Due Diligence in Emerging Markets: The Questions Most Buyers Forget to Ask

The global M&A market grew significantly in 2025, with deal values increasing 36% over the prior year. In EMEA, megadeals drove a 19% increase in deal values. More transactions, more capital, more ambition. And alongside that, more due diligence failures — because as deal timelines accelerate, the temptation to apply standard checklists to non-standard markets grows, and the gap between what a checklist covers and what an emerging market actually looks like becomes expensive.

I have been involved in transactions across the Middle East, Africa, Turkey, and South Asia — as in-house legal lead on acquisitions worth hundreds of millions of dollars, and as an adviser to businesses navigating the complexity of cross-border deals for the first time. The pattern of what gets missed is consistent. It is rarely the financial statements. It is almost always the structural, regulatory, relational, and reputational dimensions that lie beneath them.

Why standard checklists fail in emerging markets

A developed-market M&A transaction typically involves a target with reasonably standard corporate governance documentation, a predictable regulatory approval process, a well-understood body of law, and access to comparable deal terms from peer transactions. In emerging markets, often none of that holds. Corporate governance practices vary enormously. Basic diligence information — ownership records, litigation history, tax filings — can be difficult to obtain and even more difficult to verify. There may be no established market for comparable transactions. And government regulators can become, in effect, additional parties to the deal.

The risk calculus changes accordingly. In a developed market, the primary due diligence risk is financial — can I verify the numbers and is the valuation supportable? In an emerging market, the financial risk is still present, but it sits alongside structural risk (is the ownership chain what it appears to be?), regulatory risk (what approvals are required and how long will they take?), reputational risk (who are the beneficial owners and do they carry political or sanctions exposure?), and operational risk (what happens to the workforce, the commercial relationships, and the regulatory licences on a change of control?).

Ownership and beneficial ownership

In many emerging markets, corporate ownership structures are layered in ways that are not immediately transparent. Nominee arrangements, informal partnership structures, and fragmented share registers are common. The question is not just who the registered shareholders are — it is who the beneficial owners are, what their political exposure is, whether any of them appear on sanctions lists, and whether there are informal ownership claims that could surface post-closing.

I have encountered transactions where the ultimate beneficial owner was a politically exposed person whose involvement had not been disclosed at the outset — a finding that had direct implications for the buyer's own regulatory and compliance obligations. In MENA specifically, family business structures frequently involve informal arrangements that do not appear in formal corporate documents. A thorough beneficial ownership investigation, supported by local intelligence and appropriate third-party checks, is not optional — it is the foundation of responsible diligence.

Regulatory licences and their transferability

In regulated sectors — healthcare, pharmaceuticals, financial services, food and beverage — the value of the target often sits in its regulatory licences, product registrations, and government relationships as much as in its physical assets or customer contracts. The critical question is not just whether those licences exist, but whether they transfer on a change of control, what conditions are attached to transfer, and how long the approval process takes.

I have seen transactions where the buyer assumed product registrations would transfer automatically, only to discover that local law required a full re-registration process that could take 12 to 18 months — during which commercial operations were effectively frozen. In other cases, government contracts explicitly contained change-of-control restrictions that required prior consent from a ministry that was not in the habit of granting it quickly. These are not theoretical risks. They are deal-timeline and deal-value risks that need to be assessed before signing, not during integration.

Employment and workforce liabilities

Labour law protections vary significantly across emerging market jurisdictions, and many of them are significantly more protective of employee rights than buyers from developed markets expect. End-of-service gratuity obligations, mandatory notice periods, restrictions on redundancy, and sector-specific collective arrangements can create material liabilities that do not appear on the balance sheet. Saudi Arabia's Nitaqat requirements, for example, impose ongoing obligations on the buyer as the new employer that need to be understood before acquisition. Egyptian and Turkish labour law both create significant exposure on workforce restructuring.

The change-of-control implications for existing employment contracts, visa arrangements, and work permit transfers need to be reviewed in each jurisdiction where the target operates — not just in the primary acquisition jurisdiction.

The relational dimension

This is the dimension that quantitative due diligence almost always misses, and it is frequently the one that matters most. In emerging markets, the commercial value of a business is often disproportionately concentrated in personal relationships — with government stakeholders, with distribution partners, with key customers, with regulators. Those relationships may not transfer with the business. They may be held by the founder, by a senior employee who departs, or by a family connection that evaporates on a change of ownership.

Understanding what relationships underpin the business, whether they are personal or institutional, and what happens to them on a change of control, requires conversations that go beyond the data room. It requires conversations with the target, with customers, and sometimes — with appropriate care — with market participants who know the target's position in its ecosystem.

Non-operational risk: the things that derail deals unexpectedly

Emerging market transactions can be derailed by risks that have nothing to do with the target's operations. Local stakeholders using civil or criminal proceedings to extract economic benefit from a transaction. Unexpected governmental interference in sectors with political sensitivity. Hostile local press coverage triggered by the announcement of a foreign acquisition. Corruption and third-party interference risks vary significantly across markets and need to be assessed as part of any pre-transaction risk framework. These are not hypothetical scenarios — they are documented patterns in cross-border M&A in MENA and Africa.

The deal team should discuss, before signing, how they would respond if these scenarios materialised. A buyer that has pre-aligned internally on its risk tolerance and response framework is far better positioned to navigate them than one encountering them for the first time under the pressure of a live transaction.

Building the right advisory team

The most experienced emerging market buyers consistently do one thing differently: they build their advisory team before they need it, not in response to a problem. Local counsel who understand not just the law but the regulatory dynamics. Commercial advisers who have operated in the market. Tax and treasury teams who understand capital flow restrictions. And a lead adviser — internal or external — who has seen enough of these transactions to know which questions to ask before the data room opens.

The cost of getting this right is always lower than the cost of getting it wrong.