How to Do Due Diligence on a Private Company
Buying a private company isn’t just about enthusiasm or investment capital—it’s about understanding what you’re really getting into. Whether you’re an investor eyeing a tech startup in Cairo, a corporation looking to acquire in Dubai, or a strategic partner in MENA, due diligence is your best defense—and offense.
So, how do you do due diligence on a private company properly? It’s a layered, multidisciplinary process that evaluates the target’s financial, legal, operational, and commercial dimensions. More than a box-ticking exercise, due diligence is strategic risk management. And in regions like the Middle East, where family-owned businesses dominate and regulatory transparency varies, thorough due diligence can be your golden shield.
Let’s walk you through how to do it—step-by-step, backed by real-world insight and expertise from regional leader Mena Intel.
What Is Due Diligence?
At its core, due diligence is an investigative process conducted before a transaction—typically a merger or acquisition. Its goal? To verify facts, validate value, and expose risks.
In the context of a private company, due diligence typically involves:
- Analyzing financial health
- Assessing legal structure and risks
- Understanding operations and supply chains
- Evaluating market position and competition
- Reviewing human capital and employment practices
In short, it’s doing your homework before buying the house—checking for termites, unpaid mortgages, and future lawsuits.
Why Due Diligence Is Crucial in Private Company Deals and How to Do Due Diligence on a Private Company ?
Public companies are required to disclose financials and governance practices. Private companies? Not so much. That’s where the risk—and reward—lies.
Especially in MENA markets, where companies may operate informally or under family ownership, due diligence:
- Reveals hidden liabilities (like undisclosed debts or tax issues)
- Validates claimed revenue or market share
- Confirms asset ownership
- Assesses compliance with local laws
- Flags HR and labor law risks
Without due diligence, you’re essentially investing based on hope. With it, you’re betting on verified data.
Types of Due Diligence You Must Know
There are several distinct layers to explore when learning how to do due diligence on a private company:
| Type | Focus Areas |
|---|---|
| Financial Due Diligence | Statements, revenue, debts, projections |
| Legal Due Diligence | Contracts, disputes, regulatory compliance |
| Commercial Due Diligence | Market size, competitors, pricing model |
| Operational Due Diligence | Internal processes, IT systems, scalability |
| Human Resources Due Diligence | Payroll, policies, employee contracts |
| Tax Due Diligence | Historical filings, local compliance, penalties |
| IP & Technology | Software licenses, trademarks, patents |
| ESG Due Diligence | Environmental & social impact, sustainability |
Mena Intel’s Role in
How to Do Due Diligence on a Private CompanyAcross MENA
Mena Intel stands as a trusted consulting firm in Dubai, Egypt, and the wider Middle East. Its due diligence services are tailored to:
- Regional legal environments
- Cultural business dynamics
- Sector-specific risk profiles
Mena Intel uses multilingual legal analysts, forensic accountants, and field researchers to uncover not just the numbers—but the narrative.
They offer specialized due diligence for:
- Private equity firms
- Multinational corporations
- Government-affiliated buyers
- Family offices and private investors
Preparing for Due Diligence: What Buyers Must Know
Before diving in, a buyer should:
- Define the scope (what areas matter most to your deal?)
- Secure NDAs and data room access
- Assemble a team (legal, financial, technical experts)
- Use a master checklist
Being organized makes you efficient. Mena Intel offers custom pre-due-diligence playbooks for MENA markets.
Legal Due Diligence Checklist
When reviewing legal aspects, ask:
- Is the company properly incorporated?
- Are there pending lawsuits or regulatory investigations?
- Are intellectual property rights properly registered?
- What do supplier and client contracts actually say?
- Are there change-of-control clauses in major agreements?
In Egypt and UAE, contract enforcement can differ dramatically—Mena Intel helps interpret legal subtleties often missed by international buyers.
Financial
How to Do Due Diligence on a Private Company Across MENA Essentials
This is where numbers must meet reality. Review:
- Profit & Loss statements (3-5 years)
- Balance sheet accuracy
- Cash flow trends
- Bank statements vs. accounting books
- Audit reports (if available)
Also inspect: debt obligations, related-party transactions, and revenue sources. Mena Intel’s forensic finance teams are trained in IFRS and regional accounting frameworks.
Commercial
How to Do Due Diligence on a Private Company Across MENA
Considerations
Your goal: confirm the company’s position in the market.
Look at:
- Customer concentration
- Market share
- Pricing strategy
- Competitive differentiation
- Business model scalability
Understanding local demand is key. For example, a logistics firm might look good on paper, but in a country with poor infrastructure, risks compound.
Operational Due Diligence for Private Companies
Operations make or break execution. Explore:
- Supply chain robustness
- IT system capabilities
- Inventory management
- Process documentation
- Vendor dependencies
Mena Intel evaluates digital maturity and operational redundancy across industries like retail, energy, fintech, and logistics.
HR and Employee Due Diligence
Employees are a hidden cost center—or value creator. Key checks:
- Are all employees formally contracted?
- Are payroll taxes filed correctly?
- Are there outstanding labor disputes?
- Do HR policies comply with local laws?
In MENA, this is often where informal practices surface. Mena Intel audits for “ghost employees” and outdated benefits schemes.
Tax Compliance Review in Private Company Due Diligence
Taxes in MENA countries vary widely—not just in rate, but in regulatory enforcement. Your goal is to:
- Verify all tax filings (local and international)
- Check VAT/GST registration and compliance (especially in UAE and KSA)
- Review historic penalties or audit findings
- Inspect withholding taxes, payroll taxes, and transfer pricing reports
Failure to detect unpaid taxes or inconsistent filings could transfer liability to you post-acquisition. Mena Intel provides regional tax specialists who understand the nuance of local tax authorities—like Egypt’s ETA or the UAE’s FTA.
Technology and IP Ownership Checks
In tech-heavy acquisitions or any IP-driven business, you’ll want to verify:
- Ownership of all software/code
- Third-party license agreements
- Patent and trademark registrations
- Data protection compliance (e.g., UAE’s Data Law or Egypt’s Cybercrime Law)
- Cybersecurity protocols
IP is intangible but invaluable. Mena Intel’s IP due diligence team ensures you aren’t buying a brand that could be legally contested or built on pirated software.
Sustainability and ESG Due Diligence
While often overlooked, ESG factors are rising in importance. Examine:
- Environmental impact (especially for manufacturing firms)
- Social practices—diversity, labor policies, community relations
- Governance—board structure, transparency, ethics
This is especially vital if you’re planning to raise international funding post-acquisition. Mena Intel offers ESG diagnostics specifically aligned with MENA investor expectations.
Red Flags That Kill Deals
Here’s what could sink your acquisition if not caught early:
- Unreported lawsuits or legal contingencies
- Poor record-keeping or missing financials
- Overstated customer lists or fake contracts
- Dependency on one or two clients
- Outdated technology or cybersecurity risks
- Undisclosed debt or contingent liabilities
- Poor employee retention or pending disputes
Spotting red flags is an art and science—something that Mena Intel has developed into a structured scoring matrix.
Cultural and Regional Risks in MENA Due Diligence
In the Middle East, it’s not just about what’s on paper—it’s about what’s practiced behind closed doors. For example:
- Family businesses may have informal shareholder agreements
- Hidden obligations may exist between partners
- Local sponsors may control more than their nominal share
- Political affiliations can expose reputational or legal risks
Mena Intel uses in-country experts to surface these “off-the-books” dynamics with discreet interviews and reputation assessments.
Due Diligence for Startups and Early-Stage Companies
Due diligence on startups isn’t about full documentation—it’s about potential and truth. Evaluate:
- Market fit and validation
- Burn rate and runway
- IP ownership and founder splits
- Team quality and attrition risk
- Scalable tech infrastructure
Mena Intel’s “Lean Due Diligence Model” helps investors screen Egyptian and Emirati startups quickly and cost-effectively.
Hiring Experts: Lawyers, Accountants & Mena Intel
If you’re wondering how to do due diligence on a private company without internal capacity—don’t worry. That’s what advisors are for.
Engage:
- Corporate lawyers (for legal structure & contracts)
- Forensic accountants (for financial scrutiny)
- Sector specialists (e.g., for fintech or logistics)
- Regional consultants like Mena Intel (for cultural, operational & compliance review)
These experts help validate assumptions and mitigate risk. Cutting corners here can be extremely costly.
Top Tools and Checklists for Efficient Due Diligence
Technology makes due diligence more manageable. Consider:
- Virtual Data Rooms (VDRs) – Secure document sharing
- DealRoom – Project management for M&A
- Diligence Checklists – Categorized by type and timeline
- AI-powered Analytics – For parsing thousands of documents
- ERP Data Exports – For system audits
Mena Intel provides clients with structured dashboards, status tracking, and checklist-driven progress.
Due Diligence in Cross-Border M&A in MENA
If you’re acquiring across borders—say a UAE firm acquiring an Egyptian tech startup—you must consider:
- Regulatory approvals in both jurisdictions
- Currency repatriation restrictions
- Foreign investment limitations
- Double taxation treaties
- Labor law alignment
Mena Intel offers cross-border due diligence coordination, helping clients navigate both sides of the border with legal and cultural precision.
How Long Should Due Diligence Take?
The process duration depends on the company’s complexity:
| Company Type | Time Required |
|---|---|
| Small Startup | 2–3 weeks |
| Mid-sized Private Firm | 4–6 weeks |
| Large or Multinational | 6–12 weeks |
Mena Intel uses agile review protocols, often completing regional due diligence projects up to 30% faster than traditional firms.
Common How to Do Due Diligence on a Private Company Across MENA Mistakes to Avoid
Even seasoned buyers make errors. Here’s what not to do:
- Rely solely on seller-provided data
- Skip HR due diligence
- Ignore regional legal variations
- Overlook operational inefficiencies
- Fail to interview key employees
- Underestimate cultural mismatches
- Rush the final report
Avoiding these mistakes can be the difference between a dream deal and a financial nightmare.
Post-How to Do Due Diligence on a Private Company Actions
Once the investigation wraps up, smart buyers will:
- Re-negotiate the deal terms (if necessary)
- Adjust the price based on findings
- Prepare legal clauses for risk-sharing
- Plan integration (HR, tech, operations)
- Get post-deal compliance audits ready
Mena Intel also offers post-acquisition support for companies entering the MENA market.
Real Case Study – Mena Intel in Dubai
Scenario: A German logistics firm planned to acquire a UAE-based warehouse operator. Mena Intel uncovered:
- Undisclosed legal claim from a former partner
- Tax under-reporting for two years
- A cyber breach not disclosed to investors
Thanks to these findings, the buyer restructured the deal, negotiated a lower valuation, and avoided future liabilities.
Real Case Study – Mena Intel in Egypt
Scenario: A Saudi investor aimed to acquire a 12-year-old Egyptian pharmaceutical distributor.
Key issues revealed:
- Missing licenses from the Ministry of Health
- Informal employee contracts
- High dependency on two major clients
Mena Intel helped the buyer pivot to an asset purchase instead of a full acquisition—saving millions in future risk exposure.
FAQs
How do I start due diligence on a private company?
Begin by assembling a legal and financial advisory team, define your scope, and request access to a data room.
How long does due diligence usually take in MENA?
Typically 4–6 weeks, depending on company size and complexity.
What if the company refuses to provide documents?
That’s a red flag. Consider walking away or re-evaluating terms.
Is due diligence different in Dubai or Egypt?
Yes. Legal systems, labor laws, and tax structures vary, so local expertise is essential.
Can I use Mena Intel for a startup acquisition?
Absolutely. Mena Intel offers lightweight models for early-stage and growth-stage firms.
What should be in a due diligence report?
Executive summary, risk analysis, financial and legal findings, red flag section, and recommendations.
Conclusion
Knowing how to do due diligence on a private company isn’t just a skill—it’s a necessity for investors, acquirers, and partners navigating the complex and often opaque business landscape of the Middle East.
Whether you’re evaluating a tech startup in Egypt or a logistics firm in Dubai, you need more than checklists—you need regional insight, sector knowledge, and trustworthy advisors. That’s where Mena Intel stands apart, offering sharp analysis, cultural fluency, and local expertise.
In business, fortune favors the well-informed. Don’t buy blind—buy smart.
