Valuation and commercial intent are not the only determinants of the success of the deal in a merger and acquisition (M&A). Deal structuring is one of the most important components of any transaction. The appropriate structuring of M and A deals makes sure that the legal, regulatory, tax and operating risk issues are tackled at an early stage and the buyers and the sellers are safeguarded against any dispute and liability that might arise in the future.
With transactions in the UAE tending to include cross-border aspects, free zone entities and industry-specific laws, the deal structuring aspect of any acquisition has a decisive role in making or breaking an acquisition.
What Is M&A Deal Structuring?
M and A deal structuring can be defined as a legal and commercial structure that a merger, acquisition or investment is carried out. It defines the implementation of transaction, allocation of risks and the management of regulatory and contractual obligations.
Deal structuring usually characterizes:
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The type of the transaction (sale of shares, sale of assets, merger, joint venture)
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Liabilities and risks distribution
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Financial systems and schedules
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Conditional and regulatory approvals
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Post-closing restrictions and obligations
An organized transaction is one that is able to reconcile business aim with both law and sustainable business.
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Deal Structuring and its significance in UAE M&A Transactions
The legal and regulatory environment of UAE should be taken into consideration when working on the structuring of the M&A transactions. Some of the factors that affect deal structuring are:
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Disagreements in the company regime between the mainland and the free zone
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Sector and foreign ownership regulations
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Company regulations and licensing
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Tax implications including company tax implications
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Increased compliance requirements such as AML and regulatory reporting
The proper structuring of a deal is beneficial to ensure that parties do not inherit any untold liabilities, regulatory violations or a set of restrictions in a contract, which may weaken the deal.
M&A Favorable Deal Structures
Share Purchases Transactions
In a share acquisition, the purchaser gets both shares and assets of the target firm including its contracts and liabilities. In as much as it is a structure that enables continuity of operations, it also implies that current risks are passed onto the buyer.
Historical liabilities should be dealt with by proper legal structuring by use of warranties, indemnities and conditions precedent.
Asset Purchase Transactions
Asset purchases enable buyers to purchase certain assets and leave unwanted liabilities out. This structure is mostly favored when the target is exposed to legacy risks or regulatory risks.
Nonetheless, asset transfer might entail:
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Regulatory approvals
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Assignment of contracts
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Planning transition of employees
Mergers and Corporate Restructuring
Mergers involve two or more legal entities pooling in one legal entity. The structure is more often applied in group reorganisations or strategic consolidations.
Legal structuring is to provide compliance with UAE corporate laws, shareholder approvals and post-merger integration requirements.
Joint Ventures and Strategic Investments
Joint venture has common ownership and control. Structuring of dealings in such deals is centered on:
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Decision-making and governance rights
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Exit mechanisms
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Profit distribution
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Dispute resolution clauses
The transparent organization minimizes the possibility of disagreements and stalemates between shareholders.
Target Screening Role in Deal Structuring
Deal structuring is not a process that should be isolated. It is strongly related to the target screening that offers early warning of the possible legal, regulatory, and business risks of the target entity.
The problems that were found at the screening of the target, including ownership abnormalities, compliance void, or the risk of litigation have a direct impact on the way a deal is designed. For example:
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The identified risks may result in purchase of assets rather than purchase of shares
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Deferral and/or escrow can be the outcome of regulatory exposure
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Conditions precedent or termination rights are conditions that may be necessary in relation to contractual risks
Laws employed in structuring a deal
Proper M&A structuring takes the form of contractual protection, such as:
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Representations and warranties
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Risk identities indemnities
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Conditions precedent
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Escrow and holdback arrangements
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Post-closing covenants
These are safeguards that assist in balancing the allocation of risks between parties and less marginalize risk after completion.
Regulatory and Compliance Issues
Deal structuring in the UAE should consider:
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Business and commercial law
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Sector-specific regulations
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Foreign investment rules
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AML and compliance requirements
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Approvals of licensing authority
Not responding to regulatory requirements in structuring stage would postpone or nullify transactions.
M&A Deal structuring with legal support
It is critical to the effective structuring of M&A deals to have legal expertise based on the combination of corporate law expertise, regulatory expertise and transactional expertise. Legal counselors are essential in mediating the commercial interests with the legal provisions which are enforceable.
In the case of HHS Lawyers and Legal Consultants, we take clients through the lifecycle of the transaction, and as part of our Mergers and Acquisitions advisory services
we do the strategic deal structuring.
FAQ’s
What is M&A deal structuring?
The Transaction Type: Whether you are buying the whole company (Share Purchase) or specific assets (Asset Purchase).
Payment Terms: Cash, stock-for-stock, earn-outs (performance-based payments), or deferred consideration.
Risk Allocation: Determining who is liable for past debts or future legal issues through indemnities.
What is the significance of deal structuring in UAE acquisitions and mergers?
Jurisdictional Differences: Mainland companies (DED) vs. Free Zones (like DIFC or DMCC) have different regulatory requirements and transfer procedures.
Corporate Tax (9%): New for 2026, structuring now focuses heavily on Business Restructuring Relief to ensure the deal doesn’t trigger unnecessary tax liabilities.
Ownership Provisions: Ensuring the deal complies with the latest Commercial Companies Law which allows 100% foreign ownership in most sectors.
Which are the typical M&A deal structures in the UAE?
Share Purchase (SPA): Most common; the buyer inherits the company’s entire legal history.
Asset Purchase (APA): The buyer “cherry-picks” specific assets (machinery, IP, contracts) while leaving behind unwanted liabilities.
Mergers: Two entities combine; 2026 updates have streamlined “Triangular Mergers” for structured exits.
Joint Ventures: Strategic partnerships for specific projects without a full merger.
What is the effect of target screening upon deal structuring?
What are the legal safeguards in deal structuring of M&As?
Representations & Warranties (R&Ws): Factual statements about the business’s health.
Indemnities: Guarantees that the seller will pay the buyer for specific losses (e.g., a pending tax audit).
Escrow Arrangements: Holding part of the purchase price in a neutral account until certain conditions are met.
Restrictive Covenants: Non-compete clauses to prevent the seller from starting a rival business immediately.
Should deal structuring be dealt with during an M&A transaction?
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Conclusion
A key aspect of a successful merger and acquisition is the structuring of the M&A deal. A well organized decision-making process in the complicated regulatory setting of the UAE can greatly lower the risk, grow the certainty of deals, and safeguard the value in the long term with early legal involvement.
Through the combination of target screening and incorporation of sound legal frameworks, businesses have an opportunity to make sure that the M&A transactions are both commercially viable and legal as well as being strategically sound.
