Financial Due Diligence Checklist for UAE & GCC Acquisitions
Every item a serious acquirer needs to verify before committing capital in the UAE or Saudi Arabia, organised by workstream, with GCC-specific notes throughout.
Read Time
12 min
Category
Due Diligence
Author
Corvian Advisory, CFA, Big 4
Published
Last updated May 2026
Financial due diligence (FDD) is the single most important risk management step in any acquisition. It is where the story the seller has told during marketing gets pressure-tested against the actual numbers. For GCC acquisitions specifically, there are nuances, related to accounting practices, working capital norms, UAE VAT compliance, Zakat in Saudi Arabia, and the structure of family business accounts, that standard FDD templates from international advisory firms frequently miss.
This checklist is structured around the five core FDD workstreams. It is designed to be used by acquirers, CFOs, and their advisors when scoping an engagement or reviewing an FDD report's coverage. It is not a substitute for a professionally conducted FDD, it is a tool to ensure nothing important has been overlooked.
Workstream 1: Quality of Earnings
Quality of Earnings (QoE) is the heart of FDD. It answers the question: how much of the reported EBITDA is genuinely recurring and sustainable, and what does the real run-rate profitability of the business look like?
Revenue analysis:Revenue by customer, product, and geography for three to five years. Identify top 10 customers as % of revenue and any concentration risk.
Revenue recognition:Review for completeness, timing, and consistency. Watch for year-end acceleration or deferred revenue incorrectly recognised.
EBITDA bridge:Build a detailed bridge from reported EBITDA to normalised EBITDA. Identify and quantify all non-recurring items (one-off gains, restructuring, asset disposals, grants, COVID-related items).
Owner adjustments:Identify all owner/family remuneration above or below market rate. Include personal expenses run through the business (vehicles, travel, insurance, school fees).
Related-party transactions:Map all transactions with affiliated entities. Verify they are at arm's length and determine which continue post-closing and on what terms.
Cost base sustainability:Review all significant cost lines for sustainability post-acquisition. Identify costs that will change as a result of the transaction (management fees, shared services).
Gross margin bridge:Understand gross margin trends by product/service line. Explain any margin improvement in recent years, verify it is structural, not a result of cost deferrals.
Workstream 2: Working Capital
Working capital analysis determines what the normalised level of working capital is, whether the business has been managed to present favourably at the closing date, and what the deal mechanics for working capital should be.
Trade receivables aging:Review full aging schedule. Quantify receivables over 90 days, 180 days, and 360+ days. Assess recoverability with reference to counterparty quality and collection history.
Post-dated cheques (GCC-specific):Map post-dated cheque receipts. Understand the practice and quantum, economically equivalent to receivables but with different collectability characteristics.
Inventory:Review inventory valuation methodology. Assess for slow-moving, obsolete, or excess inventory. Verify physical counts tie to financial records.
Trade payables:Review payables aging and assess whether payables have been extended artificially ahead of the closing date. Compare DPO to industry norms.
Normalised working capital peg:Calculate the appropriate working capital peg for the locked-box or completion accounts mechanism. Base on a trailing 12-month average, not a single point-in-time balance.
Workstream 3: Net Debt and Debt-Like Items
Net debt identification is critical for converting enterprise value to equity value in the deal. Debt-like items, obligations that economically behave like debt but may not appear in the reported net debt figure, are where acquirers in the GCC most frequently leave value on the table.
Reported financial debt:Bank loans, overdrafts, lease liabilities under IFRS 16, shareholder loans, and any other interest-bearing instruments.
End-of-service gratuity (EOSB):In UAE and GCC businesses, unfunded EOSB obligations are material debt-like items. Quantify the full liability based on current salary and tenure of all employees.
Deferred revenue:Revenue received in advance that represents a performance obligation, economically a liability and should be included in debt-like items if material.
Contingent liabilities and litigation:Review for outstanding litigation, regulatory proceedings, and any contingent exposures. Quantify range of outcomes where possible.
Customer deposits and advances:Map any customer deposits or advance payments that represent future delivery obligations, debt-like where the business must perform or refund.
Workstream 4: Tax and Compliance (GCC-Specific)
GCC tax and compliance items are consistently underweighted by international FDD templates. These are the areas that create the most post-closing exposure.
UAE Corporate Tax:As of 2024, the UAE imposes a 9% corporate tax on business profits above AED 375,000. Verify registration status, filing history, and any exposure for prior periods.
UAE VAT:Review VAT registration, filing history, and any open assessments. Assess adequacy of input tax recovery and treatment of exempt or out-of-scope supplies.
Zakat (Saudi Arabia):For Saudi entities, verify Zakat filings, assessments, and any open disputes with ZATCA. Zakat exposure is significant and often underestimated by non-Saudi buyers.
Transfer pricing:For businesses with cross-border related-party transactions, assess transfer pricing documentation and compliance with country-specific requirements.
WPS compliance (UAE):Verify Wages Protection System compliance for all UAE employees. Non-compliance creates regulatory exposure and reputational risk with labour authorities.
Workstream 5: Financial Projections and Business Plan
The final workstream tests whether the forward-looking numbers underpinning the purchase price are credible.
Historical vs budget comparison:Review management's track record of delivering against budgets over three or more years. Persistent over-optimism is a red flag for forecast reliability.
Revenue growth assumptions:Challenge the basis for projected growth. Is it supported by contracted order book, identified pipeline, or unsubstantiated market share capture?
Capex requirements:Verify maintenance capex vs growth capex distinction. Assess whether the business has deferred maintenance capex to improve near-term EBITDA presentation.
Working capital in the model:Verify the financial model treats working capital correctly, projections showing 100% EBITDA-to-cash conversion with no working capital drain are almost certainly wrong.
"A professionally conducted FDD does not just protect the buyer from overpaying. It gives the buyer a line-by-line understanding of the business they are acquiring, which is the foundation for a successful post-acquisition integration."
Corvian Advisory provides independent financial due diligence for UAE and GCC acquisitions, quality of earnings, working capital, net debt, and UAE-specific items. Prepared by our senior CFA, CA and ACCA qualified team. Fixed fee from AED 20,000. View our Financial Due Diligence UAE →
What are the five core workstreams in a UAE/GCC financial due diligence checklist?
Quality of Earnings, Working Capital Analysis, Net Debt & Debt-Like Items (including EOSB), UAE Corporate Tax & Regulatory exposure, and Related-Party Transactions. A complete engagement typically takes 3 to 6 weeks and costs AED 20,000 to 80,000.
What GCC-specific items does a standard international FDD checklist typically miss?
UAE end-of-service benefit (EOSB) accrual, WPS payroll compliance, UAE Corporate Tax registration and free zone qualifying income status, Saudi Zakat and GOSI contributions, and family-business-specific related-party arrangements are frequently absent from generic international FDD templates not built for the region.
How much does financial due diligence cost in the UAE and GCC?
AED 20,000 to AED 80,000 depending on target complexity, number of entities, and years of financials reviewed. All fixed and agreed before work begins, no hourly billing.
Is this FDD checklist a substitute for a professional financial due diligence report?
No. This checklist is a scoping and review tool for acquirers, CFOs, and their advisors to confirm nothing important has been overlooked. It does not replace a professionally conducted FDD engagement, which independently verifies and quantifies each item against the target's actual financial records.