Due Diligence in the UAE: How Cultural and Human Factors Impact Risk Assessment?

The Dots We Connect

Performing due diligence in the UAE effectively means understanding the people behind the numbers. It involves evaluating corporate culture, relationship dynamics, local business etiquette, and informal influence structures. By incorporating these elements into your risk assessment, you can uncover hidden threats, strengthen partnerships, and create a foundation for deals that are both strategically sound and culturally aligned.

In a market where a handshake can carry more weight than a signed contract, understanding the human side of business in the UAE is essential. Cultural nuances, trust networks, and personal dynamics shape every partnership and transaction. Traditional due diligence in the UAE may uncover the numbers, but only by assessing the people and relationships involved can you truly evaluate risk and unlock potential.

Understanding the Business Culture in the UAE

Relationship‑Driven Business

In the UAE business context, personal relationships, trust and rapport tend to matter as much or sometimes more than formal contractual terms. Business often begins with informal meetings, shared lunches, and social connections, before moving into formal negotiations.

This relationship‑centric model plays into due diligence in the UAE in several ways:

A partner’s reputation among peers, their network of contacts, their standing in the local business community matters.
Informal influence and “who you know” can shape outcomes just as much as formal titles or ownership structures.

Because of this, the due diligence process should ask: Who are the informal influencers? What is the partner’s relational capital locally?

Hierarchy, Respect & Decision‑Making

The UAE business culture reflects a respect for hierarchy, seniority, and formality. The social and corporate stratification matters.

In practice, this means:

Decision‑making may rest with senior leaders or family‑members rather than middle management.
Younger professionals may defer to elders or senior Emirati stakeholders.
A mis‑alignment in decision styles (e.g., aggressive, rapid Western style vs. patient, consensus‑based local style) can hamper integration or deal execution.

Religious, Ethical and Cultural Anchors

Islamic values and traditional norms shape business etiquette, societal expectations and reputational dynamics.

For due diligence this implies:

Understanding holidays (e.g., Ramadan), religious observances, and how they adjust business rhythms.
Etiquette in meetings, dress‑code, gender boundaries, corporate social responsibility and public reputation all matter.
A company’s alignment to local cultural values, e.g., commitment to community, acceptable social practices, can influence how it is perceived and accepted locally.

Multicultural Workforce & Diversity

The UAE is a highly multicultural society with expatriates dominating the workforce. Yet this diversity brings both opportunities and risks.

In due diligence terms:

Ensure you assess how the target or partner manages cross‑cultural teams, diverse nationalities, and multicultural dynamics.
Check for potential cultural clashes in leadership, work‑styles, communication, and inclusion of Emirati nationals vs expatriate staff.
An organization's culture may reflect Western norms but may need local adaptation for the UAE environment ignoring that can lead to talent risk or integration friction.

How Cultural Nuances Impact Due Diligence in the UAE and Risk Assessment?

Compliance, Anti‑Corruption & Governance Risks

Culture influences how business is conducted beyond the formal contract. In the UAE setting, informal networks, hospitality norms, gift‑giving amongst business contacts, and relational influence may all carry risk. During due diligence in the UAE:

Assess whether the local partner’s governance, internal controls, third‑party relationships, and influence networks are transparent and appropriate for your risk tolerance.
Explore how decisions are made, who is really influencing them, whether there are any informal arrangements or expectations (e.g., vendor loyalty, consultant networks), and whether those carry hidden risk.
Check for the partner’s reputation in the local community, how they engage with regulators, government‑linked entities, and whether there have been any past issues with compliance, license renewal, or dispute resolution.

Integration Risk in M&A / Partnerships

In deals or partnerships, cultural fit between buyer and target (or between partners) is often underestimated.

Key focus areas:

Leadership style alignment: Does the target operate with a consensus‑based leadership, or a hierarchical top‑down model? Are the two organizations' styles compatible?
Decision‑making and pace: If your strategy demands rapid decisions and your target is more traditional and slower, this misalignment can stall value creation.
Employee engagement and retention: In the UAE setting, local staff retention, Emirati nationalization policies, and expatriate turnover are real risks, cultural tension may exacerbate them.
Integration of cultures: Having a plan for not just operational integration but cultural integration (shared values, norms, decision‑processes) will help avoid talent flight and loss of local goodwill.

Operational & Strategic Risks

Beyond culture, human/relational elements influence operations and strategy in ways that may not be obvious from financial reports. For example:

Trust‑building time: Because relationship matters, the timeline for deals and operations may be longer. Expect more trust‑building, more meetings, more social engagement than in purely transactional environments.
Reputation/standing: A company’s standing in local networks, their “face” in the business community, their alignment with Emirati stakeholders or government‑linked entities may drive new opportunities or block them.
Social obligations: In UAE business, broader social expectations (corporate social responsibility, nationalization, local community contribution) may impact cost, governance, or alignment.

Talent, Human Capital & Entrepreneurial Culture

A perhaps less obvious but important dimension is the human capital and entrepreneurial culture in the UAE.

In due diligence:

Assess how the target manages Emirati nationals, expatriate staffing, and leadership succession.
Evaluate how agile the business is in terms of innovation, change management, and adaptation, which in a fast‑moving UAE market matters.
Understand the local partner’s approach to teamwork, decision‑making, risk tolerance, and reward/recognition culture particularly in a multicultural workforce.

Practical Strategies for Incorporating Cultural Risk into Due Diligence in the UAE

Conduct a dedicated “Cultural & Human Due Diligence” stream

Use surveys, leadership interviews, workshops to assess target’s culture, behaviors, decision‑style, informal relational networks.
Map intangible assets: reputation, relationships, influence circles, key informal stakeholders within the organization and external ecosystem.
Identify cultural “fit‑gaps” early (e.g., target’s hierarchical culture vs acquirer’s flat model) and build mitigation plans.

Map key relationships, influencers and networks

Beyond formal organizational charts, identify informal influencers: family links, board advisors, major customers/suppliers who are also part of the local network.
Check whether local relationships carry contingent expectations: vendor loyalty, repeat business, referrals, and local introductions.
Evaluate any “dependency” on one relationship or person and the risk if that person leaves or the relationship shifts.

Assess reputation, standing and social license

Conduct reference checks in the local business community and speak to recent partners/customers/suppliers of the target.
Investigate public perception, presence in industry associations, engagement with local Emirati stakeholders.
Review how the target manages ESG and nationalization obligations as these are politically and socially relevant in the UAE.

Plan integration and change management with culture in mind

From day one, plan for culture‑alignment workshops, shared value sessions, and leadership alignment.
Assign a cultural integration lead (not just an operations lead) and include cultural KPI’s (employee engagement, retention, value alignment) in post‑deal plans.
Allocate time and budget for cultural transition: social events, leadership coaching in local norms, cross‑cultural team building.

Embed compliance & ethics into the human analysis

Add questions about local practices: gift/hospitality norms, third‑party relationships, and familial links to business dealings.
Review the target’s internal controls and culture around transparency, escalation of issues, whistle‑blowing and remedial action.
Look for early‑warning indicators: limited external exposure, key relationships not documented, reluctance to share full leadership interviews or site visits.

Manage ongoing relationship / local engagement post‑deal

Recognize that in the UAE, building and maintaining relationships is ongoing.
Use local networks (industry associations, business councils, chambers) to keep your finger on the pulse of local sentiment.
Monitor cultural integration metrics: staff turnover (especially local nationals), supplier/partner feedback, social license indicators (community involvement, regulatory engagement).

What Can Go Wrong If You Ignore Cultural & Human Nuances?

Deal value erosion: If post‑integration you lose key local staff, founder relationships collapse, or local network access dries up, the promised synergies may never materialize.
Compliance / reputational risk: Informal practices may harbor hidden liabilities, third‑party ties, gift/hospitality norms, expectations of favoritism, that a standard checklist misses.
Mis‑communication / friction: A mismatch in leadership or decision‑making style may slow operations, demotivate staff, or trigger employee flight.
Loss of trust and local goodwill: A partner or local stakeholder may feel neglected or misunderstood culturally; rebuilding trust is harder than building it.
Strategic drift: Without a shared culture and clear human alignment, the combined entity may lack coherence, leading to unclear accountability, diluted strategy, and conflict.

How Dot& Can Help with Due Diligence in the UAE?

Dot& delivers comprehensive commercial and financial due diligence in the UAE, combining market insights with rigorous financial analysis. We assess business models, growth potential, market positioning, and revenue quality, while also examining financial statements, cash flows, and operational metrics. Our approach ensures you understand both commercial opportunities and financial realities, enabling confident, informed decisions in a relationship-driven market.