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Buying and Selling a Business in Kuwait

Whether it's buying a business or selling a business in Kuwait, our role as legal advisors is to assist you to maximize your gains while avoiding the issues. We have guided many clients through business successions and acquisitions in the State of Kuwait.

Deals involving the transfer of a business in Kuwait are full of numerous complex details.

Our lawyers understand both the business and legal issues. We will ensure that:


  • Terms are fair as per Kuwaiti legislation;

  • You understand the pros & cons of the transaction;

  • The business structure is financially advantageous;

  • You are legally protected and potential issues are identified and addressed


We highly recommend in order to ensure that all parties are protected, consulting with the lawyer to go over your Letter of intent to buy, sell, or merge the company and make revisions if needed.

Non-Disclosure Agreement (NDA) is usually required as well. The purpose is to prevent the buyer or future partner from revealing confidential information if either party chooses to back out of the deal. Non-Disclosure Agreement is legally binding. It establishes what information needs to be held in strict confidentiality and for how long.

Due Diligence is another procedure involving an investigation of the important aspects of the business to be bought or merged to find out whether there are any issues with the business. This includes yearly profits, operating costs, debts, assets, and liabilities.

Sale or Merger Agreement is a legally binding contract that establishes the terms the parties agree upon to complete the transaction


Steps to follow when buying a business in Kuwait:

  1. Valuation of the Business - figure out what each asset of the business is worth, calculating the cash flow of the business, determining the actual, taxable  P & L for the business, the reputation of the business, obtaining from the seller at least 3 years of financial statements, checking out the prices at which similar businesses within the same country/location have been sold.

  2. Negotiations – the more you know about the business you are planning to purchase, the better you will be understanding and negotiating the final purchase price. Our lawyers can either negotiate on your behalf or develop a negotiation strategy that you could use when negotiating.

  3. Letter of Intent  – establishes the terms and conditions of the sale of the business and the purchase price. It is not binding and might change during negotiations.

  4. Purchase Agreement - binding contract, the terms and conditions for purchasing the business. Details what you are purchasing:

equipment, inventory, customer base, intellectual property, trademarks, website, etc.

   5. Due Diligence - you check everything out in regard to the company you want to purchase, that it is properly formed, in good standing, having all the necessary licenses and permits, been sued or not, have any judgments against it, as well as analyzing the business’ personal information, including all contracts, leases, and employees.

   6. Closing - all applicable transfer documents - share certificates, bills of sale, lease documents are signed, and the money due is paid. You leave the closing as the new owner of the business.


What is the “Goodwill” of the business?

In short: 1. business’ assets, 2. value of the customer base 3. reputation of the business.


How to sell Your business?


Once the evaluation is done and you know which price to set in order to find the right buyer, You will need to start preparing your business for sale.

Keep in mind that the potential buyers will be looking “very” closely at your business operations and if there are any flaws which might raise concerns or doubts, they will need to be fixed before listing the business.

Things to pay attention to:

  • Documentation and corporate documents of the business. Auditing the business for the last three years is an option and ensuring that all the outstanding taxes paid or judgments are resolved;

  • If the Brick-and-Mortar business, then the condition of business premises is quite important. Please ensure to fix those repairs that were put off, update the equipment if necessary;

  • Resolve and address all the outstanding invoices, claims, debts, lawsuits.


Next steps as mentioned above are:

Due Diligence - potential buyers may ask you for:


  • corporate formation documents;

  • financial information;

  • real estate and equipment leases;

  • intellectual-property portfolio;

  • employment agreements;

  • licenses and permits (if any);

  • information on past or ongoing disputes and litigation.


Why Due Diligence?

  • to understand the business and its operations;

  • to make an informed decision;

  • to justify a particular price;

  • to build confidence in the transaction;

  • to identify possible challenges;

  • to prevent issues that may arise in the future


Before turning over any documents, the potential buyer will need to sign a “Confidentiality Agreement” or Non-Disclosure Agreement (NDA) promising not to disclose any of your business/trade secrets, customer information, operational processes or any other confidential information. An NDA must be thorough, but not too restrictive.

Once Due Diligence is processed the potential buyer either purchases the business or walks away.

What is a non-competition provision in the Sales Agreement?

A provision in the Agreement which prohibits the seller of the business from competing with the business after the sale.   The duration of such provision is negotiated by the parties. 

For additional information on buying and selling a business in Kuwait feel free to contact our offices.

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