Feasibility Study & Business Due Diligence

A feasibility study looks forward — it asks whether a proposed new venture, product line, or market entry should proceed at all, before any target company exists. Business due diligence looks at an existing company — verifying that its financials, licences, contracts, and liabilities are actually what they are represented to be, ahead of an acquisition, investment, or joint venture. Acquirers often need both: feasibility confirms the strategic logic of the deal in principle, and due diligence verifies the specific target can bear that logic.

PNPC leads the financial, tax, and accounting workstream — quality of earnings, working capital, VAT and UAE Corporate Tax exposure, and employment/WPS compliance exposure. Legal due diligence — title verification, contract enforceability opinions, litigation review from a legal standing, and drafting of representations, warranties, and indemnities into the sale and purchase agreement — requires a UAE-licensed law firm. We coordinate closely with your legal counsel so findings feed directly into the SPA, but a Chartered Accountancy firm does not issue legal opinions.

A full-scope engagement typically takes 3 to 6 weeks from data room access to final report, depending on the target's size, whether it is a single entity or a group, and how complete the data room is at the outset. A financial-and-tax-only scope generally runs 2 to 3 weeks. A red-flag review focused on the highest-risk areas can be completed in 5 to 10 working days where the deal timeline is tight.

A mismatch between reported revenue in management accounts and the revenue reflected in the target's VAT return filings with the Federal Tax Authority. This can arise from timing differences, genuine errors, or in some cases from deliberate understatement of turnover for tax purposes — which itself becomes a buyer's risk once ownership transfers, since historical FTA exposure generally follows the entity, not the seller personally.

Yes. UAE Corporate Tax applies to financial years starting on or after 1 June 2023, so even a target with a short compliance history needs its registration status, filing status, and any Qualifying Free Zone Person election tested carefully. A target that registered late, mis-assessed its taxable income, or claimed the 0% Qualifying Free Zone Person regime without meeting the underlying conditions carries exposure that would transfer to a buyer post-acquisition.

These liabilities generally transfer to the buyer on a share purchase, since the employing entity continues unchanged — only its ownership changes. We size the exposure (unpaid gratuity accruals, WPS non-compliance penalties, unregistered employee exposure) as part of the employment workstream, and this feeds directly into either a purchase price adjustment or a specific indemnity clause negotiated by your legal counsel before signing.

Confirmatory due diligence — the full-scope financial, tax, licensing, and employment review — typically happens after a term sheet or letter of intent is signed but before the sale and purchase agreement is finalised, since sellers generally will not open a full data room without some level of committed interest. However, a lighter pre-term-sheet review (public licence checks, headline financial review) is often worthwhile before committing to exclusivity, to avoid entering an exclusivity period with a target that has an obvious deal-breaker.

Yes, where instructed. Valuation and due diligence are related but separate workstreams — due diligence verifies the facts underlying the business, and valuation applies a methodology (discounted cash flow, comparable transactions, or asset-based, depending on the business) to arrive at an indicative value range. We frequently deliver both together for acquisition engagements, since the diligence findings directly inform the normalised earnings figure used in the valuation.

A Qualifying Free Zone Person is a free zone entity that meets specific conditions set by the Federal Tax Authority to access a 0% UAE Corporate Tax rate on qualifying income, while non-qualifying income remains taxed at the standard 9% rate. The conditions include maintaining adequate substance in the free zone, earning qualifying income as defined in the relevant Cabinet and Ministerial Decisions, and complying with transfer pricing requirements on related-party transactions. In diligence, we test whether a target claiming this status genuinely satisfies the conditions — a target that has assumed qualification without proper analysis carries a retrospective tax exposure that a buyer inherits.

Yes. The verification approach differs by structure — for a mainland company we confirm licence standing directly with the relevant emirate's Department of Economic Development and review any foreign ownership or local service agent arrangements that predate recent ownership liberalisation reforms; for a free zone company we confirm standing with the specific free zone authority and test qualifying free zone conditions where relevant. Group structures that combine both mainland and free zone entities are diligenced as a consolidated perimeter.

A structured report with an explicit recommendation — proceed, proceed with modification (a different emirate, free zone, licensing route, or phased entry), or do not proceed — supported by market demand findings, a licensing route comparison, a 3-scenario financial model (base, downside, upside), and a summary of UAE Corporate Tax and VAT positioning for the proposed structure. It is a decision-support document, not a promotional business plan.

PNPC has operating offices in Dubai, Abu Dhabi, Chennai, Bangalore, and Hyderabad. For a deal involving a UAE target with an Indian parent, an Indian company acquiring a UAE entity, or a group with operations in both jurisdictions, we run the UAE and India workstreams under one coordinated engagement rather than splitting the mandate between two unconnected firms. This matters particularly for cross-border tax positioning under the India-UAE Double Taxation Avoidance Agreement and for FEMA/RBI reporting on the Indian side where applicable.

Not every finding in a due diligence exercise is a deal-breaker. We classify findings into categories: issues that should change the price (quantifiable liabilities or overstatements), issues that should be addressed through specific warranties or indemnities in the sale and purchase agreement (contingent or disputed items), issues that require pre-completion remediation by the seller (a lapsed licence renewal, an overdue FTA filing), and genuine deal-breakers (fundamental misrepresentation, unresolvable regulatory exposure). This classification is what makes a report usable by your negotiating team rather than just informative.

A limited pre-access review is possible using public sources — licence verification with DED or the relevant free zone authority, litigation searches where records are publicly accessible, and analysis of any financial information the target or its broker has already shared informally. Full due diligence, however, requires the target's cooperation and data room access, which is typically granted after a term sheet or letter of intent with some level of exclusivity is in place.

Audited or management-prepared financial statements for the last three financial years, the most recent management accounts and trial balance, bank statements for all operating accounts covering the review period, a fixed asset register, and aged receivables and payables listings. Many UAE SMEs, particularly free zone entities below the audit threshold applicable to them, do not have audited financials — in that case we work from management accounts and place additional weight on bank statement reconciliation and VAT return cross-checks.

We confirm status directly with the issuing authority — the relevant emirate's Department of Economic Development for a mainland licence, or the specific free zone authority for a free zone licence — rather than relying solely on the copy of the licence provided in the data room. This catches licences that are technically valid on paper but have an upcoming renewal risk, a permitted activities mismatch with actual trading, or an unresolved compliance flag with the issuing authority.

Economic Substance Regulations, administered by the Ministry of Finance, required UAE entities conducting certain 'Relevant Activities' (such as banking, insurance, fund management, headquarters, shipping, holding company, intellectual property, and distribution/service centre activities) to demonstrate adequate economic substance in the UAE and file annual notifications and, where applicable, ESR reports. ESR notification and reporting was discontinued for financial years starting on or after 1 January 2023 under Cabinet Decision No. 98 of 2024, so it is no longer a live, ongoing filing obligation — but for any target with financial years before that date, a failure to notify or report where required carries penalty exposure that transfers to a buyer, and we check historical compliance for those earlier years specifically.

Yes, and this is one of the higher-value areas of review for privately held and family-owned UAE businesses, where related-party loans, shared cost arrangements, and owner-manager transactions are common and not always clearly documented. We identify related-party balances and transactions, assess whether pricing is at arm's length (relevant both for UAE Corporate Tax transfer pricing rules and for a clean valuation), and flag any related-party dependency that would not survive a change of ownership.

A completion accounts mechanism is a sale and purchase agreement provision under which the final purchase price is adjusted based on the target's actual working capital and net debt position as at the completion date, compared to a pre-agreed target. The working capital and net debt analysis PNPC prepares during due diligence establishes the baseline and the methodology used at completion, so both parties are working from an agreed, defensible starting point rather than disputing the mechanism after the fact.

Yes, though regulated sectors add specific workstreams. A financial services target requires verification of its UAE Central Bank licensing (for banking or payments activity) or relevant financial free zone regulator standing (DFSA in DIFC or FSRA in ADGM); a healthcare target requires verification against the relevant health authority. We coordinate these sector-specific regulatory checks alongside the core financial and tax workstreams, and bring in specialist counsel where a licensing opinion beyond a Chartered Accountancy scope is needed.

Cost depends on target size, group complexity, sector, and how complete the data room is at the outset, so we do not quote a standard figure without a scoping conversation. PNPC agrees a fixed or capped fee in writing before work begins, based on the specific scope discussed at the engagement letter stage, rather than open-ended time-and-materials billing that leaves you uncertain of total cost.

A seller's reluctance to provide specific categories of documents — particularly bank statements, VAT return filings, or employment records — is itself a material finding that we flag directly, since it limits the scope of assurance we can give on that area. We document exactly what was and was not made available, so your negotiating position and your legal counsel's risk assessment reflect the actual completeness of the review, not an assumed completeness that was never verified.

We review whether IP relevant to the business — trademarks, trade names, proprietary processes, software, or licensed third-party IP — is properly registered in the correct entity's name, whether any licence or franchise agreements underpinning the business are assignable on a change of control, and whether there is any dispute or infringement exposure. Formal IP registry searches and legal opinions on IP validity are typically handled by your legal counsel, with PNPC flagging commercial and financial implications.

All engagements begin with a signed engagement letter and, where required, a non-disclosure agreement covering both PNPC and the client side of the transaction. Data room access is typically restricted to the specific team members working on your engagement, and findings are shared only with the parties you authorise — the deal team, your legal counsel, and, where relevant, co-investors named in the engagement scope.

The findings remain useful even where a deal does not close — many clients use a completed due diligence exercise to negotiate a lower price on a revised offer, to pursue an alternative target with better-understood comparative risk, or simply to avoid a transaction that would have destroyed value. PNPC's engagement letter addresses ownership and confidentiality of the report in a no-deal scenario, so this is agreed upfront rather than a point of dispute afterward.

It is not a regulatory requirement for any UAE business setup — you can proceed directly to incorporation without one. It is a commercial risk-management step that becomes proportionately more valuable as capital at risk, sector complexity, or unfamiliarity with the UAE market increases. A very small, low-capital venture with a founder who already knows the market well may reasonably skip a formal study and proceed with a lighter cost-and-licensing review instead.

Yes. The financial due diligence findings — normalised earnings, working capital position, and net debt — feed directly into a financial model that can be used to test different price scenarios, earn-out structures, or deferred consideration mechanisms during negotiation. This is typically scoped as an extension of the due diligence engagement rather than a wholly separate deliverable, since it draws directly on the same underlying data.

Where instructed, PNPC transitions from the diligence and negotiation-support role into ongoing accounting, VAT and Corporate Tax compliance, and Virtual CFO advisory for the acquired or newly formed entity. This continuity means the team managing your post-completion compliance already understands the business's history, its risk areas, and any remediation commitments made during negotiation — rather than starting from a blank data room.

The underlying methodology — quality of earnings, working capital normalisation, tax and regulatory verification — follows the same professional discipline. The practical difference for a mid-market or SME-scale UAE transaction is engagement structure: PNPC scopes and prices the engagement to the actual deal size, with senior CA involvement throughout rather than a large team structure suited to significantly larger transactions, and with direct access to the practitioners who did the work, not a relationship manager layer.

Yes. An asset purchase requires a different lens than a share purchase — rather than inheriting the target entity's full liability history, the buyer typically acquires specified assets (and sometimes specified liabilities) only. Diligence in this structure focuses on clean title to the assets being acquired, valuation of those specific assets, and a clear delineation of which liabilities are and are not included in the transaction — since ambiguity here is a common source of post-completion dispute.

Ideally, before exclusivity is granted or a term sheet is signed — even a short pre-term-sheet review can surface an obvious deal-breaker before you commit time and negotiating leverage to a specific target. Where a term sheet is already signed, engaging PNPC immediately after signing, rather than waiting until closer to the intended completion date, gives findings the best chance of still influencing price and terms.

A seller's audited financial statements express an opinion on whether the accounts present fairly in accordance with the applicable accounting framework as at a historical date — they are not a due diligence exercise, do not test working capital normalisation for a specific transaction, do not reconcile against FTA filings for buyer-specific tax exposure, and are prepared for the seller, not for you. An independent due diligence exercise commissioned by the buyer asks buyer-specific questions that an audit was never designed to answer.

The engagement letter sets out the agreed scope (which workstreams are included), the fee (fixed or capped, agreed in writing before work begins), the data required from you and from the target, the expected timeline, confidentiality terms, and the format of the final deliverable. We do not begin fieldwork until this is signed, so there is no ambiguity about scope or cost once the engagement is underway.

Some contracts allow the counterparty to terminate, renegotiate, or demand consent on a change of ownership. During the material contracts review we flag every such clause found in the target's key customer, supplier, lease, and financing agreements, and size the revenue or cost impact if a counterparty were to exercise it. Where a clause is triggered, we work with your legal counsel to decide whether pre-completion consent should be sought from the counterparty before signing, or whether the exposure is better addressed through a price adjustment or specific indemnity.

Yes. We review outstanding term loans, overdraft and trade finance facilities, and any covenants attached to them, since a change of ownership can itself trigger a review or repayment event under the facility agreement — a point that is easy to miss if diligence focuses only on the profit and loss statement. We map existing debt and any cross-guarantees or security given against target assets, and flag whether lender consent is required before completion.

The feasibility study compares the mainland route through the relevant emirate's Department of Economic Development against the free zone route through the specific free zone authority suited to the proposed activity, since licence class, permitted activities, and — since the 2021 Commercial Companies Law reform — foreign ownership rules now differ mainly by whether the activity falls on the reserved 'strategic activity' list rather than by mainland status alone. The study models the cost, timeline, and market-access implications of each route for the specific activity and target customer base, rather than defaulting to one structure.

Where deal documents originate outside the UAE — a foreign parent's board resolution, an overseas shareholder's identity documents, or a foreign audit report — they generally need the full consular legalisation chain to be recognised for UAE purposes: notarisation in the home country, home-country foreign ministry authentication, UAE Embassy or Consulate attestation, and final UAE Ministry of Foreign Affairs and International Cooperation (MOFAIC) attestation. The UAE is not a party to the Hague Apostille Convention, so an apostille alone does not substitute for this chain. We flag legalisation timeline into the overall deal schedule early, since it is often the least flexible step.

Under Federal Decree-Law No. 47 of 2022, Taxable Persons and Exempt Persons must retain relevant records for at least seven years after the end of the relevant tax period so the Federal Tax Authority can verify taxable income or exemption status. During diligence we confirm the target's Corporate Tax record-keeping practice covers this retention window, since a gap here can complicate a future FTA audit and becomes the buyer's problem to resolve after completion, not the seller's.

Because reported profit in a privately held UAE business is frequently propped up by things that will not survive completion. The three we see most: owner remuneration taken below market (or not at all) so the P&L understates the true cost of running the business under a hired manager; related-party arrangements — a sister company absorbing rent, staff, or logistics costs off the target's books; and one-off items (a large recovered debt, a non-recurring project) treated as if they were recurring revenue. Quality-of-earnings work strips these out to show normalised, sustainable earnings — which is the number a buyer should actually pay a multiple on, and it is often materially below the headline figure.

It comes down to two things: how much of the legal workstream your own counsel already covers, and how much time you have before signing. If you have engaged UAE lawyers who are handling contracts, litigation, and SPA drafting, the financial-and-tax scope (quality of earnings, working capital, VAT and Corporate Tax reconciliation) is usually the right complement and avoids paying twice for overlapping work. If you are in an exclusivity period with a hard signing date days away, a red-flag review focused on the two or three highest-risk areas is more honest than a full review rushed to an artificial deadline. First-time UAE acquirers with no legal counsel yet engaged usually need the full scope.

In order of how often they hold us up: VAT return filings for the full review period (needed to reconcile against reported revenue — the single highest-signal check); WPS transfer records and a proper gratuity accrual schedule (needed to size the employment liability the buyer inherits); bank statements for every operating account (the independent check on cash and revenue when accounts are unaudited); and shareholder current-account and related-party loan detail (needed to build net debt). Sellers are usually slowest with WPS and gratuity data because it is often not maintained cleanly, and with related-party detail because it exposes the subsidies that flatter the P&L.

Most of it can. The data room, VAT and Corporate Tax filing checks, licence verification with DED or the free zone authority, and the findings sessions are all handled remotely through document exchange and calls — an Indian, European, or GCC acquirer rarely needs to be physically present for the review itself. What may still need someone on the ground is a site visit to verify inventory or fixed assets exist as recorded, a bank meeting where a facility change-of-control consent is needed, and wet-signature or notarised documents where an overseas parent's board resolution must enter the UAE through the consular legalisation chain.

Two things make the engagement faster and sharper. First, be clear on deal structure — share purchase versus asset purchase — because it changes which liabilities transfer and therefore which diligence areas matter most; a share purchase inherits the target's entire tax, WPS, and ESR history, an asset purchase can be structured to leave much of it behind. Second, share whatever you already have, even informally: the pitch deck, any management accounts the broker sent, the licence copy. We use these to design a data request list tailored to the target's actual structure rather than a boilerplate list that generates weeks of back-and-forth on irrelevant items.

The risk is that a low-cost review confirms the accounts look fine and misses the exposures that only surface after you own the business: a revenue-to-VAT-return mismatch signalling understated turnover, an untested Qualifying Free Zone Person claim carrying retrospective Corporate Tax, under-accrued gratuity, an unresolved historical ESR penalty, or a bank facility with a change-of-control clause nobody checked. Each of these transfers to the buyer on a share purchase and is far more expensive to remediate after completion — with penalties and interest accruing — than it would have been to catch and price into the deal. A diligence fee is small relative to a single missed successor liability.

Tax is not a side workstream in UAE diligence — it is often where the largest hidden liabilities sit, because Corporate Tax (9% above AED 375,000) is recent and many targets registered late or mis-assessed their position. We reconcile reported revenue against VAT return filings on EmaraTax, confirm Corporate Tax registration and filing status, test any Qualifying Free Zone Person 0% claim against the actual income mix and substance rather than accepting it from the data room, and check for open FTA queries, audits, or penalty notices. Because historical FTA exposure generally follows the entity on a share purchase, an unaddressed tax gap becomes the buyer's successor liability.

Our professional fee for the diligence work is agreed as a fixed or capped amount in the engagement letter before fieldwork begins. Third-party costs — independent licence-verification searches, document legalisation where an overseas party's records must enter the UAE, translation of non-English contracts, or specialist counsel for a regulated-sector target — are separated out and confirmed against the relevant provider at the time, because these vary by the specific deal and cannot be honestly fixed in advance. What we will not do is quote an open-ended time-and-materials rate that leaves you uncertain of total cost.

The areas most exposed to change are the Corporate Tax regime — Qualifying Free Zone Person conditions and related guidance have evolved since the 2023 introduction — and free zone authority practice. If a relevant rule or FTA clarification changes during our review, we reassess whether the target's historical position remains defensible under the current interpretation and whether the buyer inherits any new exposure, and we update the findings before the report is finalised. Because tax and licensing conclusions are dated, the report states the position as at the review date and flags where a re-check is needed between report and completion.

Cross-border deals are where a single coordinated engagement matters most. For a UAE target with an Indian parent, an Indian company acquiring a UAE entity, or a group operating in both, we run the UAE and India workstreams under one mandate so the diligence report presents one consistent view of the group rather than two internally inconsistent country reports. The India-side points that most often interact with UAE diligence are treaty positioning under the India-UAE Double Taxation Avoidance Agreement, FEMA and RBI reporting on outbound or inbound investment, and Form 15CA/15CB requirements where consideration or intra-group payments flow across the border.

A usable handover is built for the two audiences that act on it: your negotiators and your lawyers. It contains the findings log with red-flag prioritisation (which items change price, which need warranties or indemnities, which need pre-completion remediation by the seller, which are deal-breakers); the normalised working capital and net debt schedule that feeds the completion accounts mechanism; the SPA-input schedule your lawyers translate directly into representations and warranties; and a clear statement of what was and was not made available, so the assurance given reflects the actual completeness of the review. A narrative report with no prioritisation is not a handover — it is homework.

As a Chartered Accountancy firm we lead the financial, tax, and accounting workstream but do not issue legal opinions. We escalate to your UAE counsel when a finding turns on contract enforceability, title, litigation strategy, or the drafting of warranties and indemnities into the SPA; and to a sector specialist when the target sits under a regulator whose change-of-control approval is on the critical path — the Central Bank for banking or payments, DFSA in DIFC or FSRA in ADGM for financial free zone activity, or a health authority for healthcare. We flag these boundaries early rather than stretching an accounting engagement into a legal or regulatory opinion it cannot properly give.

Usually, but we begin with a diagnostic rather than picking up mid-stream on trust: what workstreams were actually completed versus merely listed, what the prior advisor verified against independent sources rather than accepting from the data room, which findings were tested and which were assertions, and where the exclusivity or signing clock now stands. A partial review that reconciled nothing against FTA filings or the issuing authority may need substantial rework rather than a top-up, and we say so before quoting, so you are not paying to formalise an unverified file.

The timeline is driven by four things: whether the target is a single entity or a group of mainland and free zone companies to be diligenced as one perimeter; whether financials are audited or management-only (management-only means our own verification has to work harder, since there is no auditor's opinion to lean on); the deal structure, since a share purchase pulls in the full tax, WPS, and ESR history while an asset purchase can narrow it; and — the biggest single variable — how responsive the seller is in populating the data room. With those known we commit to a 3–6 week full scope, 2–3 weeks financial-and-tax, or 5–10 working days red-flag.

Every finding in the report must trace to source evidence before it is signed off — a revenue adjustment ties to the reconciled VAT returns and ledgers, a licence flag ties to the authority confirmation, a gratuity exposure ties to the independently recalculated accrual, not to the seller's figure. A senior Chartered Accountant reviews the findings log and the red-flag prioritisation, confirms that open points are disclosed as open rather than presented as verified, and checks the SPA-input schedule is drafted so counsel can action it. This review happens before the report reaches you, not after a finding is challenged in negotiation.

The findings that were priced or indemnified during negotiation now have to be actioned as the new owner. The recurring ones on UAE targets: preparing the opening balance sheet from the diligence findings; remediating any tax gaps identified — late Corporate Tax registration, VAT filing corrections, or an unresolved historical ESR penalty from a pre-2023 financial year; regularising WPS and gratuity where the accrual was understated; and updating licence, UBO, and MOHRE records for the change of ownership. Each of these needs a named owner and a deadline, because a liability identified in diligence but not remediated continues to accrue penalties and interest under your ownership.

A change of ownership triggers the bank's own KYC and re-onboarding, and several diligence findings feed straight into it: the updated UBO and shareholding record, the source-of-funds explanation for the acquisition consideration, the target's tax registration and filing standing, and material contracts evidencing the business. Where the target already holds a facility, a change-of-control clause can trigger a lender review or repayment event — which is why we map existing debt and covenants during diligence and flag whether lender consent is needed before completion, not after the account is frozen for re-KYC.