VIEW FROM THE GULF
By Ziad Salloum
Ziad Salloum, KSS, is a partner with Salloum & Partners LLC in Abu Dhabi. Since joining his father’s firm in 2006, Ziad has advised hundreds of businesses in every sector, including mergers and acquisitions, dispute resolution, family business succession planning, and the setup of family offices.
In dealing with principals, the next
generation may also find themselves stifled, or with their personality and authority constantly challenged. Mature well-established businesses where “boring is profitable” are generally less disposed to innovating. Family members often have to work harder to be respected by employees. The next generation’s greater
emphasis on personal fulfilment may also elicit sharp reactions from the older generations, a possible legacy of harsher times or cultural norms. Any absence or lack of involvement
FOUNDERS VERSUS NEXT GENERATIONS WITH $1 TRILLION AT STAKE
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he coming decade will see a transition event hit a majority of family businesses in the Gulf Cooperation Council region. This may represent a change of hands of business assets of about $1 trillion, according to the Family Business Council—Gulf.
However, family businesses in the region appear to be seeing
decreasing levels of management or operational involvement by the next generation. A common complaint by principals is members of the next generation
are not interested or otherwise capable. The older generation may have intentionally limited or discouraged the involvement of the next generation, preferring to employ professional managers. For some, this was aimed at avoiding potential problems between successors and other next-generation members. Others sought to allow the next generation the opportunity to follow their own path. A more selfish, if not always conscious, aim may be a desire to focus on the business while avoiding intergenerational frictions or entitlement issues. For the well-educated, tech-savvy, ambitious and competent next-
generation members, personal factors are not the sole cause of lack of engagement. Thankfully, an increasingly rare phenomenon is a reluctance of older
generations to include women. However, competing visions for the future of the business among family members, age gaps, or differences in education, upbringing, culture, experience, or work ethic, serve to frustrate many.
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by principals during the next generation’s formative years may lead to emotional distance or lack of shared values, exacerbating communication difficulties and hampering the search for common ground. These factors, contrasted with
the apparent freedom or creativity associated with an entrepreneurial lifestyle, may reinforce the perception that expectations of next-generation members (whether in terms of innovation, expansion or opportunities for personal growth) may not be met within the family business. Of course, family members
should not join the business for the wrong reasons (like prestige, power, or a sense of obligation). But if principals wish to encourage the involvement of the next generation, they should understand that willing successors need a rationale for staying, especially when they have other options. The importance of early engagement and open communication cannot be understated. The younger generation should be invited to understand the business’s history, philosophy, strategy, and culture. FBs should be open to diversifying or expanding geographically. For their part, the next generation may need to also recognise the importance of strong family ties and buy into the family legacy.
ISSUE 75 | 2019
ILLUSTRATTION: SHUTTERSTOCK
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