News | April 1, 2025
Beyond the Buyout: Domino’s Done but Other Deals Stuck in SE Asia
Managing Director Charlie Warren explores the impact of consumer boycotts on M&A in Southeast Asia in Deal Street Asia’s latest article, Beyond the Buyout.
January 19, 2025
Family businesses have long been the backbone of the Middle East’s economy, contributing significantly to the region’s prosperity. They are built on a foundation of shared values, traditions, and a deep sense of commitment to the company and its success. Unlike non-family companies, which set up their goals for the next quarter or year, family firms think years, or even decades ahead as a longer-term perspective which fosters a culture of clear strategy and decision-making throughout the business.
However, the intricate dynamics inherent in family-owned enterprises often give rise to complex disputes that can imperil both the business and familial relationships.
Family-owned business disputes differ from non-family business disputes in various aspects. Primarily, these differences can be summarised by reference to ownership and the decision-making dynamics. Family businesses typically have concentrated ownership within a family or a closely related group, with decisions often influenced by familial relationships and long-term legacy considerations. At the heart of the operations of family businesses is an inherent trust amongst the family members. This trust is a unique feature in family businesses which enables them to discuss and disagree more openly and freely, as well as make decisions both faster and for the longer term. However, this desire to run on trust can deter the development of proper governance structures in the business as they are considered at odds with the trust and relationships between the family members.
The influence of family dynamics on leadership transitions and succession planning is a distinctive characteristic of family businesses, as opposed to the more structured processes in non-family businesses, where professional qualifications play a key role. Understanding these differences is essential for navigating the unique challenges and opportunities inherent in each type of business structure. Key sources of conflict among family businesses include:
The threat of disputes escalates as family businesses grow beyond the first generation. Whether triggered by strategic disagreements, envy, underhanded dealings, or communication issues, these disputes can jeopardize the company’s future and result in significant financial losses. It is imperative for these businesses to proactively address issues related to succession planning, conflicts of interest, and shareholder exits by implementing open communication and transparent governance structures to not only weather the storms of internal conflicts but also to emerge stronger and ensure the continuation of the family legacy for generations to come.
Disputes or disagreements within family businesses are part of the evolution of family-owned enterprises and will continue to form a significant part of the life cycle of these businesses. It is not the occurrence of a dispute that results in a negative impact to the family businesses. Instead, it is the manner in which the dispute is addressed and resolved that plays a far more important role in mitigating any value destruction.
Key strategies for navigating family-owned business disputes include:
Family businesses must recognise that disputes are a natural but manageable part of their evolution. The key lies not in avoiding conflicts but in addressing them effectively. By integrating robust governance, clear succession plans, financial transparency, open communication, and engaging professional advisors, families can create a sustainable framework for resolving disputes and creating long term stability. This puts them on a clear path to navigate challenges with resilience, preserving both family harmony and the integrity of their shared business endeavors.
Beyond the Buyout: Domino’s Done but Other Deals Stuck in SE Asia
Managing Director Charlie Warren explores the impact of consumer boycotts on M&A in Southeast Asia in Deal Street Asia’s latest article, Beyond the Buyout.
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