The M&A Process in Dubai: From First Call to Signed SPA

Mergers and acquisitions in the GCC are not fundamentally different from transactions elsewhere, but the market dynamics, regulatory environment, and business culture create specific patterns that anyone entering a transaction needs to understand.

This article walks through the full M&A process as it typically unfolds in Dubai and the broader GCC, from initial mandate to signed Sale and Purchase Agreement.

Phase 1: Mandate and Scope

Every transaction begins with an advisory mandate. The seller (or buyer, on the buy side) engages an advisor, agrees on scope, fee structure, and timeline, and signs a mandate letter. This document defines what the advisor is authorised to do (approach buyers, prepare materials, manage due diligence) and the success fee they earn on completion.

In the GCC, mandate letters typically include a retainer component to cover preparation costs, and a success fee based on the transaction value, either a single percentage or a scale set out in the mandate letter.

What goes wrong here: Owners who engage advisors without a clear mandate letter, or who approach buyers informally before a process is structured, consistently achieve worse outcomes. Confidentiality is compromised, competitive tension is lost, and the seller's negotiating position weakens before the conversation has properly started.

Phase 2: Preparation of Materials

Before a single buyer is contacted, the following need to be ready:

Information Memorandum (IM). The central document, typically 30 to 60 pages, covering the business overview, market context, financial history, operational structure, growth thesis, and investment highlights. This is not a marketing document. It is a factual, structured presentation that a buyer's team will use as the foundation for their analysis and due diligence questions.

Financial model. A three-statement model covering historical performance and a 3 to 5 year projection, with clear assumptions documented. Buyers will rebuild this model. The seller's version needs to be defensible, not optimistic.

Data room. A structured repository of corporate documents, contracts, licences, financial statements, and HR records. In the UAE, this includes trade licences, establishment cards, Memoranda of Association, shareholder agreements, key commercial contracts, and audited or reviewed financials.

Teaser. A one or two page anonymised summary used for initial outreach: enough to qualify interest without disclosing the identity of the business.

Preparation typically takes about six weeks. Rushing it is a common reason processes stall later.

Phase 3: Buyer Identification and Outreach

The advisor builds a buyer list segmented by type: strategic acquirers, regional PE funds, family offices, international strategics with GCC interest. Each segment has different motivations and different processes.

Outreach is confidential. Buyers first receive the anonymised teaser; those who want to go further sign an NDA, and only then receive the IM.

Managing the process. A well-run process creates simultaneous conversations with multiple qualified buyers. This is critical: it is what creates competitive tension and keeps buyers honest on price and terms. A single-party process, where the seller is dependent on one buyer's interest, almost always results in a lower price and worse terms.

Phase 4: Indicative Offers

Qualified buyers submit indicative, non-binding offers, typically in the form of a letter of intent (LOI) or indicative term sheet. These outline:

• Headline enterprise value
• Consideration structure (cash at close, deferred, earn-out)
• Assumed working capital and debt
• Key conditions (exclusivity, due diligence period)
• Proposed timeline

The advisor evaluates offers not just on headline price but on structure, conditionality, and buyer credibility. An offer at a high price with extensive conditions and a weak buyer is often worse than a slightly lower offer from a credible, well-funded acquirer.

At this stage, the seller typically selects two or three parties to proceed to due diligence. Exclusivity, if granted at all, is typically withheld until late in the process.

Phase 5: Due Diligence

Due diligence is where transactions are won or lost. The buyer's advisors (financial, legal, commercial, and sometimes operational) conduct a thorough examination of the business. This typically runs four to ten weeks depending on complexity.

Financial due diligence focuses on the quality of earnings: are reported profits real, recurring, and achievable post-acquisition? Common findings in GCC transactions include:

• Revenue recognised before delivery
• Related-party transactions at non-market rates
• Owner expenses running through the business
• Undocumented liabilities

Legal due diligence covers corporate structure, contracts, employment, IP, regulatory compliance, and litigation. In the UAE specifically, this includes free zone vs. mainland issues, visa status of key employees, and whether licences are transferable.

Commercial due diligence assesses market position, competitive dynamics, customer relationships, and growth assumptions.

The seller's role during due diligence is to be organised, responsive, and consistent. Every question answered slowly or incompletely increases buyer anxiety and their perception of risk, which translates directly into price adjustments or deal conditions.

Phase 6: Negotiation and Final Terms

Based on due diligence findings, the buyer may adjust their offer: on price, structure, or representations and warranties. This is the most technically demanding phase of the process.

Key negotiation points in GCC transactions typically include:

• Price adjustments based on due diligence findings
• Earn-out structures for revenue or EBITDA performance post-close
• Escrow arrangements to cover post-closing claims
• Representations and warranties: what the seller is certifying about the business
• Non-compete and non-solicitation terms
• Transition arrangements: how long the founder stays post-close

Phase 7: Documentation and Close

The Sale and Purchase Agreement (SPA) is the primary transaction document. In UAE transactions, it is usually governed by UAE law, DIFC or ADGM law, or English law where international parties are involved, and it covers all agreed terms, conditions precedent, and post-closing obligations.

Conditions precedent commonly include regulatory approvals (including merger control clearance where the parties' combined UAE sales exceed AED 300 million or their combined market share exceeds 40%), third-party consents, and employee transfer arrangements. Once all conditions are met, funds are transferred and ownership changes.

From the start of preparation to signing, a well-run mid-market M&A process in Dubai typically takes six to nine months. Completion follows once the conditions are met; deals that need regulatory approval take longer.

General information only. Not legal, tax or investment advice.