The younger generation may get stakes… but they sure aren’t taking control of family-owned businesses in the UAE and elsewhere in the region.
There are genuine concerns about delegating management and investments to the next-gen, according to a survey by Barclays Bank. Doubts also exist over whether the likely successors have the “ability and commitment” to manage the family assets. All of which makes for a wobbly transition, with the chosen ones “feeling less prepared to take over”.
Even those who have a stake in the family business are still some way away from actually exerting control. In the Barclays’ findings, 41 per cent of millennials are acting as minority co-owners.
“This is not always translating to a share of control, as 57 per cent of senior family members say that they remain the only decision maker for the business strategy,” the report notes. “While only 45 per cent of millennials globally currently feel prepared to take over the family business, and an additional 23 per cent feel nervous about the prospect of inheritance.”
But within the Gulf, millennials being groomed to take over the family business seem better prepared to take over. In the poll, 49 per cent of the younger ones say this is their mindset.
Rahim Daya, Head of Private Banking, Barclays in the Middle East, said: “Family businesses across the Gulf which have prospered in the past are facing new challenges as a result of the pandemic and falling oil prices. The pandemic is leading many family businesses to review and reevaluate how they will fund their liquidity, longevity and legacy needs.”