Succession Planning and Capital Structure of Family-Owned Businesses in the UAE

This short paper presents the preliminary results of a study aiming to examine how effectively the United Arab Emirates' (UAE) family-owned businesses plan and manage the succession of their historic founders. In addition to analysing the transfer of knowledge and skills from the incumbent manager-owner to the new generation, we also examine the major factors affecting the decision of current and future capital structure of the company. For this purpose we plan to perform several case studies of family-owned businesses established in the UAE. Our preliminary findings show important influence of the local culture on the succession planning. The preferred successor is involved quite early in the management of the business in order to facilitate the transfer of knowledge and skills. However, the capital of the firm is rarely opened outside the immediate heirs.