Deloitte launched the 2021 Middle East Family Enterprise Survey, providing insight from prominent family groups across the region. The survey explores how family enterprises are planning and prioritising transformation across their business, the family itself and their wealth. The survey respondents are based across the Middle East and operate and invest in businesses across a range of sectors, geographies, and in their private capacity both regionally and internationally.
Overall, the family enterprise landscape reflects incredibly high levels of activity and planning across the spectrum. 38% of the respondents said that they have already finalised a transformation plan and are executing on it, whilst 59% of the respondents are currently designing and discussing their transformation strategies.
“Families have used the past 18 months to reassess their priorities and strategy. Working capital management, cost reduction, and talent still remain critical. What has transpired over time from detailed transformation exercises are key areas of focus: growth, innovation and simplification,” said Scott Whalan, Partner and Financial Advisory Family Office Leader, Deloitte Middle East. “With the magnitude of planning and execution of transformation underway, it is evident that the family enterprise landscape in the region has begun a new period of rapid evolution.”
“Two areas emerged as critical importance in the survey, both vying and competing for investment: digitisation and people. Continued investment into digitisation and people has become paramount, as 21% of respondents are allocating more than 20% of their budget into digitisation over the coming years. “
The Deloitte survey showed that historic concerns remain as oil prices, geopolitics, cost of borrowing and taxes are still front of mind and top priorities, however, inflation and changing market sentiment are now of growing concern. Similar to the previous year, managing working capital and continuing to reduce costs remain the highest priorities.
Survey respondents also pointed to resources being allocated to strategic M&A both regionally and internationally, while existing portfolios are increasingly being repositioned, and in many instances simplified, to align to their updated strategic direction. Digital, technological advancements and data will continue to be a key pillar in the transformation journeys of families in the Middle East.
One striking trend from survey responses was the breadth and variety of sectors where both investments and divestments are planned: 78% of respondents will introduce new capital through a combination of equity, debt and short-term financing.
It was also noted in the Deloitte survey that decisive action versus a ‘wait and see’ approach overwhelmingly shines through as over 72% of the respondents are prioritising the acquisition of new businesses that meet their future strategy. This is split 45% in their home country, 30% in the Middle East and 25% international.
David Stark, Partner and Deloitte Private Leader, Deloitte Middle East, commented: “We have arrived at a revolutionary moment for family enterprises where the effects of the last 18 months have provoked so much analysis and planning, that we are now in a state where the levels of preparedness for the future are perhaps unprecedented. In tandem with this, the regional operating environment is rich in opportunity as industries and countries digitise and new skills come to the fore. We are witnessing family enterprises forging and acting on solid plans to best etch their stake in the future of their industries and indeed beyond.”
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