Mergers & Acquisitions

Mergers and Acquisitions (M&A) refer to processes through which companies combine or one company acquires another. Although the end result is similar—integrating entities—the approaches differ:

  • Mergers occur when two companies of roughly equal size join forces to form a new entity. This is typically a friendly process where both companies agree to combine to enhance capabilities, increase sales, or achieve efficiencies. In a merger, both companies become equal partners in the new organisation.
  • Acquisitions happen when one company purchases another and integrates it into its operations. This process can be either friendly or hostile, depending on the circumstances. Unlike a merger, one company will absorb the other, and the two companies will not be equal partners in the new entity.

Ultimately, the result of these processes is the same; however, the relationship between the organisations will be different depending on whether a merger or acquisition transpired. Utilising company formation services is recommended for both mergers and acquisitions.

Mergers and acquisitions can provide several advantages:

  • Economies of Scale: Combining organisations can lead to cost savings and increased market share, especially if the companies operate in the same industry.
  • Expanded Distribution: M&As can broaden a company’s geographic reach, network, or service area.
  • Reduced Redundancies: By merging or acquiring, companies can cut staffing redundancies and lower labour costs, while also benefiting from a larger talent pool.
  • Enhanced Financial Position: Combining the financial resources of two or more companies can lead to a stronger financial situation, enabling new investments and opportunities.

Regardless of whether it involves a merger or an acquisition, numerous critical steps and services must be addressed before the process is complete. Therefore, various additional services should be integral to the overall process. Some of these include:

Financial, Tax, Technology & Legal Due Diligence: Identifies and examines any risks associated with a potential transaction.

Business Restructuring: Aims to protect investments, maximise recoveries, and enhance financial performance. This includes Financial Restructuring, Organisational Restructuring, Divestments and Spin-offs, Debt Restructuring, Cost Reduction, and Legal Restructuring.

Transaction Valuation: Determines the value of assets and aligns with business goals. This includes Transaction Valuations, Financial Reporting Valuations, and Portfolio Valuation Advisory.

JV/Share Purchase & Subscription Agreement: Provides the legal framework for the transaction.

Private Equity, Debt & Equity Syndication: Utilises effective strategies to maximise capital and gain insights into transactions:

  • Private Equity Funding: Includes Collateral Preparation, Investor Shortlisting, Commercial Term Sheet, and Due Diligence and Closure.
  • Debt Syndication: Includes Growth Financing, Bridge Funding, and Asset Financing.
  • Additional Services: Project Identification & Feasibility, Risk Analysis, Financial Modelling, Evaluation of Funding Options, and Negotiating Terms Sheets.

Deal Sourcing/Partner Search: Identifies key strategic partnerships.

Post-Merger Integration: Provides strategic solutions to ensure successful integration after the transaction:

  • Services Include: Integrating strategy and approach; Setting up the integration programme; Developing and validating the synergy case; Creating a blueprint for the new entity’s management structure; Mobilising and coordinating project teams.

In business, some level of risk is inevitable; however, it’s crucial to mitigate these risks as much as possible and gain a comprehensive understanding of what you’re engaging in, especially with mergers and acquisitions. For this reason, using risk advisory services is highly recommended. To maximise the benefits of your merger or acquisition, recognising and controlling risks efficiently is essential to fully realise the potential of the new organisation. Risk advisory services help in maximising value creation while safeguarding the interests of all stakeholders.

If you’re considering a merger, acquisition, or joint venture, it’s important to ensure you’re positioning your organisation for success. To achieve your strategic objectives effectively, reach out to our dedicated Mergers and Acquisitions (M&A) strategists today. We can help tailor a solution to meet your specific needs.

If you are considering a merger, acquisition, or joint venture, you want to make sure you are doing everything you can to set your organisation up for success. To ensure that you are well positioned to achieve all your key strategic objectives, reach out to our dedicated Mergers and Acquisitions (M&A) strategists today to learn how we can create a tailored solution for you

Business Transformation

Business transformation refers to clear, strong, and strategic fundamental changes that a business organisation undertakes to scale, grow, develop, change direction, or become more efficient. A business organisation can transform its business processes, personnel, information, and technology, among other areas. The goal is to accelerate organisational growth or development.

Change is the central element in a business transformation strategy. It involves implementing changes or a series of changes within an organisation. For example, following an internal quality audit, an organisation might need to comprehensively revamp its quality management systems. Such changes aim to achieve outcomes that might not be realised otherwise or to accelerate developments that would naturally occur but at a slower pace.

Traditionally, transformation initiatives have focused on enhancing productivity and differentiation. Organisations alter how they produce goods or deliver services, along with the underlying processes, to achieve greater efficiency and cost-effectiveness while distinguishing themselves from competitors.

Ultimately, organisations seek guidance from professional corporate service providers on transformative strategies that will enable them to capture a larger market share, achieve higher profit margins, reduce turnaround times, accelerate time to market, or lower production costs. Today, however, businesses may also undertake transformative strategies to redefine their identity, core values, and purpose to better align with shifting market values and seize new opportunities.

Organisations face various pain points, so there is no one-size-fits-all template for achieving strategic business transformation. Typically, organisations focus on strategy and transformation in several key areas: processes, technology, culture, and organisation.

Process Transformation: This involves updating or changing business processes, such as adopting agile methods. Organisations often optimise and automate processes that will have the greatest impact on their operations.

Technology Transformation: Organisations can use data and technology to add value. For example, a company might upgrade its marketing technology stack to centralise data and provide teams with real-time, relevant insights. This data can then be used to innovate marketing campaigns, improving customer retention and acquisition rates.

Cultural Transformation: Organisations define the type of culture they want and implement practices to help it evolve organically. For instance, a company aiming for a culture of sustainability might introduce monthly Earth Hours, offer rewards for reducing carbon footprints, and promote remote work.

Organisational Transformation: This involves restructuring from a traditional hierarchical model to a flatter structure. This may include reducing middle management layers, providing employees with direct access to executives, and increasing transparency within the company.

Business transformation analysts, also known as business transformation specialists or consultants, are experts in guiding organisations to achieve their business transformation goals. They act as coaches and facilitators, helping businesses design and implement effective strategies.

A business transformation consultant starts by assessing an organisation’s current state. This includes examining the company’s financials, conducting stock audits, reviewing assets and liabilities, and understanding how the company generates revenue. They also evaluate the organisation’s processes, culture, structure, and technology.

With a comprehensive understanding of the organisation and its transformation goals, the consultant can recommend appropriate strategies. They work closely with the organisation to translate these strategies into actionable steps and oversee their implementation.

For example, a business transformation analyst might propose reallocating resources significantly. This could involve expanding a factory that generates 80% of the company’s profits while closing one that contributes less than 5%, or shifting marketing spend from TV to social media influencers.

The consultant may also suggest strategies such as forming a company in Dubai to place one-third of the world’s population within a four-hour flight, or pursuing a disciplined mergers and acquisitions program and above-industry average capital investment.

Our expert team of UAE business transformation strategy consultants is ready to assist you. We offer strategic reviews, feasibility studies, support for entering the UAE or GCC markets, and recommendations for process improvement and organisational transformation.

Business set-up

To set up a business in the country, you should think about the industry you want to enter first and foremost. From there, use the following steps as a guide for the entire process:

Step #1: Choose a Legal Structure
Beyond selecting your industry, you need to decide on the appropriate legal entity for your business. The available options include:

  • Free Zone Entity (FZE)
  • Limited Liability Company (LLC)
  • Dubai Multi Commodities Centre (DMCC)

Step #2: Pick a Trade Name
Once you have a list of potential names, verify their availability with the free zone authority or the Department of Economic Development (DED). Ensure the name complies with the following criteria:

  • Does not violate public morals or order
  • Includes the legal form (e.g., FZE, LLC, DMCC)
  • Matches the legal status and activity type
  • Does not feature names or logos of any governing authority, religion, or external body

Step #3: Apply for a Business Licence
Prepare the required documents for business licensing in the UAE based on your business activity:

  • Commercial Licence: For trading activities
  • Industrial Licence: For manufacturing and industrial activities
  • Professional Licence: For professionals, artisans, craftsmen, and service providers

Step #4: Secure Office Space
A physical office is mandatory for most businesses in the UAE. In free zones, you can choose to buy or lease an office. The required floor area depends on your business activities, the number of employees, and free zone regulations.

For example:

  • DMCC: Offers options such as a flexi desk (20 to 30 square metres), a flexi office (200 to 265 square metres), or larger offices up to 2,000 square metres per floor.
  • Dubai Airport Free Zone: Provides packages including Office Packages, Smart Desk Office Packages, and Executive Office Packages.

Company setup costs in the UAE can vary significantly due to fluctuating fees. As a result, a fixed rate is challenging to provide. Business setup services are invaluable in this context. Consultants from CBA are well-versed in the applicable charges and any updates to governmental service fees. We offer consultancy services to help you minimise unnecessary expenses.

Factors Affecting Business Setup Costs Include:

  • The nature of the business
  • The chosen jurisdiction
  • Any required certifications and approvals

Yes.

Policy changes announced in 2020 have eliminated the requirement for an Emirati sponsor to hold 51% of company shares in certain industries. This replaces the 2015 Commercial Companies Law No. 2, which limited foreign shareholders to 49% ownership. However, some sectors, such as telecommunications, transport, energy, and hydrocarbons, remain exempt from this rule.

There are five primary business setup options in the UAE:

  1. Mainland Limited Liability Company (LLC)
    An LLC must have between two and 50 shareholders, each liable only for their share of the company’s liabilities. Profits and losses are distributed based on shareholding. Mainland LLCs are licensed by the Department of Economic Development (DED) and can operate in both local and international markets without restrictions.
  2. Free Zone
    Free zone companies are incorporated within specific jurisdictions and can conduct business within the free zone and internationally.
  3. Sole Proprietorship
    Owned and fully controlled by a single individual, this type of company allows the owner to retain all profits and operational control. While anyone can establish a sole proprietorship, only GCC and UAE nationals can operate industrial or commercial firms.
  4. Civil Company
    Civil companies are typically run by professionals such as accountants, lawyers, and doctors. Foreign professionals require an Emirati partner. Similar to sole proprietorships, civil companies come into existence when there is more than one partner involved.
  5. Freelance
    Freelance businesses are registered in a Free Zone by submitting an application form, bank reference, curriculum vitae, and notarised Registry Identification Code Form.

Our experienced team of experts is proficient in company setup and formation across various industries, both remote and onsite. Contact our CBA Corporate Services team for a seamless business setup experience in the UAE.