20% of regional family businesses have plans to go public, says Ernst & Young

The survey covers a range of family business characteristics including strategic planning, organization structure, governance, human resource alignment, operational excellence, management and ownership transition, succession planning and communications.

It examines the state of family business as compared to others and fills a research gap on this topic in the Middle East.

50% of the surveyed family businesses had annual revenues above $100m, 17% of them had annual revenues of over $500m while only 8% were publicly traded.

A majority of family businesses surveyed are run by second generation entrepreneurs (73%) followed by first and third generation owners at 48% and 20% respectively. Only 16% feel that there is a well defined succession, management and ownership transition plan, pointing to a serious gap in this area.

According to Rami Nazer, Partner and Head of Ernst & Young's Middle East Family Business Center of Excellence:

"The 1st Ernst & Young Family Business Survey examines their current state and gives the participants a chance to reflect on their own strength and weaknesses in light of key challenges common to them."

Explaining the change in the complexion of management teams within family businesses, Omar Bitar, Managing Partner, Advisory Services at Ernst & Young Middle East, said:

"When we see 68% of the respondents declaring that their management team is selected purely on the basis of competence and not on relationship, we can conclude that the majority of regional family businesses are mature and practical in terms of appointing management. They realize that professionalization of management structures and adoption of global business processes brings long term value to the business. The fact that 40% of family businesses have non-family members on their board of directors suggests that they are opening up to new ideas and are willing to accommodate differing perspectives."

46% of family businesses surveyed were established in 1960s and before while all of those employing upwards of 5000 people were founded in 1960s or before. Age does not play a major role in the strength or weakness of a family business. However, older businesses were more concerned about upcoming challenges.

"As family businesses grow older and larger, they have to deal with increased levels of risk and complexity that global companies already have the processes for. They also face pressure from various stakeholders to increase transparency and make quantum leaps in their profitability. Ernst & Young's Family Business Centre of Excellence is designed to guide them through the ever changing business landscape and our annual Family Business Survey will benchmark their progress,"

added Omar.

72% of the total respondents operate in retail and consumer sectors followed by 48% in real estate, hospitality and construction and 32% in industrial products. Only 12% of them operate in energy, chemicals and utilities. However, 60% are planning to diversify into new sectors. The survey was carried out in Saudi Arabia, Kuwait, Qatar, Oman, Lebanon, and Jordan.