What Due Diligence on a Saudi Deal Costs, and What Drives the Bill

The workstreams that make up due diligence on a Saudi acquisition or joint venture, what pushes each one up or down, and how to spend where the risk actually sits.

The cost of due diligence on a Saudi deal is driven by the number of workstreams you need, the quality of the target's records and how many entities sit in its group, far more than by the price of the deal. A well-organised single company can be reviewed efficiently; a family group with many related companies and informal records can take several times the effort. The breakdown below explains each workstream and how to keep it proportionate.

What this number does and does not include

This covers external adviser costs and internal effort for diligence on an acquisition, a minority investment or a joint venture partner. It excludes transaction documents, financing, regulatory filings and post-deal integration. Adviser fees are market-driven and vary widely, so the figures come from quotes against a defined scope rather than from any rule.

Legal due diligence

Corporate records, shareholding, licences, material contracts, property titles, employment, disputes and regulatory compliance.

• Pushes it up: many group companies, missing records, property holdings and a history of disputes.
• Brings it down: a single entity with a well-organised data room.
• How to control it: set a materiality threshold for contract review and focus on change-of-control and key licences.

Financial due diligence

Quality of earnings, working capital, debt and debt-like items, related-party transactions and cash conversion.

• Pushes it up: unaudited or recently restated accounts and intercompany balances across related companies.
• Brings it down: several years of audited statements and clean management accounts.
• How to control it: agree the key questions in advance, such as normalised earnings and working capital, and limit the rest.

Tax and Zakat review

Zakat, corporate income tax, VAT, withholding tax and any open assessments with ZATCA.

• Pushes it up: mixed Saudi, GCC and foreign ownership, open assessments or past restructurings.
• Brings it down: clear filing history and settled assessments.
• How to control it: ask the target for its ZATCA certificates and assessment history before the adviser starts.

Commercial due diligence

Market position, customer concentration, pricing, pipeline and the drivers behind the business plan.

• Pushes it up: a new sector for you and reliance on a few large customers or public programmes.
• Brings it down: a sector you already know and a diversified customer base.
• How to control it: do part of the work yourself through customer calls and use advisers for the gaps.

Technical and property due diligence

Condition of buildings, plant and equipment, permits, environmental matters and independent valuation, often by a Taqeem-accredited valuer.

• Pushes it up: industrial sites, many properties and assets contributed in kind.
• Brings it down: an asset-light business with leased premises.
• How to control it: prioritise the assets that drive value or carry liability.

Integrity and background checks

Sanctions screening, adverse media, reputation interviews and checks on shareholders and managers.

• Pushes it up: politically exposed individuals, complex ownership and limited public information.
• Brings it down: a straightforward ownership chain and clear public records.
• How to control it: scale the depth of checks to the risk profile you identify in initial screening.

Internal time and travel

Your own deal team, management meetings, site visits and coordination of advisers.

• Pushes it up: a long, stop-start process and several visits.
• Brings it down: a clear timetable and a single coordinator.
• How to control it: appoint one internal owner who runs the timetable and the question list.

Costs that never appear on the first page

• Translation of Arabic documents for foreign reviewers and decision makers.
• Extra rounds of work when the data room is incomplete or updated late.
• Broken-deal costs when diligence reveals problems and the deal stops.
• Delay costs if findings require restructuring before signing.
• Follow-up work to turn findings into warranties, indemnities or price changes.

Keeping the budget honest

Size the diligence budget to the risk, not to the deal price. Start with a short, inexpensive first phase covering identity, integrity and the headline financials, and release the full budget only if that phase finds nothing that would stop the deal. A few weeks spent on a phase-one review often saves most of the cost of a full review on a deal that should never have proceeded.

• Confirm each adviser scope and fee in writing before work starts.
• Review spending against scope at the end of each phase.
• Check whether findings justify extending or narrowing the review.
• Make sure findings are translated into deal terms, not only reports.
• Record lessons on data quality for future Saudi deals.

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