Developing a Strategy for Business Exit in Dubai, UAE

Developing a successful business exit strategy is crucial for entrepreneurs and business owners aiming to maximize their return on investment. Similarly, as easy it is for foreigners to open a business in Dubai, is the same with company liquidation. In the UAE, closing down a business requires much paperwork and work. Deregistration of a UAE company can be complicated, but you can ensure a smooth process with NH Management. 

Clearance is to be received from the concerned Government Authorities. Closing a mainland company in Dubai generally takes around 60-65 days, of which 45 days serve as a notice period after the company closing is published in the local UAE newspapers to receive no objection from third parties.  NH Management offers comprehensive guidance on planning an effective exit strategy, whether selling the business, merging, or going public.

Steps to Close Company in Dubai and the UAE

1. Determine Your Exit Goals

First, understand your financial objective to define your exit goals better. For instance, state the desired sale price or required capital from a merger or IPO. Then, decide on a timeline that aligns with market conditions and personal readiness. Lastly, consider the legacy you want to leave and how you want the business to continue after your exit.

2. Assess Business Valuation

If your business valuation still needs to be calculated, engaging financial experts to evaluate your business thoroughly is advisable. However, you can also self-evaluate by comparing similar businesses in your industry to gauge market value. In this stage, it is essential to ensure your financial statements are accurate and reflect the actual value of the business.

3. Explore Exit Options

There are three possible exit paths your company can take. When the business faces unsuccessfulness or lacks profitability and success, company liquidation becomes the only viable option to consider. 

The liquidation process involves selling assets, settling debts, and closing all operations, ultimately leading to the unwinding and de-registration of the UAE company. Failure to complete the unwinding process may result in fines and liabilities for the company’s General Manager and the shareholders. Ensuring the proper documentation and closure formalities is of paramount importance.

• Selling the Business
  A business sell-off is one of the most popular exit strategies in the UAE. Transferring ownership to another entity for a lump sum or a specific type of payment plan is very common. Acquisitions by competitors, investors, or firms seeking market expansion are popular tactics for those looking to expand their current businesses and enter new areas via an acquisition rather than starting from scratch. In the initial stage, identify Buyers and look for potential buyers such as competitors, private equity firms, or individual investors. Prepare for buyer due diligence by organizing financial records, contracts, and other critical documents. Negotiate terms that meet your financial and personal goals, including the sale price and transition period.
• Merging Companies
  Meanwhile, strategic partners identify companies that would benefit from merging with your business. A merger occurs when two entities combine forces to create a new, joint organization. An acquisition refers to the takeover of one entity by another. Highlight synergies that can create added value post-merger. Integration Plan: Develop a detailed plan for integrating operations, staff, and systems.

• Going Public (IPO) in UAE
  Prepare your business for the rigorous requirements of going public, including audits and regulatory compliance. Investment Banking Work with investment banks to manage the IPO process. Market timing: Choose the optimal time to go public based on market conditions and investor sentiment.
• Company liquidation in UAE
  Voluntary Liquidation is Initiated by the shareholders when the company is solvent. Compulsory Liquidation is a court-ordered process usually initiated by creditors when the company is insolvent.

4. Develop a Transition Plan

To ensure business continuity, you must identify and train successors for a successful leadership succession. Another necessary deed is to create an operational handover. Create a detailed handover plan for critical operations and responsibilities. Lastly, the exit plan must be communicated to employees, customers, and other stakeholders to maintain trust and stability. This can be done through an official announcement on social channels and the media.

5. Legal and Tax Considerations:

In every exit strategy, a legal review is always advisable. A legal review ensures that legal experts thoroughly review all legal aspects of the exit strategy. Then, for tax considerations, develop a tax-efficient exit plan to minimize liabilities and maximize post-exit wealth.

Developing a Successful Exit Strategy with NH Management

Have you decided to close your company in Dubai? At NH Management, we can help you with company liquidation in Dubai.

We aim to empower entrepreneurs and business owners with the knowledge and tools to plan and execute a successful exit strategy. By following these guidelines, businesses can achieve a profitable exit, ensure a smooth transition, and leave a lasting legacy. Learn how to develop a successful business exit strategy with NH Management. Get expert guidance on selling your business, merging, or going public to ensure a profitable and smooth transition.