Insights: Why immigration due diligence is as critical as financial scrutiny in the GCC

In the high-stakes world of mergers and acquisitions, the focus is almost always on the numbers.

Valuations, EBITDA multiples and legal contracts dominate boardrooms, with countless hours dedicated to financial and legal due diligence. Yet, a critical and often-overlooked element can derail a deal, expose hidden liabilities and undermine the entire transaction: immigration due diligence.

The common misconception is that immigration issues are a post-deal administrative task, a simple matter of transferring visas and work permits once the ink is dry. This could not be further from the truth, particularly in the unique and complex regulatory environment of the Gulf Cooperation Council (GCC).

Here, where visa rules are intricate and compliance is strictly enforced, neglecting this area is a costly gamble.

The consequences of such an oversight are tangible and severe, impacting the deal’s timeline, financial health and operational success.

Deal disruption, delays and hidden financial liabilities

In the GCC, a single misstep in immigration can cause a cascading effect of delays. For example, if a target company has a history of non-compliance with local labour and visa regulations, such as employing individuals on incorrect visa types or failing to update employee status, the acquiring company inherits these liabilities.

Government authorities in countries like the UAE and Saudi Arabia maintain strict compliance requirements, and potential concerns may prompt an in-depth audit. This can result in delays lasting weeks or even months while issues are addressed, a situation that can place additional pressure on the transaction.

Beyond deal delays, unresolved immigration issues can lead to significant and unexpected financial costs. Government fines for non-compliance are steep and can quickly accumulate.

Impact of deal structuring on talent loss and potential operational disruption

In many mergers and acquisitions (M&A), the true value lies in the human capital, the talent, expertise and institutional knowledge of the target company’s employees.

When immigration issues are not addressed proactively, this value is at risk. In today’s immigration landscape, complex rules regarding entity structure, type, nationalisation requirements and associated implications in relation to work permit quotas may lead to significant roadblocks or delays in employee immigration status.

Key employees with unresolved visa or residency status can become unable to work legally.

In the GCC, where visa categories are tied to specific roles and sponsorships, a change in company structure might necessitate a complete re-evaluation of every employee’s status.

If this process is not managed seamlessly, critical talent may face uncertainty, leading to a potential mass exodus. This can cripple the new entity’s operations and undermine the very purpose of the merger.

Navigating complexity

This is where proactive immigration due diligence becomes a deal-critical component, not a post-merger afterthought. A strategic partner who can absorb the complexity of global mobility is essential to make a business’ transition seamless. One with experience of connecting talent with opportunity enables us to be the leading immigration experts in the field.

By integrating a comprehensive immigration review into the M&A process, companies can identify issues early, with deep knowledge of complex regulations in the UAE, Saudi Arabia and the wider region.

The focus of this expertise extends beyond simple problem-solving to providing robust, proactive solutions.

Services include comprehensive compliance audits, policy development and organisational restructuring guidance, which empowers businesses to confidently manage the complexities of a global workforce.

In today’s complex global business landscape, a successful merger is not just about numbers and legal agreements; it’s also about a company’s most valuable asset — its people — and their legal right to work.

A transaction’s true success hinges on the seamless integration of a global workforce. Navigating this process with confidence, and accounting for every hurdle you may face, is key to safeguarding your investment and yourself.