Dubai, Abu Dhabi: UAE Urges Wealthy Families to Plan Succession - Bloomberg
The United Arab Emirates is stepping up efforts to formalize succession planning among its wealthiest families, moves aimed at avoiding conflicts and economic disruption when control passes on to the next generation.
Officials from the country’s economy ministry recently met with heads of prominent business families to encourage them to establish formal structures around their wealth, according to people familiar with the matter.
The discussions centered around the potential creation of family offices to better manage generational transitions and a renewed effort to encourage local listings, the people said, declining to be identified as the information is confidential.
Family-owned businesses make up about 90% of private companies in the UAE, spanning sectors from supermarket chains to luxury car dealerships. While there are no official estimates, US-based Dash Venture Labs projects that the country’s richest families will control a combined $1 trillion by the end of next year.
“One-in-four estates in the Middle East looks set to transfer without predefined rules or instructions, creating a host of cost and time pressures,” according to a January report from the Dubai International Financial Centre’s Innovation Hub. About $49 billion could go unclaimed in the region before 2030, with another $123 billion held up for over six months in costly probate processes, the report estimated.
Additionally, the clans themselves have evolved in recent years, increasingly deploying capital into private equity and venture capital deals. Since such investments are typically riskier bets, the government is keen to have more formalized internal governance and processes, according to one of the people.
The UAE foreign ministry didn’t respond to requests for comment.
Traditionally, the country’s rulers relied on merchant families, granting them control over certain sectors in exchange for support. However, as the UAE economy starts to open up more, and as many conglomerates face their first generational transitions, that model is showing signs of strain.
The urgency to have structures in place was underscored following the 2021 death of Majid Al Futtaim, who helmed a $16.5 billion shopping and entertainment empire widely seen as an anchor of Dubai’s economy.
The inheritance was left unresolved and a special judicial committee had to be appointed to oversee the transition — a relatively rare occurrence reserved for high-profile cases. Since then, the UAE has unveiled several steps to enhance the governance of family-run companies.
The UAE’s renewed push for succession planning also comes as a growing number of the world’s richest people — from hedge fund titan Ray Dalio to Nigerian billionaire Aliko Dangote — establish family offices in the country. Dubai’s financial hub alone hosts family offices overseeing $1.2 trillion in assets.
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