We are pleased to share key insights from the latest edition of Capital Insights (Vol. 2, Issue 3), courtesy of our partners at Capital Club Dubai. This issue is dedicated to the critical and timely theme of ‘Family Business,’ exploring the challenges and opportunities facing family-run enterprises across the region and beyond.
A profound and quiet reformation is underway across the Middle East and North Africa (MENA). Family businesses, the undisputed backbone of the region’s economy—accounting for over 90 per cent of private sector companies and contributing up to 70 per cent of GDP—are standing at the precipice of the largest intergenerational wealth transfer in history. With an estimated $1 trillion in assets poised to move to the next generation over the coming decade, the latest issue of Capital Insights magazine lays bare a critical challenge: legacy without structure is a liability. The consensus among the experts featured is clear: without a radical embrace of formal governance, many of these economic titans risk becoming casualties of their own success.
The core of the issue is a succession crisis brewing beneath a veneer of prosperity. As Dr. Adil Alzarooni points out, with nearly half of UAE business owners admitting they have no formal succession plan, the odds are stacked against them. Globally, only 10-15 per cent of family firms survive to the third generation. This isn’t just a business risk; it’s an economic one. The traditional, informal, founder-led model that fuelled initial growth becomes a vulnerability during transitions, often leading to governance breakdowns, ownership fragmentation, and value destruction. As Fadi Hammadeh notes in his article, “Succession Planning: Betting Against the Odds,” when conversations are postponed, “uncertainty fills the space, and uncertainty can quietly erode stability.”
Governance: The New Engine for Growth
The antidote to this instability, echoed throughout the magazine, is the deliberate implementation of robust governance. This marks a shift from relying on familial ties to building institutional resilience. H.E. Abdulaziz Al Nuaimi, from the UAE Ministry of Economy and Tourism, frames this not as an option but as a “national imperative.” The UAE government is actively fostering this transition, launching initiatives like the THABAT Venture Building Program to train the next generation and enacting the new Family Business Law. This legislation is described as a “legal engine for diversification,” providing a flexible framework for families to codify their charters, define roles, and manage ownership transitions without sacrificing agility.
This move towards structured governance involves creating family councils, professionalising boards with independent directors, and establishing clear protocols for conflict resolution. As Amin Nasser of PwC Middle East highlights, many family disputes arise from the overlap between family, ownership, and management. By creating formal structures like family councils and constitutions, businesses can “defuse conflict before it starts” and ensure decisions are based on merit, not sentiment. Walid S. Chiniara describes this evolution as “Governance 3.0,” a living system that “transcends static charters and legal scaffolding” to become the “architecture of continuity.”
NextGen Leaders: Balancing Tradition, Tech, and Transformation
As the next generation prepares to take the helm, they face the dual challenge of honouring legacy while driving innovation. They bring a new set of priorities, with a stronger focus on Environmental, Social, and Governance (ESG) commitments, digital transformation, and technology adoption. However, a significant gap exists. Dr. Alzarooni notes that while 88 per cent of next-gen leaders are interested in generative AI, only 9 per cent are involved in its implementation.
This highlights a central tension: the need to bridge generational divides on the pace of change. Experts Matt Knight and Dr. Vern Glaser propose a strategic framework for AI adoption that aligns with family business values, using AI as a “Digital Assistant” to free up humans for relationship-building, a “Data Wizard” to turn legacy data into foresight, and a “Creative Coach” to spark innovation that remains true to the family’s heritage.
Furthermore, the magazine shines a light on an often-overlooked asset: female leadership. Lea Boyce argues that overlooking capable women in succession is not tradition, but “misgovernance.” In an increasingly complex global market, treating succession as a merit-based strategy rather than a patriarchal birthright is essential for survival and growth.
Ultimately, Capital Insights paints a picture of a region at a critical inflection point. The long-term survival of its most significant economic contributors depends on their willingness to evolve. The families that thrive will be those who professionalise their operations, invest in their future leaders, and understand that the most enduring legacy is one that is governed by design, not by default.
Click link to read full issue – https://qrco.de/CIFB
CAPITAL INSIGHTS: Capital Club Dubai’s exclusive business publication reaches 100,000+ Global Business Leaders across diverse industries, through online distribution in the Middle East and beyond.
Next Issue Theme – DISRUPTION 2035. This theme will offer a compelling and timely framework of the complex, interconnected transformations expected to shape our world over the coming decades.
Reference e-links to previous issues
Financial Ecosystem – https://qrco.de/CIFE
Innovation- https://qrco.de/CIInnovation
Deglobalisation & Resilience – https://qrco.de/CIDR
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