This is the most common M&A manipulation. The seller agrees to leave a “normal” amount of working capital in the business at closing. This is the “peg.” The problem? They set this peg at an unnaturally low level.
How They Do It: They pick a month when inventory was lowest and customer payments were highest.
How We Find It: We ignore their number. We analyze the last 12-18 months of financials. We find the true average (or “normalized”) working capital. We also look at seasonality. A toy company’s “normal” in February is very different from its “normal” in November. This analysis stops you from injecting cash on Day 1 just to keep the lights on.

Are you seeing a lot of invoices for exactly AED 10,000.00 or AED 25,000? This is a major red flag for padded or fake expenses.
How They Do It: A fraudster is lazy. They don’t submit an invoice for AED 9,472.50. They just create a “consulting” expense for AED 10,000.
How We Find It: We use forensic data tests like Benford’s Law. This test finds which numbers appear most often in a data set. In the real world, the number “1” appears as the first digit about 30% of the time. “9” appears less than 5%. If the numbers in the expense file look too perfect, they are probably fake.

This is another classic due diligence red flag. The seller claims high costs, but they are just paying their friend (or themselves) through a different company.
How They Do It: The seller owns “Company B.” They have “Company A” (the one you’re buying) pay “Company B” an inflated “management fee” every month. This artificially lowers the target’s profit.
How We Find It: We get the entire vendor master file, not just the list of “related parties” they give us. We cross-check vendor bank accounts and addresses against the employee list and known associate lists. We find conflicts of interest fast.

High revenue is great, but not if every customer leaves after one purchase. You are not buying a business; you are buying a list of one-time sales.
How They Do It: The seller spends heavily on marketing to get a lot of new customers, creating a spike in revenue.
How We Find It: We ask for customer-level sales data. We run a cohort analysis. This group’s customers are divided by the month they first bought. We then track what percentage of that group buys again. If the retention rate is near zero, you cannot count on that revenue to continue.

How They Do It: They are building a new website. They move their developer salaries from “Payroll Expense” to a new asset called “Capitalized Software Development.” Their expenses go down, and their EBITDA shoots up.
How We Find It: We get the fixed asset register and read every line. We look for new, vague “intangible assets.” We then ask for the invoices and records behind them. If it’s a normal cost of doing business, we move it back to the P&L to find the true EBITDA.

These are the skeletons. A contingent liability is a potential future cost that is not on the books. This is where a financial due diligence UAE expert adds serious value.
How They Do It: They “forget” to mention a pending lawsuit, a major tax dispute with the FTA, or a product warranty problem.
How We Find It: We read everything. We read the board minutes, all sales contracts (to find warranty clauses), and all correspondence with lawyers and government bodies like the UAE Ministry of Economy (which governs M&A activity).

Does the last month of the quarter look amazing? Be suspicious. The seller is likely “stuffing the channel” or “pulling forward” sales.
How They Do It: They ship products in March that were ordered for April. Or they call customers and offer a huge discount to “buy now.” This makes Q1 look great, but Q2 will be a disaster.
How We Find It: We look at sales by day leading up to the quarter-end. We look for a massive spike, followed by a matching crash in the first week of the next quarter. We also look for a cluster of supplier payments being delayed until Day 1 of the new period.
The EBITDA on the slide is just the beginning. The real M&A advisory work is finding what’s not on the slide.