Due Diligence on a Saudi Partner or Target Company: The Order of Checks

A staged due diligence process for checking a Saudi counterparty before a joint venture, acquisition or large contract, from registration records to reputation and finances.

Due diligence on a Saudi counterparty starts with the public registration record and ends with how the company behaves toward partners and clients, and the order matters because early checks decide whether the later, more expensive ones are worth doing. The process below applies to a potential joint venture partner, an acquisition target or a major customer or supplier, adapted to the size of the commitment.

Before stage one

Decide how much depth the transaction justifies. A distributor agreement needs lighter checks than an acquisition, and a joint venture with contributed assets needs checks on those assets as well as the company. Agree a scope with your advisers and a budget, and make sure the counterparty knows that diligence is a normal part of the process.

• The type and size of the transaction and the maximum exposure.
• Signed confidentiality terms allowing the exchange of information.
• A diligence scope agreed with legal, financial and technical advisers.
• A named person on the counterparty side to answer requests.
• Your own list of deal-breakers, decided before findings arrive.

Stage 1: Confirm the legal identity

Verify the company's commercial registration through the Ministry of Commerce services, its legal form, registered activities, capital, shareholders and managers, and check that the person negotiating is authorised to bind it.

• Deliverable: A verified company profile with shareholders and authorised signatories.
• Owner: Legal adviser.
• Approval gate: The entity exists as described and the signatories have authority.

Stage 2: Screen for sanctions and integrity risks

Screen the company, shareholders and managers against sanctions lists and adverse media, and check for political exposure, in line with your own compliance policies and anti-bribery obligations.

• Deliverable: A screening report with any flags explained.
• Owner: Compliance team or screening provider.
• Approval gate: No unresolved integrity issue remains.

Stage 3: Review financial statements

Obtain audited financial statements for several years, tax and Zakat filings with ZATCA, and management accounts. Examine revenue concentration, receivables, debt, related-party transactions and cash conversion.

• Deliverable: A financial diligence report with adjusted figures.
• Owner: Financial adviser.
• Approval gate: Reported earnings are supported by cash and audited accounts.

Stage 4: Check licences, compliance and employees

Confirm that operating licences, municipal permits and sector approvals are valid, and review the Saudisation position, GOSI registration, labour disputes and any government fines or notices.

• Deliverable: A compliance review listing licences and open issues.
• Owner: Legal adviser with HR specialist.
• Approval gate: Licences are valid and there is no compliance issue that would stop operations.

Stage 5: Verify assets and contracts

Check title to key property through the Real Estate Registry or other title records, review material contracts for change-of-control clauses, and examine intellectual property registered with SAIP.

• Deliverable: An asset and contract register with risks noted.
• Owner: Legal and technical advisers.
• Approval gate: Key assets are owned or held as stated and key contracts survive the transaction.

Stage 6: Investigate disputes and reputation

Review known litigation and arbitration, then speak discreetly with clients, suppliers, former partners and banks about how the company behaves when things go wrong.

• Deliverable: A summary of disputes and reputation interviews.
• Owner: Deal lead with advisers.
• Approval gate: No pattern of disputes or poor conduct toward partners.

Stage 7: Translate findings into terms

Convert findings into price adjustments, conditions precedent, warranties, indemnities, escrow or a decision not to proceed. Record why each issue was accepted, priced or rejected.

• Deliverable: A diligence memo linked to the transaction documents.
• Owner: Deal lead and legal adviser.
• Approval gate: Every material finding is addressed in the terms or accepted in writing.

Handovers between stages

The common failure is between findings and terms. Advisers produce a thorough report, the deal team reads the summary, and issues are left unaddressed in the final documents because the timetable is tight. Assign someone to map each finding to a clause, a price change or a conscious acceptance before signing.

How you know it is finished

Diligence is complete when you can explain who you are dealing with, what they own and owe, whether their earnings are real, whether they comply with the rules that matter, how they treat partners, and how each risk is reflected in the deal. At that point the decision to proceed rests on known facts rather than on the strength of the relationship.

If a Vision 2030 programme or market trend is shaping your investment case, Domira can test it against real land, construction costs and local demand in the city you are considering before you commit capital.