A seller shows you the best year and the books show you the rest. Most buyers read the first and skip the second. Acquiring a business in Dubai is a big decision and the price you agree on is only as good as the numbers behind it. A careful look at those numbers before you sign turns a hopeful purchase into a safe one.
At ebs chartered accountants we are an accounting consultancy in Dubai that reviews targets for buyers who want to see the real numbers before they commit. The owner of the target usually has a good story. Our job is to check whether the numbers tell the same story.
Why Do Buyers Get Surprised After They Complete a Deal?
Most surprises come from what was never shown. Acquiring a business in Dubai often goes wrong because the buyer sees the profit and loss for the best year and nothing else. The unpaid tax and the old supplier balances and the staff end of service amounts are not on that page. When you buy the shares of a company those items stay inside it.
Financial due diligence in UAE is the step that finds these items before you pay. It is a structured review of the target’s accounts and tax position and cash. The goal is simple. You should know what you are really buying and what it is really worth before the deal is final.
What Does a Financial Review of the Target Actually Cover?
A good review looks at five things.
- Profit quality. Whether profit is repeatable or came from one-off gains.
- Cash conversion. Whether profit becomes real cash in the bank.
- Net debt. All loans and owner balances that reduce what you actually pay for.
- Working capital. How much cash the business needs to keep running normally.
- Tax position. Whether VAT and corporate tax filings are complete and paid.
These checks fit a share purchase and an asset purchase differently. In a share purchase the company keeps its history and its liabilities. In an asset purchase you choose what you take. The structure changes what risks you carry so the review should be planned around it. Financial due diligence in UAE work always starts by asking which structure the deal will use.
How Do You Know If the Reported Profit Is Real?
Financial due diligence in UAE starts with revenue. Sales in the accounts should match the invoices and the bank deposits. They should also be close to the turnover on the VAT returns. A gap between these records is the first thing we look for. It does not always mean something is wrong. It always needs an answer. Then look at profit. Owners often run personal costs through the company and one-off gains through sales.
A fair view of profit removes both. This adjusted figure is the profit you should use to value the business. Acquiring a business in Dubai on unadjusted profit is how buyers overpay. Our team at ebs chartered accountants also checks the timing of sales near the year-end. Sales pushed into the last month to make the year look stronger show up when you compare invoices with delivery dates. Revenue should follow IFRS 15 and be recorded when the service or goods are actually delivered.
Quick tip. Ask for the bank statements and the VAT returns before you ask for anything else. Comparing them to the accounts takes an afternoon and it tells you quickly whether the rest of the file can be trusted. This is the fastest first step in financial due diligence in UAE.
Which Tax and Liability Items Can Pass to the Buyer?
A buyer acquiring a business in Dubai should treat tax as the first risk. In a share purchase the company keeps its past tax problems. Unfiled VAT returns and unpaid corporate tax and late filing penalties all stay with the company and so with the new owner. Ask for proof of every filing and every payment. Do not accept a verbal promise. Staff are another hidden cost. Employees build up end of service amounts every year they work. If the company has not set money aside the buyer takes on that cost.
The same applies to unpaid leave and to any dispute that has not ended yet. A buyer acquiring a business should ask for a full list of employee balances. We also check money owed to and from the owners and related companies. These balances are often large and rarely explained. Unclear related party balances can hide payments that should have been profit or cost.
Which Warning Signs Should Make You Slow Down?
Some signs do not need a long review to be worrying.
- Revenue that does not match bank deposits or VAT returns.
- One customer or one supplier making up most of the business.
- Bank accounts or loan balances that are not reconciled.
- Large owner loans with no paperwork.
- A seller who delays or refuses to share records.
- Sudden changes in accounting policy just before the sale.
One sign alone often has a simple reason. Several together mean you should slow down and ask for more evidence. A seller who has nothing to hide welcomes questions. A good accounting consultancy will treat the pattern as the signal and not the single item.
Which Papers Should You Ask the Seller to Hand Over First?
The table below shows a practical starting set for financial due diligence in UAE.
| Document | What It Tells You |
| Audited financial statements for recent years | Performance and position as checked by an auditor |
| Latest management accounts | How the current year is going |
| Bank statements for all accounts | Real cash movement to compare with reported sales |
| VAT returns and corporate tax filings | Tax compliance and a second view of turnover |
| List of customers and suppliers with balances | Who owes the business and who the business owes |
| Loan agreements and owner loan records | Debt and money owed to owners |
| Employee list with salaries and end of service balances | Staff costs and hidden staff liabilities |
| Business registration and ownership documents | That the business is what the seller says it is |
How Can an Accounting Consultancy in Dubai Support Your Deal?
Top-Tier Chartered Accountants in this role read the numbers the way a lender or an auditor would and report what they find. A buyer then knows what to accept and what to question and what to walk away from.
Firms in Dubai who do this work often can also say which findings should change the price and which should change the contract. At ebs chartered accountants we write the findings as a short list ranked by money at risk so you can act on them fast. The same accounting consultancy in Dubai can then help with the opening balances after completion.
What Should You Do With the Findings Before You Sign?
Findings are only useful if they change something. A tax gap can lower the price. A fragile customer base can lead to a longer handover or a payment tied to future results. An unclear balance can lead to a promise from the seller to cover any loss. Acquiring a business in Dubai becomes much safer when each finding has a matching term in the agreement.
Write each finding down with a rough money value and agree with your lawyer how it will be covered. Then go back to the seller with facts and not feelings. Deals that are fair to both sides survive this step. Deals that depend on hidden problems usually do not. Contact us can help present the findings in a way that keeps talks calm.
Frequently Asked Questions
Investors should request audited financial statements, management accounts, bank statements, VAT returns, loan details, and records of balances owed to or by owners. These documents form the foundation of financial due diligence in the UAE and help assess a business’s financial position before a deal.
An accountant verifies revenue by comparing sales records with invoices, bank deposits, contracts, and VAT returns. Profit is then reviewed for unusual transactions, non-recurring expenses, and other adjustments to determine the business’s underlying financial performance.
Common red flags include revenue that does not match bank or VAT records, undisclosed debts, tax compliance issues, inaccurate financial statements, and heavy reliance on a single customer. These issues can affect the valuation, delay negotiations, or cause buyers to reconsider acquiring a business in Dubai.
Yes. Even a small acquisition can involve hidden debts, tax liabilities, or inaccurate financial records. Financial due diligence in the UAE can be tailored to the size and complexity of the deal, helping buyers identify potential risks before completing the purchase.