Using the lessons of 2009 to prosper in 2010
The new year provides the perfect occasion for family businesses around the world to assess their 2009 performance, attempt to learn the lessons of the recession and work out how best to seize the opportunities 2010 presents. It is also the time for www.campdenFB.com to review the outgoing year and look forward to the possibilities of 2010, writes Katie Barker
We begin our review with some suggestions of companies and areas to watch this year.
India has long been tipped as a region with huge growth potential in many areas of business, but 2010 looks destined to be the turn of family-controlled automobile companies to realise this potential. Toyota and Volkswagen are two family businesses which have already made it clear they intend to significantly grow their presence in the Indian car market in 2010, and they are not the only ones, suggesting India is an area to watch this year.
The move to India is part of a wider trend that picked up pace throughout 2009 and we expect to see continue into 2010: the shift from West to East. Hong Kong and Singapore are already well-established financial and business centres but alongside India, China is starting to realise the full potential of its population size and financial weight. Businesses that can effectively and successfully tap into these markets are likely to be rewarded in 2010.
We have seen plenty of consolidation throughout family-owned media companies in the last decade, most notable have been News Corps' 2007 acquisition of the Dow Jones operations from the Bancroft family and more recently Comcast's takeover of NBC Universal just last month. We are now left with media giants run by charismatic and influential leaders, and, the more pressing issue for two of the biggest media families, the Murdochs and the Redstones, is succession.
In November 2009, 78-year-old Murdoch reiterated his desire for one of his children to succeed him as head of the family business; could 2010 be the year we see this come to fruition? www.campdenFB.com will be watching closely for signs the media mogul is loosening his hold on the top spot.
Family businesses in the Middle East had a turbulent time in 2009. Problems became apparent at two of Saudi-Arabia's largest family-owned conglomerates, the Saad Group and Ahmed Hamad Algosaibi and Brothers Company (AHAB), in May when the billionaire owner of the Saad Group, Maan Al-Sanea had his bank accounts frozen by the Saudi national bank. The situation developed into a global trail of accusations, lawsuits and unpaid debts and saw AHAB accuse Al-Sanea of "massive fraud". (Click here to read more on this story)
As the trial attempts to uncover the nature of the links between the two businesses, it also questions the assumption family companies must always operate behind closed doors. The outcome could have repercussions for family businesses throughout the region and Saudi Arabia will be waiting eagerly to see exactly what these are.
Perhaps the biggest event to shock the gulf in 2009 was the default of the state-owned conglomerate Dubai World in November. The implications of this for family businesses and family offices across the region are not yet fully apparent and, despite initial concerns, some are choosing to see this as an opportunity as opposed to a crisis. One family office executive www.campdenFB.com spoke to suggested these events should act as a catalyst for much needed change in the region's family businesses. (Click here to read the article in full) One of the most difficult adjustments will be increasing company transparency whilst maintaining the successful business model on which family businesses are based. The question is have these two events in the Middle East caused big enough shock waves to result in a whole-scale change in how family businesses operate?
Transparency was a buzzword not only in the gulf last year but throughout the world. The seminal case between the US government and the Swiss bank UBS had UHNW individuals and families gripped as they prepared for the landscape of private banking to change permanently when UBS was forced to reveal the names of 4,450 private clients.
It is still unclear how far the US will push the Stop Tax Havens Abuse Act and the impact this will have on offshore financial centres and those who use them. Some families will benefit from taking a multi-jurisdictional approach to their tax and asset planning in 2010. www.campdenFB.com anticipates family businesses and family offices will follow these ideas and issues closely this year so we will bring you the most up-to-date news and analysis on the subject.
The rise of initiatives such as the Institute for Wealth Management Standards, the aim of which is to minimise the possibility of financial mismanagement and fraud for individuals, families, family offices and foundations, was in reaction to the financial crisis and particularly the Madoff fraud. However the initiatives the IWMS is proposing provide a framework for effective wealth management that is not just important during times of crisis. The Standards are coming to the end of their consultation period and we expect to see a significant uptake of their implementation during 2010. To view the Standards visit www.wealthstandards.org
Many will want to put the difficulties of 2008/2009 behind them, but for family offices the recession provided an incentive to reassess their outgoing costs and find more efficient and effective ways to offer the services their families require. For some this entailed a move from an SFO to an MFO and consolidation is a trend we expect to see continuing in 2010. However, those SFOs that navigated the crisis more successfully have emerged stronger and more confident in their SFO model.
Both Campden FB and Campden FO, supported by www.campdenFB.com, will bring you the most up-to-date news, features, issues and comment from the family business and family office world throughout the year. Check back regularly to see how we fair with out 2010 predictions and click here to send us some of your own. We wish you a prosperous 2010.
