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 2024 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.