Family Business Council – Gulf (FBCG), a regional association of the Family Business Network (FBN) have launched a guide in cooperation with PricewaterhouseCoopers (PwC) to help family businesses in the Middle East successfully plan and navigate scenarios of shareholder exit in the family business.
For family-owned businesses in the Middle East, and the GCC in particular, handover from the first to the second generation, and increasingly from the second to the third generation can present unique challenges, which can have tremendous implications on the sustainability and growth of many of the region’s largest companies. The newly published guide provides a roadmap through succession challenges, and is designed to help family businesses navigate potential divergence and differences in family members’ interests and goals, understand the opportunities and challenges of the shareholder exit process, and plan for an optimized outcome that preserves both business continuity and family unity.
Chairman of Family Business Council – Gulf, Mr. Omar K. Alghanim spoke on FBCG’s role in sharing best practices for family-owned businesses operating in the region. He said: “Family members choosing to leave a business can be a sensitive topic for all involved, and many will overlook it until it’s unfortunately too late. Both FBCG and PwC have conducted studies telling us that while in the last two years, family businesses have improved their commitment to documenting their policies in writing, only 31% of businesses have a robust, documented succession plan in place, and only 33% have effective governance policies in place. At FBCG, we are happy to play our part in developing our regional knowledge base on this topic, to help families develop sustainable governance and business models and contribute to the economy in the best way we can.”
The surveys, which were conducted across the Gulf and the Middle East, also revealed that despite being aware of the challenges and sensitivities involved, many family businesses do not have adequate plans in place to address shareholder exits. This absence of essential documentation can often leave room for ambiguity and complication for those looking to address challenges or conflicts in family dynamics.
PwC Partner and private business leader Imad Shahrouri, spoke on the partnership between PwC and the Family Business Council – Gulf as a whole, commenting: “We recognize that family businesses have always been an engine for growth and their success translates into prosperity for the Middle East region. Family businesses show higher profitability in the long run and have a more long-term strategic outlook. Our goal is to help family businesses maintain their values and legacy while unlocking their maximum potential to achieve a competitive advantage in times of transformation.”
Amin Nasser, PwC’s senior advisor on Middle East private and family business also shared his insights on working with family-owned businesses, remarking that “The unique dynamics of family-owned businesses become particularly apparent in the case of a family member deciding to leave the business. Navigating an exit process can be a challenge and common cause for family conflict. We worked with FBCG to develop a brief yet comprehensive overview of the process, so that family businesses are prepared to create a healthy exit process by setting family constitutions and documentation that allows the business’ future to remain intact while balancing financial security and personal freedoms for all family members.”
Suggested Planning Roadmap to be Ready for Shareholder Exits in Family Businesses
Exits are an inevitable part of the business. It is important that family member exits are handled in a professional and fair manner to avoid conflict. A sound preparation is crucial to ensure that the business can continue running without disruption and mitigate any risks:
The full report can be found here: https://www.pwc.com/m1/en/publications/family-business-shareholder-strategies-and-principles.html