UAE acquisition question
What Should Be in an LOI When Buying a UAE Business?
A Letter of Intent should create sufficient commercial clarity for buyer and seller to proceed into detailed diligence and definitive documentation. It should not attempt to resolve every transaction issue prematurely.
Define the transaction
The LOI should state what the buyer proposes to acquire:
- shares;
- specified assets;
- a controlling or minority stake.
The structure affects employees, contracts, licences, liabilities and approvals.
Define the valuation basis
The LOI should clarify whether the proposed price refers to enterprise value or equity value and how the following are expected to be treated:
- cash;
- debt;
- working capital;
- debt-like items;
- deferred consideration;
- earn-outs.
A headline number without valuation mechanics can create avoidable disputes later.
Set the diligence framework
The LOI may outline access to information and the expected scope of:
- commercial diligence;
- financial diligence;
- tax review;
- legal review;
- operational review;
- regulatory review.
Address exclusivity
Where the buyer is committing meaningful time and adviser costs, an exclusivity period may be appropriate.
Its duration and legal effect should be drafted carefully.
Identify material conditions
Potential conditions may include:
- satisfactory diligence;
- financing;
- regulatory approvals;
- third-party consents;
- shareholder approvals;
- retention of key management.
Clarify what is binding
This requires particular care under the UAE's current legal framework.
Federal Decree-Law No. 25 of 2025 introduced the new Civil Transactions Law, effective 1 June 2026.
Current legal commentary notes that an LOI is not automatically binding or non-binding merely because it is described as an LOI. Wording, agreed essential terms and party conduct may matter.
Legal counsel should therefore draft or review the document.
Include a transaction timetable
The LOI should establish expectations for:
- data-room access;
- diligence;
- management meetings;
- documentation;
- approvals;
- target completion.
Conclusion
A strong LOI should not attempt to become the final acquisition agreement.
Its purpose is to establish enough commercial alignment for both parties to proceed efficiently and with appropriate discipline.
Keel Partners supports buyers with commercial structuring, transaction coordination and LOI negotiation support. Legal documents should be prepared or reviewed by qualified counsel.
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