The rise of Single Family Offices in the Middle East

In the following article, we will introduce what specific challenges family businesses in the Middle East face that could affect their long-term sustainability.

If we take a closer look at the Gulf Region, Kuwait, Qatar and United Arab Emirates hold most of the family businesses in the region. Family groups in the GCC have a significant impact on the development of the region – in fact, they generate more than 100 billion U.S. dollars in revenue, according to a study by GFBC and McKinsey & Company.

However, as they grow larger and develop further, they are also facing many difficulties. Apart from the management, political, and economic challenges, one key issue is structural, succession, and governance planning. And unfortunately, many family businesses in the Middle East are not yet prepared to tackle those issues. Let’s take a closer look into the existing problems and ways to solve them.

In terms of governance planning, decision-making at different levels needs to be made taking into account the different goals and wishes of the family members as well as new generations. Very often, making a decision that combines family wealth and business interest becomes problematic.

Another matter that principals should pay special attention to is succession planning. It is a crucial step as this involves mentoring and preparing the new generation to preserve the wealth of the business.

A few practical steps to overcome those challenges mentioned above: a productive approach to succession planning is to have a clear strategy that needs to be in place and implemented with a goal towards protection and future growth. Not postponing it is a crucial step that will help prepare the next generation to take over the business and preserve family wealth.

What is also important is separating the business and personal wealth with a long-term multi-generational vision. This will most likely help protect and ensure the continuity of long-term wealth management.

From a technology perspective, having a platform to manage finances can help the family members track their investment performance in a cost-efficient way. A cloud platform can provide a simple and clear overview of all the different owners, assets, accounts and investments.

With a more and more challenging environment the family businesses have to deal with in the GCC region, the trend and concept of Single Family Office (SFO) will most likely develop and increase in numbers in the coming years. Setting-up a Single Family Office is a crucial step for sustaining your long-term wealth in a professional way.

FA Solutions investment management platform is a perfect fit for Single Family Offices, holdings, and groups. The FA Platform can track various family portfolios and investments taking into account the complexity of the family structure and ownership.

For instance, if a Family Office has multiple family members as owners with separated portfolios for each of their assets, FA Platform can easily set up multiple portfolios structure and group those flexibly according to your need.