Despite having many substantially wealthy families, there are few single family offices (SFOs) and even fewer multifamily offices (MFOs) in the Middle East. Some estimates put the number of SFOs at between 60 and 75. Whether that’s right or not, most analysts think that there are many more families that could afford to run a family office than are currently doing so.
Family charters make sense for family businesses, in particular for those controlled by the second or later generations. But what exactly is a family charter, and what advantages can it bring?
“From shirtsleeves to shirtsleeves in three generations” is perhaps the world’s most famous phrase about family businesses. It’s universal – just said in different ways. The Chinese say “Fu bu guo san dai” – wealth never survives three generations. The Brazilians say “Pai rico, filho nobre, neto pobre” – rich father, noble son, poor grandson. And the Italians say “Dalle stalle alle stelle alle stalle” – from the stables to the stars and back to the stables.
Many family businesses leave succession until the last possible moment. But doing so can cost the business dearly in terms of lost revenue. It can even cause it to collapse. I’ve learnt from experience that businesses which plan succession as part of their overall governance strategy are more successful and last longer.