“Planning for your succession will, by necessity, be a process rather than an event, as it will take time to address these issues. Planning five years in advance is good but planning ten years ahead is even better.”
at Dubai-based Integris. “But, when you look at the personal and family issues that are involved, it is easier to understand why many people avoid dealing with the issue of business succession. None of us like to think about or discuss our own mortality, for example,” he says.
Add to that the fear of losing control and we can begin to understand why it took so long for this concept to make inroads in FOBs in the region. As Ernst and Young's Partner at MENA Family Business Leader Loutfi Echhade puts it, there is no dearth of reasons why the region's businesses find succession planning particularly challenging.
So what is stirring FOBs in this direction now? Adam Lomas, Partner at the leadership and talent management consultancy firm Castor & Partners, with a rich experience in MNCs like Shell and later on in private businesses, says, “In Qatar, and the region, very often wealth was built up in the last 20-30 years, since the oil boom in the 70s. Because the market was captive and the wealth in it was big, business boomed and it was impossible to go wrong. But to sustain that growth, families started looking at neighbouring markets (which were also soon saturated) and then the international market. They found out that to function globally, the business approach is quite different.”
And adapting the corporate practices to FOBs wasn't easy either, because of the aura of confidentiality around them. “In MNCs the process is more open and transparent. You need to demonstrate to shareholders that you have a procedure in place and have promoted the right people for the job in order to maintain trust. But in family businesses, it's extremely difficult to discover how their size and waelth are layered.” That is the first barrier to bringing in external consultants. The general consensus, however, is that awareness is on the rise. Succession planning has gained real momentum in Qatar and elsewhere in the region according to Gary Watts, Partner and Regional Head of Corporate Commercial and Regional Head of Family Business, at the law firm Al Tamimi and Company. He says that FOBs are starting to experience and witness the “difficult scenarios which have arisen following the passing of founders of family businesses. There have been highly visible cases of conflict between the heirs and those cases have served as warnings to other families. This renewed emphasis on succession planning will continue to grow and develop in Qatar and in the wider GCC.”
Echhade concurs, pointing out that several families have started and completed the journey and more still are seeking outside help (see box). “Still, many have not done anything formal or initiated steps to develop their governance framework. We also witnessed a number of such businesses that suffered or went out of business due to family feuds, conflicts and unreconcileable differences,” he says. Lomas has a reservoir of such local stories where it has all gone south due to lack of foresight. “Ultimately it's the family's choice between absolute control and some sort of compromise. Most FOBs have sufficient understanding of the market and are willing to look at alternatives, even if it conflicts with their moral and spiritual system.”
To Sharia or not
This moral and spiritual system is, more often than not, the Sharia Law. The shadow
MARK NIERADA Partner Integris