Family Businesses in the U.A.E.

The United Arab Emirates pays increasing attention to entrepreneurship, which is an essential driver of family businesses, that drives socioeconomic development plus wealth creation around the world. Family-owned businesses are the backbone to the U.A.E. business community, especially the growth of the economy.

World Economic Forum research shows that by 2020 in the Arab world will require digital skills jobs. Computing the future of employment and skills requirements in the Middle East region estimates 47 percent of all work activity in the U.A.E. faces increased automation. In terms of competitiveness and an expert of tech firms, the U.A.E. leads the Arab region and needs to improve efforts to expand the use of the latest digital technologies for further enhancement.

Consideration, the family business in Dubai have at least 51% of the shares owned by a single U.A.E. family, and at least one member of the management team from the family that owns the business. Likewise, the family includes the household (HH) which consists of the husband, his wife, and their siblings; the HH parents, brothers, and sisters and their siblings.

In Dubai, family members preserve the top leadership positions for themselves in the family businesses, whereas the power within the business is usually related to the family, not market concerns. Moreover, the fully U.A.E. owned businesses belong to only one U.A.E. family, despite the size of the business.

In like manner, it is necessary to note that family business in Dubai retains restrictions on investments. Such as a foreign investor to own 49% of a business, with at least 51% for a U.A.E. national, and the business is set up in one of the Emirate’s free zones (e.g., Jebel Ali Free Zone, Dubai Internet City; Dubai Media City; Dubai Healthcare City, etc.).

U.A.E. based family firms are young, i.e., less than 45 years old; are managed by the family CEO rather than a professional CEO; focus on the regional and local market. Family-owned businesses, whether large and medium family firms in the U.A.E. address some challenges, such as vision and strategy development, governance and organizational structure, succession planning and founder plan, leadership development, reward strategies, etc.

Family businesses are considered “business incubators” for future start-ups by training other family members. Additionally, this is supported by the fact that business competes based on available knowledge, talent, skills, and ability. Family members with their flexibility, stability, and commitment face the above challenges.

For many years, Hadef & Partners has been the trusted adviser to many largest and successful family businesses in the U.A.E. They have helped, guided and advised many of these companies throughout their businesses to unlock their potential and growth. Hadef & Partners enable U.A.E. families to achieve their objectives and a smooth succession between current and future generations of family members.

Mainly, family members need to know what are their responsibilities and duties in the business, especially those who want to become the future heirs in the business. The parents (first generation) play an essential role in teaching their heirs about the behaviors that are essential for the success of the business. For instance, Michael Chahine founder and chief executive of NexGen Desert Green (a firm offering family business and wealth management solutions), he has been advising such entities for almost 40 years and now prepares to launch the Institute for the Next Generation in the U.A.E. It will be a center for family business and entrepreneurship studies, a hub for research linked to executive education, helping family businesses prepare even better for the challenges of succession, leadership, and ownership.

All in all, the family business is a way to enhance the social standing rather than money-making activity.