Smarter M&A: AI’s Impact on Due Diligence in the Gulf Region

Smarter Deals: How AI is Transforming M&A Due Diligence in the Gulf

Introduction

In 2025, a Dubai-based acquirer leverages a proprietary AI platform to complete legal and financial due diligence for a $900 million cross-border acquisition in record time. The platform reviews 25,000 documents, flags change-of-control clauses, identifies ESG liabilities, and recommends structuring alternatives—all within a week. Meanwhile, in Riyadh, a public-private consortium explores AI-assisted review protocols for regulatory and anti-competition risks in IPO-bound acquisitions. Across the Gulf, artificial intelligence is no longer theoretical—it is redefining how M&A due diligence is executed.

In the UAE and Saudi Arabia, AI tools are being integrated across transaction timelines to accelerate legal analysis, enhance risk detection, and optimize deal structuring. Yet, regulatory uncertainty, data localization, and Sharia compliance present real obstacles. How can stakeholders deploy AI in M&A diligence without compromising enforceability, privacy, or transactional integrity?

This article explores how acquirers, legal counsel, and regulators in the UAE and Saudi Arabia are navigating the promise—and limits—of AI in M&A due diligence.

The AI Advantage in Gulf M&A Diligence

Traditional M&A due diligence is labor-intensive, prone to error, and often stretched across weeks or months. AI-powered tools now automate large-scale document reviews—analyzing corporate records, litigation histories, regulatory filings, and compliance certifications. Generative AI platforms, trained on transaction templates and statutory texts, draft first-pass risk summaries, flag missing consents, and detect red flags across legal, tax, and employment domains.

In the UAE, DIFC-based law firms have adopted AI systems for multi-lingual document parsing, integrating Arabic-language memoranda into English deal reports. In Saudi Arabia, regulatory and Sharia reviews are being automated through AI classifiers that tag clauses triggering non-compliance with Zakat or CMA regulations.

Notably, AI systems trained on Gulf-specific legal inputs now predict regulatory clearance timelines, offering acquirers strategic foresight on deal certainty and closing conditions. In 2024–2025, private equity and sovereign fund acquirers increasingly rely on these tools for both pre-bid diligence and post-closing integration.

Legal and Regulatory Frameworks

In the UAE, AI use in legal processes is governed by Federal Decree Law No. 34/2021 on Cybercrime and Cabinet Resolution No. 21/2023 on AI regulation, which require data accuracy, explainability, and cybersecurity compliance. Within DIFC and ADGM, common law frameworks permit English-law governed transactions and arbitration, enabling acquirers to adopt AI tools from global platforms—provided they comply with UAE data localization and DIFC Data Protection Law No. 5/2020.

Saudi Arabia, meanwhile, enforces the Personal Data Protection Law (PDPL) and SDAIA’s AI Ethics Principles, requiring that AI tools be transparent, accountable, and aligned with Islamic values. The CITC’s cloud computing framework imposes data sovereignty rules, which restrict offshoring M&A datasets unless encrypted and anonymized.

Sharia considerations are non-trivial. AI-generated diligence reports used to inform sukuk-funded acquisitions or Islamic joint ventures must avoid speculative assertions (gharar) and must align with Sharia boards' interpretation of enforceable knowledge. Saudi legal advisers now consult Islamic finance specialists to assess AI tools’ compliance with these principles, especially where risk quantification and governance due diligence are involved.

Risks and Enforcement Considerations

AI-enabled due diligence in the Gulf introduces new categories of legal risk:

• Confidentiality breaches may arise if AI systems ingest unredacted third-party data or store deal files on unlicensed platforms.
   
• Regulatory penalties may be triggered if AI outputs misclassify regulated entities or misstate ESG performance—especially under the UAE’s anti-greenwashing guidelines and Saudi’s ESG disclosure requirements.
   
• Algorithmic accountability is emerging as a threshold issue: under UAE law, deal parties may be liable if AI-generated analysis omits material risks that a reasonable human review would have identified.

For enforceability, transaction documents that embed AI-generated findings—especially in representations and warranties—must include legal review layers. In both UAE and Saudi Arabia, arbitration tribunals and courts are unlikely to accept AI-generated diligence as dispositive without a qualified legal sign-off.

Saudi’s Board of Grievances and DIFC Courts have both indicated that human responsibility remains central to contractual validity, particularly where AI systems are involved in risk discovery.

Strategic Recommendations

Hybrid review models—where AI accelerates document triage but human experts sign off on flagged issues—are now the standard in Gulf cross-border deals. DIFC and ADGM firms are experimenting with audit trails for AI output, ensuring chain-of-custody for each risk flag or recommendation.

In Saudi Arabia, SDAIA-licensed platforms are favored, particularly in public sector or Vision 2030-related transactions. Firms are advised to pre-clear AI tools with regulators where sensitive sectors (defense, energy, health) are involved.

Sample Clause – AI Diligence Disclaimer:
 “Findings generated by AI-based diligence tools shall not be deemed conclusive and must be validated by licensed counsel prior to inclusion in any transactional certificate or disclosure schedule.”

Comparative Table: UAE vs Saudi Arabia – AI in M&A Due Diligence

Conclusion

AI is reshaping M&A due diligence across the Gulf, accelerating transaction timelines and improving risk visibility. In the UAE and Saudi Arabia, legal and regulatory frameworks are evolving to accommodate these tools—provided parties observe data security, legal oversight, and Sharia compliance. The future of dealmaking will be hybrid: driven by AI, governed by law, and shaped by regional regulatory nuance.

As the Gulf races ahead in AI regulation and smart capital deployment, acquirers and counsel must remain agile—selecting the right AI tools, embedding legal controls, and harmonizing technological advantage with enforceability and cultural legitimacy.