Family owned businesses within the UAE represent a large proportion of the business demographics in the region. These businesses were established by visionary leaders and entrepreneurial families when the UAE was still in its foundation. It was a land of virgin opportunity and within 43 years, the nation has emerged as a key geo-economic player on the world pedestal.
The city of Dubai has witnessed a fascinating transformation with development of industries such as leisure & hospitality, trading and logistics, light manufacturing and real estate & construction that add to its growing economy. The city has one of the most fluid migration rates in the world, houses the tallest tower, recently won the Expo 2020 and builds and endorses “bigger, better and bolder” than anywhere else.
Along with the visionary leaders of the country, this growth has been supported by family owned businesses who have continued to grow along with the country. Now we are helping support them for the next stage, which is essentially: how to sustain and adapt the business to the new economy with a new generation of leaders and visionaries.
A key focus will be on institutionalising the legacy and building new strategies to meet the opportunities and challenges of a new dynamic market. We are already seeing many family businesses investing in strategy and operational efficiency as well as expanding into regional and global territories. IPO’s are also a considered alternative, which may be a good consideration, but it’s not the only way. Companies can modernise without necessarily going public.
They have to ask themselves the question: why are we going public? The advantages are that an IPO will strengthen governance, help raise capital, and might assist expansion plans, but an IPO itself will not do all those things. Look at BMW, one of the biggest companies in the world. It is still a private company.
Family owned businesses need to ensure the next generation are well versed and prepared to take the business on so that it can develop into a dynamic business which will allow it to continue rising during the ever competitive business environment which is emerging.
The business environment no longer warrants the number of years that a business has been active for, with greater competition and new business startups emerging with founders coming from around the world, it is imperative that family owned businesses begin to think more innovatively. This is essential in order to continue the legacy that saw Dubai and the UAE emerge as the nation of possibilities.
Hisham Farouk is the managing partner of Grant Thornton UAE.