Liv­ing ex­am­ples

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“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

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