This transcript has been lightly edited for clarity.

Chris Adams: Welcome to Muhami Matters, the podcast where credibility meets clarity in legal and professional services across the UAE and the wider region. I’m your host, Chris Adams, founder of Muhami and CJA Consulting. Today we’re going to talk about things to look out for when buying a business. A smart acquisition can accelerate growth, but the UAE’s dynamic legal landscape means due diligence isn’t optional. To help us navigate these issues, I’m joined by Sameer Khan, founder of SK Legal, who brings over 14 years of M&A and advisory experience across domestic, DIFC and arbitration contexts. Sameer, tell us a bit about your background and what’s drawn you into M&A.

Sameer Khan: I’ve been in the UAE for the last 14 years and I’ve had a wide range of practice. There is a section of our firm that concentrates on M&A, but we do other areas as well. What I like about M&A is that it uses all the skill sets we develop elsewhere: when you’re doing due diligence on a company you need to know the employment law, the court procedures, whether there is a criminal element to certain things, loan agreements, the banking laws, how the contracts will be affected, and the company law itself.

Sameer Khan: The UAE is also very complex because you have so many parallel jurisdictions. You may be acquiring a company in a free zone or on the mainland and different laws would apply. There is a federal companies law, but it doesn’t apply to every free zone — the DIFC has its own companies law, ADGM has its own. You have to have a wide range of knowledge to properly advise a client on an acquisition, and that’s what makes it interesting and challenging.

Chris Adams: What do M&A transactions typically look like in the UAE?

Sameer Khan: The ones we come across a lot: someone from abroad — often a high-net-worth individual — wants to move to the UAE. They want a good source of income from the UAE itself, they want their families to grow up here in a safe, secure environment. Certain businesses are promoted to them — we recently advised on the purchase of a very large restaurant that is doing very well, and someone else wanted to purchase an IT consultancy. Rather than purchasing individual assets, they buy the shares and become direct owners of the company. We also act where an international company with significant UAE operations is being purchased by another international company, and we carry out the due diligence on the UAE arm.

Chris Adams: Who are the typical parties involved, and what needs to come together to get a deal started?

Sameer Khan: Let me give a basic step-by-step framework, leaving out third-party financing. Imagine a company or high-net-worth individual who has the funds to purchase a company. The first step is what we call the MOU stage — the memorandum of understanding. It’s a non-binding stage: I want to purchase this company for, say, 50 million dirhams, and you talk about a ballpark price and high-level commercial terms — all provided the due diligence comes back clean. The lawyers have to get involved here, because we have to ensure the buyer isn’t locked into a commitment.

Sameer Khan: The second stage is due diligence. A lot of people think all they need is financial due diligence — get the accountants to look at the audit reports. But they overlook legal due diligence. The lawyer looks at all the contracts of the company: employment contracts — you haven’t got employees on huge commissions or bonus provisions that an auditor might not see in the figures; supply contracts; and the lease agreement. This is a real-world example: people purchase a restaurant or a retail unit in a big shopping mall, and a lot of these lease agreements — especially in the DIFC — say you have to seek permission from the landlord before you assign the lease, and a change of ownership is akin to assigning a lease. In the DIFC they could terminate you on that basis. A lawyer will also tell you that the beautifully refurbished restaurant you’re paying good money for only has a year left on its lease — so you make the seller lock in a three- or five-year term first. And very importantly, we search whether there are any legal cases against the company, its management or its shareholders.

Sameer Khan: The third step is signing the share purchase agreement, the SPA. Say due diligence finds a legal claim against the company and the seller insists it’s weak — in the SPA you protect the buyer with indemnities: if you end up paying on this case, the seller compensates you. Due diligence also drives price negotiation — if there’s only a year on the lease, or a claim in court, you may still buy, but at a reduced price. The SPA also sets a road map — payment is rarely all cash up front. Then the fourth step is completion, when shares are transferred and funds are paid. Lawyers supervise the changes to the constitutional documents: the trade licence, the shareholder name, the memorandum and articles.

Chris Adams: You mention protecting the buyer — does the seller need protection as well?

Sameer Khan: The buyer is at more risk, but we protect sellers too. What some buyers try to do is let go of the due diligence, because it’s an expensive, tedious exercise, and instead say: I’ll buy the company, but if anything goes wrong in the next three years you pay me. Once a seller sells, he wants to walk away into the sunset and enjoy the money — not carry the stress of a potential liability for three years. So we encourage sellers: if there are genuine issues in the company, disclose them now, have them mentioned and addressed in the SPA, so that the day you transfer your shares you walk away without giving indemnities later on.

Chris Adams: If you didn’t involve a lawyer, could you make a transaction happen?

Sameer Khan: People do, but it could potentially be a big disaster. What if you buy a company with a huge case against it that you never knew about? You need a lawyer to carry out a search in the courts — it’s not as if any layman can go to the courts and ask. In small transactions people take the risk because the legal costs can’t be justified, but when you come to a complex jurisdiction like the UAE — where even within Dubai very different laws apply depending on which free zone or area you’re in — the risk is huge.

Chris Adams: What should buyers do to approach due diligence effectively?

Sameer Khan: Once you’ve signed the non-binding MOU, the sellers should present all their documents. The seller’s lawyers create a data room — employment contracts, commercial contracts, loan agreements, litigation, permits and licences in separate folders, ready for the buyer’s lawyers to review. Often the buyer’s lawyers are from another country — European lawyers helping with the due diligence — and they need local assistance on what the law is. The global principles of M&A are similar everywhere, and a bad contract can be spotted in any jurisdiction, but leases, licences, court cases and procedure are very local. Even within Dubai, the tenancy laws of the mainland and the DIFC are different.

Chris Adams: Tell us more about those peculiarities.

Sameer Khan: Sharjah rental laws are different from Dubai rental laws, and Dubai mainland rental laws are different from DIFC rental laws. In Dubai mainland, even if the tenancy contract expires, as long as the tenant is paying rent the contract continues, and to evict you must give a 12-month notice stating you intend to sell the property or use it personally. In the DIFC, once the contract expires you can terminate. So practically: if you purchase a business with outlets in mainland Dubai shopping malls and you didn’t take the landlord’s permission for the change of ownership, the landlord cannot technically evict you on that ground. But if you’re buying a business with outlets in the DIFC, and the DIFC lease says that a change of ownership without the landlord’s permission is an event of default allowing immediate termination, the DIFC courts will enforce that. Within the same emirate, the different laws can have a hugely different impact on the business.

Chris Adams: As the seller, do you need to make sure the other side has adequate advice too?

Sameer Khan: The seller’s part is clear disclosure. You usually have a disclosure letter where all the issues are mentioned, attached to the SPA to protect the seller. As long as the seller has done that, it doesn’t matter whether the buyer had a lawyer — the seller has done his bit. Practically, though, it helps to have the buyer’s lawyers pushing a little from the other side to get the deal over the line.

Chris Adams: Could you explain the difference between share and asset purchases in practice?

Sameer Khan: A share purchase: rather than buying individual assets, you buy the shares from the owner and become 100% owner of the company — that’s the typical one. An asset purchase: say a developer owns several buildings, all rented out, and another company is interested in one particular building. They purchase that asset. The asset itself requires due diligence — the accountants check the rent roll, expenses and maintenance; the lawyers check that all the tenancy contracts are correctly registered, how many rental cases are in the RDC, whether there are claims by tenants, and whether the outsourced maintenance agreements are tight and in place.

Chris Adams: What approvals or disclosures often catch buyers off guard?

Sameer Khan: With asset purchases you have to be a lot more careful about how the asset is actually transferred. Procedurally a share purchase is cleaner — if the company owns just the one building, buying the shares is easy. But if you’re buying one building out of several, the ownership has to be transferred by title deed, and then the tenancy contracts have to move into the name of the new owner as they expire — and there might be two or three hundred tenants in that building. Those tenants paid security deposits to the previous owner: is that money transferred to the buyer, or does it reduce the price? There are lots of complications when you buy the building as an asset.

Chris Adams: How do you make that as practically easy as possible?

Sameer Khan: Planning, and teamwork. You sit down, think about the transaction and everything related to it — what can go wrong, the security deposits — and having done many transactions you already know what to look out for. The accountants feed you from their practice, and the buyers themselves are often already property owners who know what needs addressing. You brainstorm the elements, come up with a plan, and then structure the due diligence and the purchase agreement around it. It takes time and effort, experience and teamwork.

Chris Adams: Who else is part of the team beyond lawyers and accountants?

Sameer Khan: The business consultants who initially brought the idea to the buyer, sometimes the bankers if they’re financing the purchase, and the buyer’s own team. I’ll give you an interesting example: a client was acquiring a small salon, and it was the accountant who told me — understand that this is a very cash-based business, and the seats are actually rented out. The barbers aren’t employees; they’re on commission, renting individual chairs. When you have a situation like that, you have to make the buyer aware: what kind of agreements exist with the barbers, are they enforceable, are these people employees on paper — or does somebody from the Ministry of Labour come in tomorrow and fine you because someone is working who isn’t on your visa? That’s the beautiful thing about this work: every transaction teaches you about a business, and your knowledge bank keeps increasing.

Chris Adams: Thinking about the seller — if a business owner wants to sell in two years’ time, what do you want in place?

Sameer Khan: In the ideal scenario, I’d sit down with the seller and ask what issues the company already has, so we can advise on frankly disclosing them to the buyer — who may still buy, take a discount, or ask for an indemnity. Then we help the seller create the data room: we review the employment contracts, commercial contracts, loans, licences, and check the litigation ourselves in the courts — to make sure there are no cases even the seller didn’t know about. When the buyer’s side starts sending queries, we discuss them with the seller and explain UAE law to foreign lawyers where needed. And we structure the documents to be fair — at the end of the day, the lawyer’s job is not just to protect his side; it’s to facilitate the transaction and get the deal done.

Chris Adams: Do clients actually plan that far in advance?

Sameer Khan: It depends on the client. One of the most sophisticated companies we worked with recently was a seller who appointed lawyers to do vendor due diligence — creating a report that could be shown to potential purchasers. That’s useful not only for purchasers but for large bank loans and private equity investors. Sometimes they’ll do their own diligence anyway; sometimes they rely on the report and state in the SPA that they’re relying on it.

Chris Adams: So what are the steps to make a business sale-ready?

Sameer Khan: Talk to two people: accountants and lawyers. The accountants will say you need properly audited accounts for at least three years — preferably five — where the revenue is clear, ideally bank-to-bank transfers rather than cash, with tax paid. That’s credibility. The lawyers might advise incorporating in a free zone that’s more reputable among international investors — the DIFC and ADGM are well regarded because they have English-style, common-law courts that investors find comfort in, even though they’re more expensive. And if you have underlying issues — existing cases — wrap them up, settle them, clean it up, and then prepare a due diligence report.

Chris Adams: On the flip side, what can buyers do to make the transaction quick and efficient?

Sameer Khan: Delays happen because buyers don’t want to spend money on advisers at the start. They go a step ahead, find something that scares them, and only then get people involved — and the whole due diligence starts late. It’s best to conclude up front: I am buying this company, X amount of my budget will be spent on advisers, and those advisers will plan it out — the issues that could arise in this sector, what the due diligence must cover, and how long it will take. The transaction takes time, but that’s the best — and fastest — way through the process.

Chris Adams: What common mistakes do you see from both sides?

Sameer Khan: Lack of planning, and underestimating due diligence — saying “we’ve got an internal accountant, just send over your audited reports.” People underestimate that a lot, and not only with companies — with major property acquisitions too. In any acquisition, any investment, the more you prepare, the better you will be.

Chris Adams: Prior preparation prevents poor performance — the five Ps. And from the seller’s side, be open about the major issues right off the bat?

Sameer Khan: Straight away: “Look, this is the issue — we’ve got a 20 million claim in the court. I don’t know how it’s going to go, but that’s what it is. Do you still want to buy?” Fair enough. Sooner or later the other side will find out in due diligence — so why lose the transaction after all that effort and time?

Chris Adams: If people want to find you, how can they get in touch?

Sameer Khan: Through our website, www.sklegalfirm.com — our contact details are there — or email us directly at [email protected].

Chris Adams: Thank you, Sameer Khan, managing partner of SK Legal, for sharing these practical insights on Muhami Matters. Sameer is a regular contributor at muhami.ae, where you’ll find more of his articles. If you enjoyed today’s conversation, subscribe and share it with your network. I’m Chris Adams — until next time, stay informed and stay empowered.