BrazilThe top 2022 priorities for family businesses in the Middle East
What are the top priorities for family businesses in the Middle East in 2022? According to a survey from Deloitte, most efforts will focus on further driving down costs and digitisation, with expansive-focused businesses keen to accelerate growth through inorganic means.
For its latest Middle East Family Enterprise Survey, Deloitte canvassed the views of family business owners and leaders across the region and sectors on their outlook for the year as well as strategic priorities and concerns.
Overall, the family enterprise landscape reflects high levels of activity and planning across the spectrum. 38% of the respondents have already finalised a transformation plan and are executing on it, whilst 59% of the respondents are designing and discussing this now.
Commenting on the finding, David Stark, Partner and Middle East Private Leader at Deloitte said: “During the past year, almost every aspect of business within family enterprises has been reviewed, scrutinised, and tested. Reactionary plans to the turbulence of the last 18 months have evolved at striking speed to form proactive and forward‑looking transformation plans. Family enterprises are taking action in almost all areas and seemingly leave very little to chance.”
Similar to the previous year, managing working capital and continuing to reduce costs remain among the highest priorities.
Not surprisingly, digital also ranks highly in the list, amid the rapid acceleration of digital ways of working seen during the Covid-19-induced lockdowns.
“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,” explained Scott Whalan, Partner and Financial Advisory Family Office Leader at Deloitte.
Hosein Moghaddas, a Partner at the accounting and consulting firm, said: “Digital transformation in both physical and digital world will be the cornerstone for most, if not all, family enterprises in the region.”
“Family businesses in the Middle East should embrace the technological changes and digitisation that is happening at an accelerated pace post Covid-19 to continue being successful and to ensure future proofing,” added Sunder Nurani, also a Partner at Deloitte in the UAE.
Human capital and people management is another top priority for family business leaders. “The responses reflect high conviction that in‑house talent with specific sector expertise will be the most vital element in fortifying the wealth of the business and family,” said Whalan.
In particular the rush for digital talent is expected to take centre stage. Whalan: “To offer a sense of how rapidly digital talent needs have manifested, respondents ranked the building of digital skills to drive technological transformation as among the most important aspect of human capital, ranking it as a top five priority.”
Meanwhile, the Deloitte study found 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.
The M&A agenda
Survey respondents also pointed to resources being allocated to strategic M&A both regionally and internationally, as family businesses seek to align their capabilities to their strategic agenda. Digital, technological advancements and data will continue to be a key pillar in the acquisition journeys of families in the Middle East.
Mark Taylor, a Director in Deloitte’s Corporate Finance wing, stated: “The Covid-19 pandemic continues to drive M&A activity as businesses are now adapting to what is effectively a ‘new normal’. The majority of family enterprises in the region are a portfolio of diverse businesses and assets, which are now being scrutinised as owners seek to optimise capital allocation and focus scarce senior management time. This increased focus is driving M&A activity.”
