The Next Wave of M&A in the UAE: Legal Issues Buyers Are Prioritising in 2026

The UAE's M&A market is entering a more selective phase. The appetite for acquisitions remains strong. Many businesses continue to use M&A to enter new sectors, acquire technology, strengthen market positions and build long-term growth. However, buyers are becoming more disciplined about where they deploy capital.

The focus is shifting from deal volume to deal quality. In 2026, the strongest activity has been concentrated around assets with clear strategic value. Technology, infrastructure, energy and other sectors linked to long-term economic development continue to attract investor attention, while regional and sovereign-linked capital remains an important source of support for dealmaking.

At the same time, the legal issues influencing transactions are becoming more complex. Buyers are looking more closely at regulatory risk, ownership structures, data, technology and the legal resilience of the businesses they are acquiring.

This is changing the role of legal due diligence. The question is no longer simply whether the target has a significant legal problem. Buyers increasingly want to understand whether the business is ready for the next stage of growth.

Buyers Are Looking Beyond Traditional Due Diligence

Due diligence remains central to any acquisition. A buyer still needs to understand the target's corporate structure, material contracts, employment arrangements, assets and potential liabilities.

However, the scope of legal diligence is changing. Businesses are now more dependent on technology, data and complex supply chains. Many also operate across multiple jurisdictions and rely on a network of third-party providers.

As a result, a legal issue that might previously have been viewed as a technical or operational matter can now have a direct impact on the value of a transaction.

For example, weak data governance may affect the ability of the buyer to integrate the target's systems after completion. A cybersecurity incident may expose the business to regulatory, contractual and reputational consequences. A poorly documented ownership structure may create difficulties with regulatory approvals or post-closing restructuring.

The most important diligence questions are therefore becoming more closely connected to the buyer's wider investment strategy.

The issue is not simply:

What is wrong with the target?

It is increasingly:

What could prevent the buyer from achieving the value it expects from the acquisition?

Regulatory Risk Is Moving Higher Up the Agenda

One of the most significant legal developments for UAE M&A is the continued development of the country's competition and merger control regime.

Federal Decree-Law No. 36 of 2023 introduced a new framework for the regulation of competition, including a mandatory regime for certain economic concentration transactions. Cabinet Resolution No. 3 of 2025 established notification thresholds, while the Executive Regulations introduced under Cabinet Resolution No. 59 of 2026 provide further detail on the application and review process.

The notification thresholds include transactions where the combined annual sales of the relevant parties in the UAE exceed AED 300 million or where their combined market share exceeds 40% of total transactions in the relevant market.

For buyers, this means that competition analysis needs to begin early. The need for regulatory approval can affect transaction timing, conditions precedent and the long-stop date. It can also influence the allocation of regulatory risk between the buyer and seller.

Competition issues can be particularly important where a buyer is acquiring a competitor or entering a market in which it already has a significant presence.

The legal analysis is therefore becoming more closely connected to the commercial rationale for the transaction.

A buyer that waits until the final stages of a deal to consider merger control may find that an avoidable regulatory issue has become a timing or execution risk.

Ownership Transparency Is Becoming More Important

Understanding who owns and controls a business has always been important in M&A.

In 2026, it is becoming even more significant.

The UAE's focus on beneficial ownership transparency, anti-money laundering and know-your-customer compliance is influencing how transactions are structured and how buyers conduct diligence.

Recent developments in the UAE's corporate and anti-money laundering framework have reinforced the importance of accurate beneficial ownership information and source-of-funds analysis. Buyers are therefore looking more closely at ownership structures, shareholder arrangements and the identity of individuals who ultimately control the target.

This can be particularly relevant where a target has a complex group structure, nominee arrangements, minority investors or shareholders based in multiple jurisdictions.

A problem with beneficial ownership information may create more than a compliance concern.

It may also delay completion or create difficulties with regulatory approvals, financing and post-acquisition restructuring.

For buyers, the objective is not simply to identify the legal owner of the shares.

It is to understand who controls the business.

Tax Is Now Part of the Transaction Strategy

Tax considerations have become a more central part of M&A in the UAE.

The introduction of UAE corporate tax has changed how buyers approach acquisitions, restructurings and post-closing integration.

Buyers need to consider the tax position of the target, including the availability of incentives, the treatment of losses and the potential consequences of the transaction structure.

The legal and tax analysis increasingly needs to take place together.

A transaction structure that appears commercially attractive may create an unexpected tax consequence. Similarly, a target that benefits from a particular tax position may require additional diligence before the buyer assumes that the benefit will continue after completion.

Recent changes to the UAE Commercial Companies Law have also added further structural considerations for M&A transactions, particularly in relation to shareholder rights and exit arrangements. The reforms introduced by Federal Decree-Law No. 20 of 2025 are part of a broader move towards greater legal certainty around ownership transitions and transaction structures.

For buyers, tax is therefore becoming more closely connected to the overall investment case.

The question is not only what the business is worth at signing. It is also what the business will look like once it has been acquired and integrated.

 

Technology Due Diligence Is Becoming Legal Due Diligence

Technology is now one of the most important assets in many transactions.

A buyer may be acquiring software, customer data, proprietary algorithms or digital infrastructure. In other transactions, the value of the business may depend on technology that is not owned by the target but licensed from a third party.

This creates a number of legal questions. Does the target own its technology? Does it have the right to use the software and intellectual property that are central to its operations?

Can those rights continue after a change of control?

Are there restrictions on the transfer or use of customer and business data? These issues are particularly important in technology acquisitions, but they are no longer limited to technology companies.

Businesses across the economy are becoming more dependent on digital systems. This means technology diligence is increasingly a mainstream part of M&A.

The growth of technology, media and telecommunications activity in the region reflects this wider trend. Technology, media and telecommunications was the Middle East's most active M&A sector in the first half of 2026, recording 76 transactions, a significant increase from the same period in previous years.

For buyers, the challenge is understanding whether the technology they are acquiring is genuinely an asset or whether it carries legal and operational risks that have not yet been identified.

AI Is Creating a New Category of Due Diligence

Artificial intelligence is adding another layer to technology due diligence. A growing number of businesses are using AI in their products, services and internal operations. In some cases, AI may be central to the target's commercial value.

A buyer therefore needs to understand more than whether the target uses AI. It needs to understand how.

This may include questions about training data, intellectual property, third-party models, data protection, confidentiality and the accuracy of AI-generated outputs.

A business may describe itself as an AI company while relying heavily on technology developed by external providers. This does not necessarily create a problem.

But the buyer needs to understand the commercial and legal dependencies.

Can the target continue using the technology after completion? Are there restrictions in the relevant licences? Has confidential information been provided to external AI systems? Who is responsible if the technology produces an inaccurate or harmful result?

As AI becomes more important to the UAE's economy, these questions are likely to become increasingly common in M&A due diligence. The value of a technology acquisition will increasingly depend not only on what the technology can do. It will also depend on whether the buyer can legally and effectively continue to use it after the deal closes.

Cybersecurity Is Becoming a Transaction Risk

Cybersecurity is another area receiving greater attention from buyers. A serious cyber incident can affect the value of a business in several ways.

The business may face regulatory scrutiny, contractual claims or operational disruption. It may also lose confidential information or customer trust. For a buyer, a cybersecurity incident may not simply be a historical problem.

It may reveal a continuing weakness in the target's systems and governance. Cyber diligence is therefore becoming more focused on the target's ability to manage future risk.

Buyers may want to understand whether the target has experienced significant incidents, how those incidents were handled and whether any vulnerabilities remain.

The analysis may also include the target's incident response procedures, cybersecurity arrangements and contractual protections with key technology providers. The question is not simply whether the target has ever suffered a cyber-attack. It is whether the business understands how to respond if one happens.

Data Is Now a Value and a Liability

For many businesses, data is a significant commercial asset. Customer information, market intelligence and operational data can all contribute to the value of an acquisition.

At the same time, data can create legal risk. Buyers need to understand what information the target holds, how it has been collected and whether the target has the right to use it.

The applicable legal framework may vary depending on the target's operations. A business operating in the UAE may need to consider the federal data protection regime, while businesses operating in the Dubai International Financial Centre or Abu Dhabi Global Market may be subject to separate legal frameworks.

The buyer also needs to think beyond completion. Can the data be transferred? Can it be combined with the buyer's existing data? Can it be used for new commercial purposes?

A data issue that appears manageable before completion may become more complex during post-acquisition integration. This is why data diligence is increasingly being connected to the buyer's plans for the business after closing.

Buyers Are Paying More Attention to Integration Risk

The success of an acquisition does not end with signing or completion. In many transactions, the real value is created afterwards.

The buyer may need to integrate technology systems, consolidate operations, restructure the group or bring the target into its existing governance framework.

Legal issues can affect each stage of this process. A change-of-control provision in a material contract may require consent. A licence may not be transferable. Data may be subject to restrictions that affect integration. Employees may need to be transferred, or new arrangements may be required.

This is why buyers are increasingly asking integration questions during due diligence rather than waiting until the transaction is completed. The buyer needs to understand what the business will look like on day one after closing. A legal issue that prevents integration can have a direct effect on the value of the transaction.

Sellers Are Being Asked More Difficult Questions

As buyers become more focused, sellers are also facing more detailed diligence requests. The days when a business could expect legal diligence to focus primarily on corporate documents and major contracts are becoming less common.

Buyers may now want information about technology, cybersecurity, data governance and internal policies. This is encouraging more sellers to prepare earlier.

A seller that understands its own legal risks before entering a transaction can respond more effectively to diligence requests and reduce the risk of unexpected issues affecting the timetable or purchase price.

The growing use of targeted, risk-based due diligence also reflects the need for efficiency.

Full legal diligence can be expensive and time-consuming.

As a result, buyers increasingly focus on the issues that are most likely to affect value, transaction execution or the ability to integrate the business after completion. Recent UAE market analysis has also identified a growing preference for targeted red-flag due diligence rather than comprehensive narrative reporting in many transactions.

This makes the quality of the diligence process particularly important. The goal is not to identify every possible legal issue. It is to identify the issues that matter most.

 

Regional and Sovereign Capital Will Continue to Shape the Market

The UAE's M&A market is also being influenced by the continued importance of regional capital.

In the first half of 2026, regional and sovereign-linked investors continued to support deal activity as cross-border investment became more selective. State and sovereign-linked entities featured on at least one side of half of the region's largest transactions, while intra-regional dealmaking continued to grow.

This is shaping the types of assets attracting investment. Energy, utilities, infrastructure and technology have remained important areas of activity because they are closely connected to long-term economic priorities.

For buyers, the focus is increasingly on strategic value. The transaction needs to offer more than short-term financial opportunity. It needs to fit within a wider plan for growth, resilience or market position.

This is likely to influence legal diligence as well. Buyers investing in strategic assets may be particularly focused on regulatory compliance, operational resilience and long-term legal risks.

The Next Wave Will Be More Selective

The UAE remains an important M&A market. The country's strong economic position, continuing diversification and active regional capital base continue to support transaction activity. However, the next phase of M&A is likely to be more selective.

In the first half of 2026, Middle East M&A activity moderated in volume, but capital remained focused on assets with strategic value. Energy, infrastructure and technology continued to attract investment, while buyers became more disciplined in their assessment of risk and long-term value.

This will place greater importance on legal preparation. A buyer needs to understand not only whether the target is attractive today.

It also needs to understand whether the business can withstand regulatory change, technology risk, cyber threats and post-acquisition integration.

The strongest transactions will therefore be those where the legal analysis supports the commercial strategy.

What This Means for Buyers

In 2026, buyers are looking at M&A with a broader view of risk.

Competition law is becoming a more important execution issue. Ownership transparency and KYC are influencing transaction structures. Tax is affecting valuations and post-acquisition planning.

Technology, AI, cybersecurity and data are moving from the technical side of the business into the legal diligence process.

These developments do not make transactions less attractive. They make preparation more important.

The UAE's M&A market is continuing to evolve from a market focused primarily on access and expansion into one that is increasingly focused on execution, integration and long-term value.

For buyers, the legal questions being asked are changing.

It is no longer enough to ask:

Can we complete the transaction?

The more important question may be:

Can we achieve the value we expect once we do?

That is likely to shape the next wave of M&A in the UAE.