Mena family offices face succession issue

Strong investment appetite is evident among family offices across the Middle East, according to recent research from Deloitte, but concerns about internal governance and a need for more succession planning remain with just 14% of family offices in a position to hand over the business to the next generation. 

The management consultant’s latest Middle East family office survey showed that an average 67% of family offices intend to make investments in the next 18 months on the back of general optimism about the economy – 75% expect business activity to return to pre-pandemic levels within 18 months. 

Appetite is strongest in the UAE with 93% willing to invest, followed by Saudi Arabia (73%). 

Distressed digital businesses are apparently the most coveted sector among the respondents, along with healthcare and personal wellbeing. 

The top three areas of economic concerns among Mena family offices were oil prices (55%), taxes (23%) and cash collection (22%). 

In terms of internal governance, more than half (59%) of the family offices cited succession as one of their top areas of focus. Just 14% of respondents said that the next generation of their family would be able to lead the business immediately. 

The numbers do improve over the longer-term with 64% saying that the next generation will be ready to lead within five years. 

According to Walid Chiniara, partner, family enterprise consulting leader for Deloitte Middle East, the pandemic has seen a shift in focus among family offices from growing their business and exploring new opportunities to sustainability, succession planning and next generation preparedness. “Covid-19 has put the emphasis on the conversation families have had during their confinement. For many, their family constitution proved to be fit for purpose,” said Chiniara. 

“Others realised that their family constitution was no longer valid and that it needed upgrading. For those who did not have a family constitution, they realised that the sustainability of their business in the hands of the NexGen warranted a conversation about vision, values and purpose.” 

The survey canvassed more than 80 prominent family groups across the Middle East.

©2019 funds global mena

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