Dubai: Family-run organisations, which dominate Middle East businesses, should adopt modern management techniques and corporate best practices to keep up with the demands of the financial markets, said experts speaking at a seminar called Creating Sustainable Family Businesses in the Middle East, organised by the Dubai International Financial Centre (DIFC) yesterday.
Increasingly, regional family businesses looking to finance their projects will need to convince banks of the financial viability of their business models. Learning from the recent corporate scandals involving family businesses, banks have become very cautious in lending.
"Name-lending has become a thing of the past. Increasingly, family businesses that are looking for finance from banks and capital markets will have to keep up with the demands of the markets in terms of transparency and management practices," said Walid S. Chinara, principal, Shoora Family Business Advisors.
In addition to issues relating to financing and finding capital for expansion, family businesses in the region are increasingly facing problems relating to family conflicts and succession.
"The two greatest threats to the continuity of family businesses are conflict and succession. Conflicts in family businesses are rarely caused by poor business performance; mostly, they arise because owners feel that their needs are not met. Conflicts also surface when situations are unclear or not properly understood," said Ameen Nasser, partner, Business Advisory Services, PricewaterhouseCoopers.
Speakers at the event called on Middle East family businesses to adopt family constitutions and adequately structured succession planning.
"Family businesses need to put in place strong corporate governance and succession planning frameworks. The DIFC and the Hawkamah Institute for Corporate Governance have now put in place a toolkit of practical solutions to address these challenges," said Dr Nasser Al Saidi, Chief Economist of the DIFC Authority.
To help family businesses meet governance standards the DIFC has created a platform for families to establish dedicated Family Offices.
