Berliner Boersenzeitung - Succession pressures put Gulf family companies at a crossroads

Gulf family-owned companies face growing succession and governance risks as large fortunes pass to second and third generations without clear ownership plans.

Stock markets around the world tend to make the headlines in the business news, but there is more wealth in private hands than traded on public stock exchanges.

Much private wealth is tied up in families who own businesses, and in the Gulf, these businesses generate a sizeable proportion of GDP. Many large firms that were founded in the 1960s and 1970s are still owned by a founder who may be reluctant to cede control to the second and third generations. If he dies without a clear succession plan, this can cause disagreements and lawsuits.

It is reaching the stage where governments feel obliged to step in. One example concerns the case of the late Majid al-Futtaim of the United Arab Emirates, who was the founder of a major business mostly in real estate and visitor attractions, including the Mall of the Emirates. It also owns the franchise for the French Carrefour retail group in markets across the Middle East, Africa and Asia. He died in 2021 at the age of 87, yet still owned most of the shares. There followed disputes among his heirs, and a government-appointed judicial committee oversaw changes to the parent company’s board in 2025.

In the UAE, family businesses contribute around 60% of GDP, according to the Dubai International Financial Centre. The Majid al-Futtaim group reported nearly $20bn in assets at June 2026 and employs more than 40,000 staff.

Across the economy, if a substantial part of business-owning families’ wealth is tied up in lawsuits, rather than investing in new businesses, this is a drag on growth.

One estimate is that between $500bn and $700bn of wealth in the Gulf will be inherited by 2035. A 2025 report published with the Dubai International Financial Centre estimated that, across the Middle East, $123bn could be tied up in probate for more than six months and a further $49bn could go unclaimed by 2030.

In Saudi Arabia almost two-thirds of family firms did not have a succession plan, according to National Center for Family Businesses figures reported in January 2026. According to a 2022 survey by UBS, the Swiss bank, 91% of wealthy investors in the UAE struggled to divide assets fairly, compared with 66% globally. The Saudi centre set up a dispute resolution service in 2025, which had been used by 170 families by January 2026.

The legislative framework in Gulf states is fledgling, and could be developed further. In 2022 the UAE enacted a dedicated family business law, which took effect in January 2023 and covers ownership, governance and dispute resolution. There is scope for developing frameworks for family business governance based on international expertise and standards.

Similarly, public listings are often shunned by owners, in the interests of control and privacy, but an advantage of publicly traded shares is transparency over their worth, which can lessen family tensions. There was a case where two factions within a family entered into a legal dispute over an estimated valuation of a business where the respective values differed greatly: Respectively $3bn and $1bn, a difference that is difficult to resolve through mediation. In some cases, heirs have been receiving dividends for many years without knowing much about the business’s operations.

In the Middle East, sometimes the founder has two wives, each with several children. It is common for such siblings to fall into disputes, especially when they have different mothers. If there are five children in each of two families in the second generation, and most of these individuals in turn have several children, then the number of inheritors can be large by the third generation, considerably increasing the complexity.

One of the most important matters is clarity of succession for the owner-founder. Many defer such considerations until they are elderly, but of course they may die suddenly. It makes sense to consider the matter when you are still relatively young.

Succession is often best considered as primarily of ownership and governance responsibilities, rather than actually running the business. Moreover, many firms have become conglomerates so there isn’t such a thing as ‘the family firm’ in the singular to inherit. Many second and third generation inheritors lack the aptitude or training to become a chief executive of one of the businesses, especially if it is highly specialised, such as chemicals or supply chain. It is often better to train the inheriting young adult in governance, and appoint him (or her) to be chair of the board able to recruit a strong executive team. Others in the succeeding generation prefer to take responsibility for a philanthropic arm, or to sell their entire holding and seek an alternative career.

The future of a family business should not depend on whether its heirs can reach agreement after the founder’s death. Clear ownership and governance arrangements need to be established while the founder can still guide the process, supported by laws that protect shareholders and help resolve disputes. The consequences of poor succession planning extend beyond the family, affecting employees, creditors and future investment. Ensuring that successful businesses survive their founders is therefore an economic priority for the Gulf, and a responsibility shared by business owners and governments.

(Y.Yildiz--BBZ)