Wolves hope to complete a deal for Vitor Pereira to become their new head coach in the next 24-48 hours, and Sky Sports News understands there is now broad agreement with Al Shabab over a compensation package.
Negotiations are ongoing in Saudi Arabia, and Wolves have made plans to fly Pereira over to England for the middle of the week, in time for him to take training and prepare his new side to face Leicester at the weekend.
The appointment would be a continuation of Wolves' keenness to employ Portuguese coaches, with Pereira set to follow in the footsteps of Bruno Lage and Nuno Espírito Santo.
The club's owners, Fosun, have strong connections with the Portuguese agent Jorge Mendes, although it is unclear whether he has been involved with Pereira this time.
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WOLVES-IPSWICH PL HIGHLIGHTS.
FREE TO WATCH: Highlights from Ipswich's win against Wolves in the Premier League
Pereira has never managed in the Premier League, but is highly thought of by the Wolves hierarchy, having won league titles in three different countries.
He was close to becoming the new Everton boss, before Frank Lampard was appointed in 2022.
Set-pieces conceded (excluding penalties)
Gary O'Neil was axed after a dramatic 2-1 defeat to Ipswich at Molineux on Saturday, which was followed by a scuffle that saw Rayan Ait-Nouri pulled away from the pitch.
That result leaves Wolves 19th in the Premier League table - five points adrift of 17th-placed Leicester, their opponents on Sunday.
Wolves chair Jeff Shi said in a statement on Sunday: "We're very grateful to Gary for all of his effort, dedication and hard work during his time at the club, and we wish him and his team the best of luck for the future."
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O'Neil admitted his future was in question in what ended up being his final interview as Wolves head coach
Wolves bosses, whose priority is Premier League survival, had been doing due diligence on a number of candidates in recent weeks - including West Brom manager Carlos Corberan and John Eustace at Blackburn.
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'Wolves managers operate with one hand behind back'
Daily Mirror assistant editor Darren Lewis on Sunday Supplement:
"I have a lot of sympathy for O'Neil. At Wolves, you do a good job and they sell your best players.
"Julen Lopetegui said he couldn't do the job if he didn't have the players who had been sold from under him. O'Neil came in, and not only did he keep them up but he did it fairly comfortably.
"So what do they do? Sell another two of his best players in Pedro Neto and Max Kilman.
"Wolves are sacking him, but actually if I'm a Wolves fan, I'm looking at the club and asking why they're bringing in managers and asking them to do a job with one hand tied behind their back.
"It's 11 defeats in 16 games, and justifiably you can't expect to be a manager and keep your job. But there's not a manager in the Premier League who would say they can work in circumstances where the chairman, the owners, the people who make the decisions are going to systematically remove your leaders at the back and your goalscorers, and stay in the top division."
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ONEIL 151224
Kaveh Solhekol and Darren Lewis discussed Wolves' decision to sack O'Neil, with the club sitting 19th in the Premier League
Analysis: O'Neil's demise is both simple and complicated
Sky Sports features writer Adam Bate:
"The story of how it unravelled for O'Neil, a coach who might have fancied his next job could have been as England manager had that final phase of last season played out differently, is both simple and complicated. There were certainly mitigating factors.
"The trajectory at Wolves has changed in recent seasons, a club seemingly contracting. The big investment stopped and there will be some sympathy as a result. Indeed, O'Neil only inherited the job because his predecessor had been so frustrated by the situation.
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"That trend continued in the summer when captain Max Kilman and star winger Pedro Neto were sold. The club will argue that they committed £28m to sign a new striker in Jorgen Strand Larsen and a series of prospects who they have far from given up on.
"But it is a far cry from the days of Ruben Neves and Joao Moutinho, Diogo Jota and Raul Jimenez, top-seven finishes and European nights at Molineux under Nuno Espirito Santo. Wolves cut ties with him at the end of a season in which they finished 13th.
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"That was a team that knocked Liverpool and Manchester United out of the FA Cup in the same season, picking up Premier League wins over Tottenham, Chelsea and Arsenal as a newly-promoted side before doing the double over Manchester City the following year.
"All of which helps to explain why the excuse of Wolves' awkward fixture list never really landed. Fans had become used to troubling the best teams, but the first eight games delivered one point. Those same fixtures brought 11 for O'Neil himself just last season.
"It is that comparison - between last season, one in which Neto started fewer than half of the games, and this - that damned O'Neil in the end. Performances and results should not have deteriorated so dramatically. After all the praise, he lost his way."