THE BIG SHIFT

Fam­ily busi­nesses take leap to­wards glob­al­i­sa­tion

Qatar Today - - FRONT PAGE - BY V L SRINI­VASAN

“FAM­I­LIES FEAR LOS­ING CON­TROL IF PUB­LIC SHARE­HOLD­ERS BE­COME IN­VOLVED AND FAM­I­LIES ARE NOT AC­CUS­TOMED TO THE DE­GREE OF PUB­LIC SCRU­TINY AND AC­COUNT­ABIL­ITY WHICH IS RE­QUIRED OF LISTED COM­PA­NIES. THEY OF­TEN ALSO FEEL THAT THEIR BUSINESS IS DO­ING WELL AND THERE IS NO NEED FOR A STOCK EX­CHANGE LIST­ING.”

SHEIKH MO­HAMMED BIN FAISAL AL THANI VICE CHAIR­MAN AA­MAL COMPANY

Pri­vately-owned or­gan­i­sa­tions span mul­ti­ple busi­nesses and are typ­i­cally ver­ti­cally in­te­grated, own size­able real es­tate port­fo­lios, and their op­er­a­tional con­trol is still main­tained by the orig­i­nal found­ing fam­ily mem­ber or, in some cases, by the sec­ond or third gen­er­a­tion.

The 19th cen­tury-born US poet Ralph Waldo Emer­son was em­phatic when he said: “It re­quires a great deal of bold­ness and a great deal of cau­tion to make a great for­tune, and when you have it, it re­quires ten times as much skill to keep it.”

For many fam­i­lies in business, the rapid pace of change and growth in the mar­ket place presents sig­nif­i­cant con­cerns re­gard­ing the man­ner in which they will con­tinue to safe­guard and pre­serve their her­itage and wealth. The FOBs in the Mid­dle East face a range of chal­lenges that not only im­pact the suc­cess of their business, but also the pro­fes­sional and per­sonal goals of their own­ers and their stake­hold­ers at large.

In Qatar, fam­ily-owned and-man­aged busi­nesses have been mak­ing a vi­tal con­tri­bu­tion to the coun­try's econ­omy and over 75% of the com­pa­nies, which are regis­tered with Qatar Cham­ber, are ei­ther fam­ily business groups or HNWIs.

Re­puted FOBs in­clude Salam In­ter­na­tional, Aa­mal Hold­ings, Jaidah Group, Ez­dan Hold­ings, Man­nai Cor­po­ra­tion and Al­far­dan Group in Qatar, Olayan Group in Saudi Ara­bia, Kanoo Group in Bahrain, Al Ghanem in Kuwait and oth­ers in the GCC re­gion. All of th­ese business groups have started on a mod­est note and they have not only built em­pires but also con­trib­uted sig­nif­i­cantly to the eco­nomic growth of their re­spec­tive coun­tries over the years. They are in­volved in busi­nesses right across the econ­omy, in­clud­ing re­tail, real es­tate, au­to­mo­tive, fi­nance, man­u­fac­tur­ing, im­por­t­ex­port, con­struc­tion and so on.

Aa­mal Company Vice Chair­man Sheikh Mo­hammed bin Faisal Al Thani says the FOBs in the GCC have a strong tra­di­tion of en­trepreneur­ship that goes back many gen­er­a­tions. Much of the Gulf coun­tries' suc­cess can be at­trib­uted to the con­tri­bu­tions made by them.

“I be­lieve FOBs could do this be­cause their ex­pe­ri­ence, mar­ket knowl­edge, flex­i­bil­ity and en­tre­pre­neur­ial na­ture en­abled them quickly to cap­ture the op­por­tu­ni­ties cre­ated by the eco­nomic pros­per­ity this re­gion has been wit­ness­ing,” he feels.

Even a re­port by global man­age­ment con­sul­tancy firm A T Kear­ney says the big­gest ad­van­tage of GCC fam­ily business has been the abil­ity to cap­ture the re­gion's sig­nif­i­cant growth via in­ter­na­tional part­ner­ships and fran­chises across mul­ti­ple sec­tors. Th­ese are re­in­forced by lo­cal reg­u­la­tions and ex­cep­tional lead­ers with strong en­tre­pre­neur­ial spirit and in­ti­mate knowl­edge of lo­cal mar­kets, it says.

The re­port en­ti­tled “GCC Fam­ily Busi­nesses: Un­lock­ing Po­ten­tial through Ac­tive Port­fo­lio Man­age­ment” also says that after a tough 2008, GCC fam­ily business-

es re­bounded to some ex­tent (as did the mar­ket), but this did not last. As the over­all mar­ket has trended mostly up, fam­ily busi­nesses have trended down­ward.

Sus­tain­abil­ity is cru­cial, after all, as many of the FOBs are fac­ing in­creased com­pe­ti­tion in lo­cal mar­kets, pres­sure to con­tinue to glob­alise their busi­nesses, and chal­lenges as­so­ci­ated with gen­er­a­tional tran­si­tion of lead­er­ship and business man­age­ment, the re­port adds.

Rea­sons for suc­cess

One of the main rea­sons why the FOBs have suc­ceeded in the re­gion is the in­volve­ment of the fam­ily mem­bers, who are will­ing to go to any length to achieve their goal. Be­sides, loy­alty from the staff is another fac­tor that has con­trib­uted to their suc­cess.

Abu Issa Hold­ing (AIH) Chair­man Ashraf Abu Issa, who took over the business when he was 19 fol­low­ing his fa­ther's death, says: “It was by no means an easy task as there were 36 em­ploy­ees at that time. How­ever, my fa­ther was a role model for me as he nur­tured the re­la­tion­ship with the em­ploy­ees based on mu­tual trust and re­spect and this con­tin­ues even to­day. Ours be­ing a fam­ily business, I al­ways treat them as my fam­ily mem­bers and not as em­ploy­ees.”

Abu Issa says com­pared with pri­vate limited com­pa­nies, fam­ily busi­nesses are more con­cerned about their rep­u­ta­tion. “Any wrong move will not only re­sult in the col­lapse of business but also bring a bad name to the en­tire fam­ily. Hence the ex­pec­ta­tions are high and so is the out­come,” he says.

How­ever, he has a word of cau­tion. Though there are more than 1,000 FOBs in Qatar, not more than 5% of them have a for­mal gov­er­nance struc­ture, which is vi­tal for the health of any business to at­tract best tal­ent, en­sure greater trans­parency and ac­cess to cap­i­tal.

“I feel that by hav­ing a stream­lined man­age­ment prac­tice, fam­ily busi­nesses can with­stand changes such as gen­er­a­tional tran­si­tions and thrive for sev­eral years. Since ev­ery fam­ily business is dis­tinc­tive, the rules and pro­ce­dures will be flex­i­ble to face their own chal­lenges and be­come suc­cess­ful ven­tures. If there is no fam­ily business gov­er­nance model, even good com­pa­nies are prone to go the wrong way,” Abu Issa warns.

“In­trin­sic qual­i­ties such as their longterm view on prof­itabil­ity (in­vest­ing prof­its ver­sus pay­ing out div­i­dends), their fam­ily fab­ric, value sys­tems, his­tory and tra­di­tion play a role in their suc­cess,” says Walid S Chiniara, Head of Pri­vate Company Ser­vices at Deloitte Mid­dle East.

“Fur­ther, ex­ter­nal fac­tors such as favourable re­gional eco­nomic cir­cum­stances and the en­cour­age­ment of for­eign di­rect in­vest­ment have sup­ported the growth of fam­ily busi­nesses,” Chiniara says.

“THE BIG­GEST CHAL­LENGE TO FAM­ILY BUSI­NESSES IN THE MID­DLE EAST IS THE THORNY IS­SUE

OF MAN­AGE­MENT IN­TER­FER­ENCE. ALL MID­DLE EAST RE­SPON­DENTS FELT THAT HNWIS WOULD GET

HEAV­ILY IN­VOLVED IN MAN­AGE­MENT DE­CI­SIONS.”

HAR­ISH GOPINATH HEAD OF FAM­ILY BUSI­NESSES IN THE MID­DLE EAST AND ASIA

KPMG

“SINCE EV­ERY FAM­ILY BUSINESS IS DIS­TINC­TIVE, THE RULES AND PRO­CE­DURES WILL BE FLEX­I­BLE TO FACE THEIR OWN CHAL­LENGES AND BE­COME SUC­CESS­FUL VEN­TURES. IF THERE IS NO FAM­ILY BUSINESS GOV­ER­NANCE MODEL, EVEN GOOD COM­PA­NIES ARE PRONE TO GO THE WRONG WAY.”

ASHRAF ABU ISSA CHAIR­MAN ABU ISSA HOLD­ING

Ac­cord­ing to Chiniara, the three ma­jor rea­sons why FOBs have suc­ceeded in the past were a pool of ed­u­cated next gen­er­a­tion who were ready and able to take over the reins of con­trol and be­come the next en­ablers; mod­ern and so­phis­ti­cated le­gal sys­tems that support and of­fer the foun­da­tions to fam­ily busi­nesses to team up with suc­cess­ful in­ter­na­tional brands; and a sense of pri­vacy and con­fi­den­tial­ity where fam­ily con­flicts are kept pri­vate, lim­it­ing the neg­a­tive in­flu­ence they can have on the business or even the fam­ily's rep­u­ta­tion.

Im­proved gov­er­nance

An im­por­tant trend that is be­ing wit­nessed in the re­gion is the de­lib­er­ate, sys­temic im­prove­ment in gov­er­nance, says An­drew Porter, Di­rec­tor of Re­search at London-based Cam­p­den Wealth, which pro­vides in­tel­li­gence and net­work­ing op­por­tu­ni­ties for re­puted business-own­ing and fi­nan­cial fam­i­lies and their fam­ily of­fices around the world.

“Good cor­po­rate gov­er­nance – re­lated in­te­grally to trans­parency, ac­count­abil­ity and pro­fes­sion­al­i­sa­tion – is help­ing th­ese business fam­i­lies se­cure their lega­cies. The en­tre­pre­neur­ial, found­ing gen­er­a­tion took many risks and weath­ered eco­nomic tur­bu­lence in or­der to build suc­cess­ful busi­nesses; in many cases, we are see­ing the next gen­er­a­tion of business lead­ers take steps – no­tably through ed­u­ca­tion, train­ing, and pro­fes­sional ex­pe­ri­ence and im­proved gov­er­nance struc­tures – to in­cul­cate global best business prac­tices,” Porter says.

Stan­dard Char­tered Bank's Re­gional Head (Pri­vate Bank­ing Clients for EMEA and South Asia) Stephen Richards-Evans at­tributes the suc­cess to a num­ber of rea­sons like heavy fam­ily in­volve­ment in the day-to-day man­age­ment of the business, strong per­sonal and fam­ily ties, and the abil­ity to make dif­fi­cult in­vest­ment de­ci­sions that will ben­e­fit the company in the long run, un­like com­pa­nies that are run pri­mar­ily to de­liver fast re­turns for share­hold­ers and fo­cus on not over-stretch­ing the business. “Fam­ily busi­nesses also adopt a con­ser­va­tive ap­proach when deal­ing with business fi­nance, only seek­ing credit where it is af­ford­able and where there is a gen­uine need,” he points out.

Clear rules

Fam­ily-owned busi­nesses in Qatar and the re­gion, which rep­re­sent the majority of the pri­vate sec­tor, are well es­tab­lished in a vast range of in­dus­tries such as re­tail, real es­tate, trad­ing, and ser­vices. Fam­ily busi­nesses have de­vel­oped the nec­es­sary knowl­edge and cap­tured the right op­por­tu­ni­ties to achieve high growth.

Sheikh Mo­hammed says many of them have evolved to be­come multi-bil­lion dol­lar com­pa­nies and earned an in­ter­na­tional rep­u­ta­tion. Suc­cess­ful fam­ily busi­nesses which also im­ple­ment best prac­tice poli­cies and reg­u­la­tions, high stan­dards of cor­po­rate gov­er­nance and trans­parency have won pub­lic con­fi­dence and proved them­selves over the years, ex­pand­ing their op­er­a­tions and at­tract­ing for­eign in­vest­ments to Qatar, he points out.

“As far as Qatar is con­cerned, the ad­van­tages of FOBs are that the rules and reg­u­la­tions are very clear and there are

no grey ar­eas in this re­gard. The ab­sence of a tax regime is another rea­son why they have scripted many suc­cess sto­ries in the past and also in the present gen­er­a­tion. More­over, they will be lead­ers in their com­mu­ni­ties and spear­head­ing in­no­va­tions,” says Abu Issa.

The flip side

The other side of the story is equally in­ter­est­ing. While the first-gen­er­a­tion FOBs, led by the founder(s), had a string of vic­to­ries in the West, suc­ces­sion wars, fail­ure in over­com­ing hur­dles dur­ing tran­si­tion of power, and fa­mil­ial feuds have re­sulted in the down­fall of many of them after the third or fourth gen­er­a­tions, in many coun­tries. In other words, the first gen­er­a­tion makes money while the sec­ond gen­er­a­tion tries to keep it and the third and fourth gen­er­a­tions lose it, as is the case in the West.

Chiniara, how­ever, says it is en­tirely dif­fer­ent when it comes to the Mid­dle East, as most of the fam­ily busi­nesses in the Mid­dle East are still owned and con­trolled by the found­ing mem­bers. “One can of­ten see three or four gen­er­a­tions co­hab­i­tat­ing un­der the same roof whereby they have not yet ex­pe­ri­enced the tran­si­tion from gen­er­a­tion one to gen­er­a­tion two, three, or four,” he says.

What is about to hap­pen over the next decade, he says, is a tran­si­tion from first gen­er­a­tion to third or fourth gen­er­a­tion, de­pend­ing on the cir­cum­stances. But he is con­fi­dent that the new lead­ers are qual­i­fied to take over from their se­niors and that they will beat this statis­tic. "I be­lieve that each gen­er­a­tion of lead­ers should be­have as if it is gen­er­a­tion one. They have the re­spon­si­bil­ity to keep the dream alive and the en­tre­pre­neur­ial spirit thriv­ing,” he says.

How­ever, Abu Issa feels that the majority of FOBs do not sur­vive due to loss of fam­ily val­ues and mo­ti­va­tion over the years and also due to the dom­i­nance of the older gen­er­a­tion.

The FOBs also lack a proper suc­ces­sion plan to en­dure their busi­nesses, which is again part of good cor­po­rate gov­er­nance. The au­to­cratic ap­proach never helps and the next gen­er­a­tion should gain ex­pe­ri­ence from the founders/suc­ces­sors while they are still at the con­trols, Abu Issa points out.

The suc­cess per­cent­age of tran­si­tion is 30% to the sec­ond gen­er­a­tion while the cor­re­spond­ing fig­ures for the third and fourth gen­er­a­tions are 10% and less than 3%, re­spec­tively, says Porter. “Fam­ily busi­nesses fail not be­cause of op­er­a­tional blun­ders, misplaced patents, or mis­man­age­ment but due to fa­mil­ial feuds,” Porter adds.

Es­tab­lish­ing a gov­er­nance frame­work to reg­u­late the fam­ily's roles as share­hold­ers, board mem­bers, and man­agers is es­sen­tial be­cause it can help avoid th­ese pit­falls.

Richards-Evans says the main is­sues af­fect­ing FOBs sur­vival across gen­er­a­tions is lack of proper plan­ning for per­sonal wealth trans­fer, fam­ily con­flicts, nepo­tism and

“THE MAIN IS­SUES AF­FECT­ING FOBs’ SUR­VIVAL ACROSS GEN­ER­A­TIONS

ARE LACK OF PROPER PLAN­NING FOR PER­SONAL

WEALTH TRANS­FER, FAM­ILY CON­FLICTS OVER MONEY, NEPO­TISM AND KEEP­ING THE BUSINESS PER­SONAL RATHER THAN IN­STI­TU­TION­AL­IS­ING IT. THIS EVEN­TU­ALLY RE­SULTS IN POOR MAN­AGE­MENT

AND DIS­PUTES OVER THE SUC­CES­SION OF THE BUSINESS LEAD­ER­SHIP AND

MAN­AGE­MENT.”

STEPHEN RICHARDS-EVANS RE­GIONAL HEAD, PRI­VATE BANK­ING CLIENTS FOR EMEA

AND SOUTH ASIA STAN­DARD CHAR­TERED BANK

“THE THREE MA­JOR REA­SONS WHY FAM­ILY BUSI­NESSES HAVE SUC­CEEDED IN THE PAST WERE A POOL OF ED­U­CATED NEXT GEN­ER­A­TION WHO ARE READY AND ABLE TO TAKE OVER THE REINS OF CON­TROL AND BE­COME THE NEXT EN­ABLERS; MOD­ERN AND SO­PHIS­TI­CATED LE­GAL SYS­TEMS THAT SUPPORT AND OF­FER THE FOUN­DA­TIONS TO FAM­ILY BUSI­NESSES TO TEAM UP WITH SUC­CESS­FUL IN­TER­NA­TIONAL BRANDS; AND A SENSE OF PRI­VACY AND CON­FI­DEN­TIAL­ITY WHERE FAM­ILY CON­FLICTS ARE KEPT PRI­VATE.”

WALID CHINIARA HEAD OF PRI­VATE COMPANY SER­VICES DELOITTE MID­DLE EAST

keep­ing the business per­sonal rather than in­sti­tu­tion­al­is­ing it. This even­tu­ally re­sults in poor man­age­ment and dis­putes over the suc­ces­sion of the business lead­er­ship and man­age­ment.

Sheikh Mo­hammed feels that it would be im­pos­si­ble to pin point one spe­cific rea­son why FOBs do not sur­vive. Fam­ily busi­nesses can­not suc­ceed for any num­ber of rea­sons and in­deed the rea­sons for fail­ure are the of­ten same as for any business: they are badly man­aged, fail to con­trol costs or sim­ply suf­fer from an eco­nomic down­turn.

“There are, how­ever, cer­tain fac­tors that are preva­lent in fam­ily busi­nesses that can con­trib­ute to their demise. Spe­cific fac­tors can in­clude in­for­mal­ity of fun­da­men­tal business prac­tices, a lack of ro­bust pro­cesses and con­trols, or lack of firm lead­er­ship with dif­fer­ent fam­ily mem­bers pur­su­ing their own agen­das. What is clear is that with­out strong cor­po­rate gov­er­nance a business is un­likely to suc­ceed in the longer term,” Sheikh Mo­hammed says.

Many chal­lenges

Like suc­cesses and fail­ures, FOBs in the re­gion have many chal­lenges to sus­tain and grow and they in­clude con­cen­tra­tion of as­sets in the hands of se­niors, cen­tralised decision-mak­ing process frus­trat­ing those not in­volved in it, lack of trans­parency and com­mu­ni­ca­tion be­tween ben­e­fi­cial own­ers and in­ter­ested par­ties, and re­ten­tion of tal­ent among oth­ers.

“One of the ma­jor chal­lenge is a ris­ing gen­er­a­tion of ed­u­cated, ca­pa­ble next gen­er­a­tion en­trepreneurs, par­tic­u­larly fe­male mem­bers of the fam­ily who are look­ing to se­cure their share of the own­er­ship in the business, and who are be­gin­ning to chal­lenge the sta­tus quo,” Chiniara says.

The other is­sues are dif­fi­culty in let­ting go and pass­ing the ba­ton to the next gen­er­a­tion, an op­por­tunis­tic (emo­tional) growth strat­egy that leads in many cases to the mis­align­ment of the vi­sion be­tween se­niors and ju­niors, and also grow­ing in­ter­na­tional com­pe­ti­tion, Chiniara says.

Richards-Evans says there is in­creased com­pe­ti­tion in the mar­ket and the chal­lenges as­so­ci­ated with tran­si­tion of business lead­er­ship to the next gen­er­a­tion. “A key chal­lenge to the suc­cess­ful trans­fer of business across gen­er­a­tions stems from the lack of tal­ent inventory and/or lack of readi­ness among the next gen­er­a­tion to lead the business,” he says.

Ac­cord­ing to Porter, re­cruit­ment and re­ten­tion of qual­i­fied staff are a peren­nial chal­lenge for GCC/Qatar-based fam­ily busi­nesses, though they are not alone in fac­ing this is­sue.

As many fam­ily busi­nesses pre­pare for the in­ter-gen­er­a­tional lead­er­ship tran­si­tion, it marks an op­por­tu­nity to es­tab­lish and de­velop re­la­tion­ships with ex­ter­nal (non-fam­ily) business lead­ers, thus ex­pand­ing and pro­fes­sion­al­is­ing their net­works.

“With the GCC gov­ern­ments ac­cord­ing pri­or­ity to ed­u­ca­tion and hu­man cap­i­tal in­vest­ments, one can ex­pect the FOBs fur­ther pro­fes­sion­al­is­ing through the re­cruit­ment and re­ten­tion of se­nior staff, man­agers and ex­ec­u­tives in the com­ing years,” Porter says.

“There should be more aware­ness among fam­ily busi­nesses about the threat of glob­al­i­sa­tion and how it can neg­a­tively af­fect their business if they don't pre­pare for it,” Abu Issa adds.

List­ing in bourses

De­spite their suc­cesses, the majority of FOBs in the re­gion are not keen to get listed on the stock ex­changes in their re­spec­tive coun­tries for fear of los­ing con­trol over the business if pub­lic share­hold­ers be­come in­volved, as fam­i­lies are not ac­cus­tomed to the de­gree of pub­lic scru­tiny and ac­count­abil­ity which is re­quired of listed com­pa­nies, com­ply­ing with reg­u­la­tory con­di­tions, trans­parency in ac­counts and ac­count­abil­ity to the share­hold­ers.

The other rea­son is that the re­gion's economies are not yet mar­ket-based and they de­pend mainly on en­trepreneur­ship and pri­vate cap­i­tal. In­sti­tu­tion­al­i­sa­tion is a process and it usu­ally takes be­tween three and five years for a company to be­come IPO-ready.

Shar­ing sim­i­lar views, Sheikh Mo­hammed says FOBs of­ten feel that their business is do­ing well and there is no need for a stock ex­change list­ing. “But I be­lieve that more ef­fort should be made to high­light the ben­e­fits of a pub­lic list­ing and en­cour­age them to take this step,” he says.

How­ever, things have been chang­ing over the past decade in the GCC judg­ing from the suc­cess of com­pa­nies like Man­nai Cor­po­ra­tion, Salam In­ter­na­tional, Ez­daan group etc in Qatar, just to name a few suc­cess sto­ries.

With the GCC gov­ern­ments ini­ti­at­ing eco­nomic re­forms, FOBs are con­sid­er­ing ex­pand­ing their op­er­a­tions by go­ing pub­lic and rais­ing ad­di­tional re­sources both

within and out­side their coun­tries.

“It's like mov­ing from dic­ta­tor­ship to democ­racy at the business level. In ad­di­tion to in­tro­duc­ing man­age­ment and ac­count­ing sys­tems, the mind­set of the own­ers and that of the ex­ec­u­tives work­ing within such busi­nesses needs to evolve whereby col­le­gial­ity, trans­parency, em­pow­er­ment and ac­count­abil­ity be­come sec­ond na­ture,” Chiniara says.

“The FOBs have be­come FDI-friendly and are in­vest­ing heav­ily in in­fra­struc­ture, most no­tably ed­u­ca­tion, health­care, trans­porta­tion, lo­gis­tics, and telecom­mu­ni­ca­tion. We strongly be­lieve that the part­ner­ship be­tween the pri­vate sec­tor (dom­i­nated by fam­i­lies in business) and the gov­ern­ment will en­sure the sus­tain­abil­ity of the econ­omy over gen­er­a­tions to come,” Chiniara adds.

Ex­ter­nal fi­nance

An in­ter­est­ing as­pect is that four-fifths of Mid­dle-East­ern busi­nesses are seek­ing ex­ter­nal fi­nance, while three in five have pre­vi­ously of­fered eq­uity in their business to ex­ter­nal in­vestors, ac­cord­ing to a re­cent global survey by KPMG, a global net­work of pro­fes­sional firms pro­vid­ing Au­dit, Tax and Ad­vi­sory ser­vices.

The survey says that 58% of fam­ily busi­nesses glob­ally are cur­rently seek­ing ex­ter­nal fi­nanc­ing to fund their in­vest­ment plans, but find­ing the right strate­gic in­vest­ment part­ner can be chal­leng­ing. This is not the case in Qatar, where banks are “very will­ing” to lend to FOBs, the re­port says and iden­ti­fies that HNWIs are an un­tapped re­source in the re­gion.

The find­ings also show that the top pri­or­i­ties of HNWIs and FOBs align: HNWIs name long-term cap­i­tal ap­pre­ci­a­tion (37%) as their top driver for in­vest­ment, while fam­ily-owned busi­nesses name long-term ori­en­ta­tion to­wards in­vest­ment re­turns as their top in­vestor char­ac­ter­is­tic (23%).

“The big­gest chal­lenge to fam­ily busi­nesses in the Mid­dle East is the thorny is­sue of man­age­ment in­ter­fer­ence. All Mid­dle East re­spon­dents felt that HNWIs would get heav­ily in­volved in man­age­ment de­ci­sions,” Har­ish Gopinath, KPMG's head of Fam­ily Busi­nesses in the Mid­dle East and Asia, says.

“In­vest­ment be­tween fam­ily busi­nesses and HNWIs in the Mid­dle East is not common, mainly due to the per­cep­tion that HNWIs would want to get closely in­volved in the man­age­ment de­ci­sions and day-to­day op­er­a­tions of the fam­ily business. How­ever, fam­ily busi­nesses are seek­ing ex­ter­nal fi­nance and, in ad­di­tion to fi­nanc­ing, con­nect­ing with HNWIs can bring about syn­er­gies and tap into the knowl­edge and ex­pe­ri­ence of HNWIs which will en­able them to grow to the next level, “Gopinath adds

“GOOD COR­PO­RATE

GOV­ER­NANCE – RE­LATED IN­TE­GRALLY

TO TRANS­PARENCY, AC­COUNT­ABIL­ITY AND PRO­FES­SION­AL­I­SA­TION – IS HELP­ING TH­ESE BUSINESS FAM­I­LIES SE­CURE THEIR LEGA­CIES. THE EN­TRE­PRE­NEUR­IAL, FOUND­ING GEN­ER­A­TION TOOK MANY RISKS AND WEATH­ERED ECO­NOMIC TUR­BU­LENCE IN OR­DER TO BUILD SUC­CESS­FUL

BUSI­NESSES.”

AN­DREW PORTER DI­REC­TOR OF RE­SEARCH

CAM­P­DEN WEALTH

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