How to research private companies in the Middle East

Over the last five years, innovation in the Middle East has been developing at a rapid rate. With a $4 trillion GDP, the Middle East is a big attractive market for economic development, investment, and innovation. This trend is likely to persist throughout 2022.

And that’s why VCs and investors are seeing the region more optimistically than ever before. Moreover, this is amplified by the loosening of ownership rules in Saudi Arabia, government digitisation in the UAE, and economic restructuring in Egypt that should generate unique opportunities. 

However, while the Middle East is becoming an interesting market for investors, it’s not without its challenges and complexities. There are a number of considerations that businesses must consider when looking to partner with or invest in companies in the region.

In this article, we explore the complexities and challenges of researching private company information in the Middle East and share guidance to help you make sound business decisions. 

The complexities and challenges of the Middle East

From political complexity to regional differences – the contrast between the different countries and ways of doing business are quite stark.

What’s more, in recent times the scale of private company transformation in the region is unprecedented – while big family-owned groups used to dominate the private sector, a new generation of entrepreneurial, tech-savvy competitors are taking more and more of an active role in order to drive the economy forward. 

Due to these stark differences, understanding the nuances between regions, company types, and even sectors is really important. That’s why you cannot apply what you’ve done in other markets for the Middle East – it takes a specific, thorough and meticulous approach to researching private company information.

So how do you ensure you fully research and risk assess a company in the Middle East?

Uncovering granular detail is key

As a starting point, it’s important to remember that you can’t think of the Middle East as one, you need to get quite granular – Region-by-region, country-by-country, and sector-by-sector. For example, the UAE is a country but has seven Emirates, all of which have different jurisdictions and different requirements for setting up companies. That’s why local knowledge is so important. Without it, risk will be missed.

The key to doing business in the Middle East relies on having the ability to understand closely the company you are, or will be, doing business with and having the expertise to know when that information needs a closer look.

Contending with a lack of publicly available information 

The majority of Middle Eastern countries don’t report company ownership and shareholding within publicly available shareholding information. In the case of the Dubai International Financial Centre (DIFC) there is some limited information available on the public register. 

However, in other jurisdictions, up-to-date business addresses, trading styles, financial information, and other important risk decision information is hard to come by within public records. In addition, the information that is available is often written in Arabic. 

This lack of information means that in the majority of cases, the only way to check company ownership and critical key facts is with the company you need to research itself.

How to gain access to missing private company information

The starting point is fully researching all publically available and open-source information, including the company websites, press releases, and even social media.

After you’ve gathered as much information as possible, the most crucial step and the best way to ensure you gather all the key facts is by contacting the company itself and ensuring an interview takes place. 

By interviewing the company itself you can be sure of the facts and check them against previously held information and other sources of information.

It’s also key that research investigations in the Middle East are conducted in the local language(s), as well as in English as the global business language. As we’ve already mentioned, that's another reason why local expertise is so important.

Where necessary, you can also leverage this local expertise to understand the nuances in particular business sectors in a specific jurisdiction – allowing you to obtain information not available through public searches. 

Of course, it’s useful to have linguistic capabilities in Arabic as well as the in-country expertise to conduct thorough company research and risk assessments - and understand the outputs and how that can impact your business. 

Key takeaways

As you’ve seen there are a number of considerations to think about when it comes to researching Middle Eastern companies, here’s our final top considerations:

• The Middle East requires a granular approach: Each region, country, and sector within the country has stark differences and challenges. 

• Develop research expertise: To contend with the lack of publicly available information it’s key to develop highly-skilled research expertise. Highly skilled researchers have the ability to look at all the layers of information and understand exactly where to look.

• Interview the company itself: The only way to be sure of all the facts is by interviewing the company itself. 

• Find reliable local knowledge: Local knowledge is so important. Without it risk will be missed and information is often written in Arabic. 

• Understand the risks: Be mindful of the risks of not getting hold of the right information, such as inadvertently being involved in money laundering or subjecting your company to a fraudulent situation with a lack of recourse. Then of course risk of non-payment due to many reasons that a good, correct understanding of the company will mitigate.

• Review information older than two months: Emerging economies and challenging reporting regions like the Middle East do not facilitate automatic record updates. The only way of knowing your ongoing risk is to investigate – again, and again as needed. That means interview, research, corroborate the facts, use expertise to spot the risk depending on the region. In the current environment, any information older than a month or two needs to be re-interviewed and checked.

In summary

The Middle East region provides an abundance of opportunity but is an environment where consideration needs to be given with company data transparency, and where potential rewards and risks need to be assessed carefully. 

That’s why adopting a thorough, meticulous, and tailored approach to researching private company information in the Middle East is fundamental. 

Successful investors, corporates, finance, and insurers in the Middle East all use high-quality, strategic, and intelligent research.