Dr Hischam El Agamy is the executive director of the IMD business school in Switzerland and one of the founders of the Tharawat Family Business Forum. He talks about how Tharawat encourages Arab businesses to experiment in order to take on challenges.
How are you hoping the Tharawat Family Business Forum will assist families in this region?
We provide workshops and certain educational things for the younger generation. We do some research and advisory, and while it was started with [fewer than] 20 founders we have expanded our service to approximately 200 families in the region. The highest concentration of businesses - maybe 40 or 50 of them - is from the UAE.
What's the greatest internal threat family businesses face today?
I would not say threat. It's more of a challenge, which can become an opportunity or threat. For the time being, we're facing the issues of succession: how to prepare properly. How do future leaders have space to experiment their ideas, learn how to implement ideas, understand what the business is all about and deal with the challenges surrounding the business?
Do some of these succession issues play out differently here compared with the West?
Absolutely. Here, it's coupled with a certain social culture. For example, the elder person should be the successor. In the West, that's not necessarily the case. Here you have to deal with the issue of succession in a different way.
What else is unique here?
People in the West will say, "at 65 or 70, I will retire". Here, you are born with the business, and you die with the business. So it's very important to speak about family governance and business governance.
So you're advocating to have two different systems to help manage a business?
There are two systems - scientifically there has to be. But they're interdependent. Corporate governance is dealing with business. All the emotional issues can be discussed under the roof of the institution of family governance.
How is the family governance piece different?
Family governance is the family institution that supports the family to grow the business, communicate the business and ensure the non-active members of the families have the right information about the business. This is the alarm system for conflict. It's filtering a lot of emotions.
What's an external issue family businesses in this region are contending with?
They're dealing with products that have a very short life. In the past, you could represent a product and make money. Nowadays, a family business you take over today has no value tomorrow.
How can the new family managers ensure that past value will continue?
More and more companies are interested in buying technology - not the product, but the source of the product. So they will go and buy shares or even buy out the company. This we saw over the last five years. This is a very smart trend, and it will increase. The issue of having a licence of a product is not anymore reliable in the long term.
If you go
The flights
Etihad and Emirates fly direct from the UAE to Chicago from Dh5,215 return including taxes.
The hotels
Recommended hotels include the Intercontinental Chicago Magnificent Mile, located in an iconic skyscraper complete with a 1929 Olympic-size swimming pool from US$299 (Dh1,100) per night including taxes, and the Omni Chicago Hotel, an excellent value downtown address with elegant art deco furnishings and an excellent in-house restaurant. Rooms from US$239 (Dh877) per night including taxes.
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
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DUNE%3A%20PART%20TWO
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City's slump
L - Juventus, 2-0
D - C Palace, 2-2
W - N Forest, 3-0
L - Liverpool, 2-0
D - Feyenoord, 3-3
L - Tottenham, 4-0
L - Brighton, 2-1
L - Sporting, 4-1
L - Bournemouth, 2-1
L - Tottenham, 2-1
COMPANY%20PROFILE%20
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Business Insights
- As per the document, there are six filing options, including choosing to report on a realisation basis and transitional rules for pre-tax period gains or losses.
- SMEs with revenue below Dh3 million per annum can opt for transitional relief until 2026, treating them as having no taxable income.
- Larger entities have specific provisions for asset and liability movements, business restructuring, and handling foreign permanent establishments.
The%20Letter%20Writer
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Farasan Boat: 128km Away from Anchorage
Director: Mowaffaq Alobaid
Stars: Abdulaziz Almadhi, Mohammed Al Akkasi, Ali Al Suhaibani
Rating: 4/5
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MOST%20POLLUTED%20COUNTRIES%20IN%20THE%20WORLD
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COMPANY%20PROFILE
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If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Ticket prices
- Golden circle - Dh995
- Floor Standing - Dh495
- Lower Bowl Platinum - Dh95
- Lower Bowl premium - Dh795
- Lower Bowl Plus - Dh695
- Lower Bowl Standard- Dh595
- Upper Bowl Premium - Dh395
- Upper Bowl standard - Dh295
Company%20Profile
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The%20BaaS%20ecosystem
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