85 percent of privately held businesses in the ME are family-owned or controlled
Succession planning critical challenge for Middle East business families
17 March, 2015 - Families in the Middle East dominate the business sector with over 85 percent of privately held businesses being family-owned or controlled. Such families therefore have a significant role to play in relation to the region’s economies, investment environment and job market.
Demographic trends indicate that in the Middle East, the first cohort of founders who have so far created successful empires is now approaching retirement age. Thus, succession planning is a critical challenge for the region’s business families. This challenge is among the topics discussed in the spring 2015 issue of Deloitte’s quarterly publication, the Middle East Point of View (ME PoV).
“The present day business environment is constantly evolving. The rapid growth of technologies, a demand for more social responsibility, greater expectations from employees, suppliers and stakeholders, and fierce international competition make the market very different to what it once was,” explains Walid Chiniara, partner, Deloitte Private, Middle East who leads advisory services to family businesses in the region. “If a business is to remain sustainable and its handover to the next generation is to be successful, the founders of the family must see succession planning as a priority and give their successors the tools, flexibility and support to enable them to succeed.”
Real estate development laws are also in the spotlight for governments in the region. In “Trust me, I’m a real estate developer”, Nick Witty, director, Real Estate Advisory at Deloitte Corporate Finance Limited (DCFL) (regulated by the Dubai International Financial Center), discusses the Bahraini and Qatari governments intentions to enact real estate development laws intended to regulate market practice, thereby strengthening their respective markets and more importantly, promoting investor confidence.
Bilal Marroush, audit principal at Deloitte Middle East, in “Raising the ceiling of expectations”, adds: “Winning the right to host the FIFA World Cup in 2022 and the implementation of the Qatar National Vision 2030 plan have greatly unleashed the potential in the country over the next decades and as such investments are expected to intensify and boost real estate development.”
The spring issue of the ME PoV publication also explores other hot topics in the region including reduced public sector spending, finance institutions’ need to diversify their income sources, and doing business with Chinese clients.
David Brazier, director, Infrastructure and Capital Projects at DCFL writes about reduced public sector spending in “Virtue borne out of necessity?” He says: “The scale and speed of the change in the oil price has had a clear influence on the fiscal landscape for governments across the region. While the level and immediacy of the impact vary, many have signposted a recasting – or rethinking - of major investment programs in infrastructure”.
In “Rethinking the future”, Umair Hameed, director, Monitor Deloitte, Middle East, says: “ With regulators all set to introduce new capital adequacy requirements with interest rates at all-time lows, it’s a good juncture for finance companies to re-think their corporate strategy and business model, both in terms of sources of revenue as well as sources of funding.”
In “Winning with China, Inc,” James Babb, partner, client and industries, and Madeleine Chen Todd, manager, Chinese Services Desk at Deloitte Middle East specify that: “When it comes to dealing with this culturally and linguistically distinct group of clients, it would certainly help to understand the whys and how’s of their decision-making in order to form mutually beneficial relationships that are built for success and build to last.”
To download the Middle East Point of View spring 2015 - pdf version, go to: http://bit.ly/1Aa2z21
To download the ME Point of View App and review over 100 current and past reports, go to: http://bit.ly/Q9WGAV
To subscribe to the Middle East Point of View, send contact details to firstname.lastname@example.org
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.
Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 200,000 professionals are committed to becoming the standard of excellence.
About Deloitte & Touche (M.E.)
Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence since 1926.
Deloitte is among the region’s leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with more than 3,000 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region since 2010 (according to the International Tax Review World Tax Rankings). It has received numerous awards in the last few years which include Best Employer in the Middle East, best consulting firm, and the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).