Tag Archives: Family Business

Venture Capital Lessons from India, Lebanon and Ireland

January 31, 2017 By in Investments, Finance, Government Tags: , , , 1 Comment

In a recent article I pointed out the failure points in the UAE’s venture capital ecosystem, in particular the lack of support for entrepreneurs and start-ups. In this article I’d like to review some of the initiatives other countries have launched that could be useful in upgrading our ecosystem.

Given the recent visit to India of Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, let us start with that government’s efforts, and in particular the Startup India initiative. This initiative is comprehensive, starting with a streamlined registration process. Importantly, it has a streamlined bankruptcy process that seems to be fair – no extra-judicial imprisonment if an entrepreneur cannot financially meet a liability. There are also tax breaks for the company as well as investors in the company.

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Karl Happe on Allianz’s investment strategies

November 15, 2015 By in Executive Insight, Asset Management Tags: , ,
Karl Happe on Allianz’s investment strategies

My co-author today is Karl Happe, chief investment officer of Allianz Global Investors’ Insurance Related Strategies. Although the strategies developed and deployed by Allianz are aimed at the insurance market, there are many important lessons that most investors would benefit from, in particular family offices.

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The Family Business: Strategic Growth Ideas

November 15, 2015 By in Family Business Tags: ,

The family business invariably grows from a single operating company. As the original business grows and matures, throwing off tremendous amounts of cash, the question becomes: what next? There seems to be three main strategic ideas: 1. Grow the same business geographically, 2. Financial investment programs or 3. Enter into new businesses locally. These strategies are not mutually exclusive.

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State-owned enterprises can learn from family businesses

June 9, 2015 By in Corporate Governance Tags: , ,

State-owned enterprises (SOEs) are controlled subsidiaries of a government which undertake commercial activities. SOEs are globally common and are involved in a wide variety of activities such as mail services, telecommunications, airlines, airports, railroads, natural resources, broadcasting and healthcare.

Sometimes it is easy to forget that SOEs form an important component of the economy. Just think of the UK’s BBC, Manchester airport, London Underground and London Rail. SOEs are usually connected to natural monopolies and infrastructure thus giving them an even greater influence over the economy.

Since SOEs are expected to act with their commercial interests as their main goal they can learn a lot from the private sector. There is one area though that does not crossover well from the private sector to the SOEs and that is corporate governance. Being a fully owned subsidiary of a government creates unique challenges not least because a government does not hold commercial interest as its overriding goal.

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The Challenges of Generational Change in a Family Business

March 1, 2015 By in Family Business Tags:

Andrew Carnegie, an incredibly successful American businessman, famously said “Three generations from shirtsleeves to shirtsleeves.” Here, shirtsleeves mean the clothing of a (poor) blue collar worker. This is probably the origin for the more modern day warning “The first generation builds it, the second generation enjoys it, the third generation loses it.”

In the GCC a quick and informal survey of family businesses would suggest that the second generation not only enjoys it, but often is the generation that loses it. This process seems to take years as often as it takes decades. Are there issues that we face that are different from those faced by the rest of the world, or are we just better at squandering family fortunes?

I will argue the former, and that blindly applying global best practice therefore harms regional family businesses. I will pick a number of the more salient issues that should reinvigorate the discussion.

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The Family Holding Company: More Than Just A Legal Structure

February 25, 2015 By in Family Business Tags: , , ,

عربي

With generational change increasing, the idea of institutionalising family businesses has gained wide spread acceptance. The magic formula seems to be create a holding company to hold the shares of the operating companies, a shareholder agreement, a terms of reference for the board and maybe add some independent directors to the board. Focussing on the holding company aspect, there quite often is no strategic plan let alone business plan. The holding company direction is set by the agenda of the constituent operating companies. Talk about the tail wagging the dog.

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Entrepreneurs Face Trust Challenges in the Middle East

December 17, 2014 By in Entrepreneurship Tags: , , , ,

Trust in the Middle East is based on social networks: how much I trust you depends on how often I have interacted with you and whether people I trust also trust you. Essentially, trust is a commodity that is built up over time. This model is found globally but there exist alternatives and substitute models that are applied when appropriate. One such model is the swift trust model that Americans often use when faced with situations where trust is needed but there is no time to build it up using a conventional model. This is a trust first, verify later model. A simple example is disaster relief groups which are composed from various sources who need to act immediately. This model is precisely why Americans seem to be able to repeatedly launch successful start ups, whilst in the Middle East many start ups seem stuck.

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Family Business: Acknowledging Core Challenges

November 9, 2014 By in Family Business Tags: , ,

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Family businesses have been the private sector economic foundation of the GCC. Their financial strength and contribution to national GDP is obvious. Their challenges, however, are usually private, hidden behind a family wall of silence. True, there have been a few public blow ups, but everything else is discreet. This is a shame, as these wonderfully successful family businesses deserve to remain successful across generations and a necessary part of that is open debate and discussion on the challenges faced by these families. How else can you learn?

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