be checked against the current rules and the transaction’s facts with the authority and local counsel. The guide also reports 75 Saudi economic-concentration applications in Q1 2026, down 31% year on year; that is a time-bound Saudi filing statistic, not a measure of GCC-wide merger activity.
Qatar: assess the separate control-or-domination framework
A 2025 Qatar merger-control guide describes a separate review approach based on control or domination. Treat that commentary as secondary legal guidance and confirm the current law, thresholds and filing analysis with Qatar counsel for the proposed transaction.
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For a regulated UAE bank, the Central Bank of the UAE rulebook states: “A Bank must obtain written approval from the Central Bank prior to completing a Major Acquisition.” The rule concerns banks and major acquisitions, not every acquisition of a UAE company. The rulebook identifies a due-diligence report and valuation methodology among application materials. Confirm current rule status and applicability directly with the regulator and specialist counsel before relying on it.
6. Test contracts and business continuity
Review material customer, supplier, distribution, franchise, agency, financing, lease, government and technology agreements. For each one, flag assignment and change-of-control provisions, termination rights, exclusivity, pricing, minimum-purchase obligations, renewal terms and required consents.
- Can a counterparty terminate, suspend or renegotiate because of the transaction?
- Is consent required before closing, or can it be obtained afterward?
- Can the business keep operating while a consent or regulatory approval is pending?
- Do key contracts sit in an entity that is outside the proposed deal perimeter?
Prioritize agreements whose loss or interruption would materially affect revenue, supply, financing, facilities, government work or technology access.
7. Verify intellectual property, data and technology
Check registration and ownership of brands, domains, software, designs and other critical intellectual property. Confirm that employees and contractors assigned their rights where needed, and review licences, third-party restrictions, renewal dates, source-code access and control of domains and social accounts. A founder may personally hold a brand registration, or the operating company may rely on licensed software rather than own it; verify the actual title and permissions.
Review privacy obligations, cybersecurity incidents, data-location and access restrictions, technology resilience and reliance on key vendors. Identify whether the target can continue lawful and reliable operations after closing, including access to systems, data and software that the business does not own outright.
8. Review employees and employment liabilities
Sample employment contracts, payroll, wage-protection records where applicable, visa and sponsorship files, accrued leave, end-of-service obligations, pension or social-insurance contributions, disputes, contractor status and localization requirements. Check whether payroll records reconcile with headcount and payments, and whether any critical employees are employed by a different group entity from the one being acquired.
Confirm that key managers and technical staff are expected to remain. If continuity depends on particular people, assess whether retention or incentive arrangements are needed and how they will be documented. In Qatar, diligence should include employment contracts, sponsorship arrangements and visa status; in the UAE and Saudi Arabia, examine relevant end-of-service, wage-protection and GOSI exposures.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.9. Investigate disputes, compliance and integrity
Review litigation, arbitration, regulator correspondence, investigations, customer complaints and insurance claims. Examine sanctions and export-control exposure, anti-bribery controls, beneficial-ownership records and related-party conflicts. Ask about informal practices as well as documented policies: contingent claims or compliance failures may not be visible in audited financial statements.
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Where an issue is identified, establish what happened, which entity or people were involved, whether it is ongoing, what records support the account and what remediation or reporting obligations may apply. Include data-protection and sector-specific compliance in the review where relevant.
10. Convert findings into price, protections and a decision
Maintain an issue register with one entry per material finding. Record the evidence, confidence level, likelihood, financial or operational impact, accountable owner and proposed remedy. Then connect each finding to an explicit deal choice:
- Price and adjustments: revise valuation, working-capital assumptions or net-debt treatment where the evidence changes expected value or closing balances.
- Approval and closing: make required regulatory or counterparty approvals conditions to closing, with clear responsibility and timing.
- Contractual protection: consider a specific indemnity, escrow, retention, warranty, covenant or closing deliverable when a risk needs to be allocated or resolved.
- Integration: assign post-close remediation for issues that can be managed after completion, such as systems access, policy gaps or operational dependencies.
- Stop or pause: do not proceed on the original terms if a critical right, approval, liability or fact cannot be verified or acceptably addressed.
Revisit valuation after diligence. A seller’s information memorandum is a set of claims to verify, not evidence that the claims are accurate.
How to compare two targets or diligence proposals
Use the same criteria for each target or adviser so that a strong presentation does not obscure a weaker risk profile or a missing workstream.
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|---|---|
| Jurisdiction and sector | Countries, regulators, activities, entity forms and applicable ownership or operating restrictions. |
| Ownership and perimeter | Verified ownership, location of key assets and contracts, and any rights held outside the proposed acquisition group. |
| Financial quality | Earnings support, cash conversion, working capital, debt-like and contingent liabilities, and customer or supplier concentration. |
| Tax and customs | Filing and payment history, open audits or disputes, related-party treatment and transaction or post-close exposure. |
| Approvals and timing | Competition filings, sector consents, third-party approvals, conditions and realistic time-to-close. |
| People, IP and data | Employment liabilities, retention dependencies, ownership and permissions, privacy, cybersecurity and vendor reliance. |
| Evidence quality | Which conclusions are documented, which are based on management explanations, and what remains unresolved. |
| Remediation cost | Contractual protection, price impact, approval delay, operational fix or integration work needed for each issue. |
When choosing advisers, compare local legal capability, financial and tax expertise, sector experience, independence and conflicts, scope and deliverables, language capability, timetable and fee basis. The diligence scope should match the transaction’s countries, entities, sector and risk profile.
Jurisdiction is a diligence question, not a footnote
The examples above do not establish a complete current legal matrix for Bahrain, Kuwait, Oman, every UAE emirate or free zone, or every regulated sector in the six GCC states. Identify the competent authority and obtain current local advice for each relevant entity and activity. Do not infer a rule from Qatar, Saudi Arabia or a regulated UAE bank and apply it elsewhere—or assume that a rule applying to one entity type covers another.
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