How Succession Planning and AI Can Future-Proof Middle East Family Businesses

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One of the world’s fastest-growing regions, the Middle East is home to 528 family businesses with annual revenues of $100 million or more. According to a Deloitte report, the UAE’s family-owned businesses account for 60% of the GDP, employ over 80% of the workforce, and comprise 90% of the private sector, with Saudi Arabia also being a key hub for prominent family businesses.

“Since the early days of the UAE, rulers and local family businesses have worked in a balanced relationship, each giving and receiving legitimacy. This mutual understanding has contributed to the country’s prosperity in a resource-based economy,” says Basco Rodrigo, professor & Sheikh Saoud bin Khalid bin Khalid Al-Qassimi chair in Family Business at the American University of Sharjah.

Why is the Old Model Breaking?

Traditionally, these family businesses, like other sectors and economies, have focused on a few anchor sectors, such as trade and retail, real estate and construction, and hospitality and tourism. However, they are now undergoing a shift, both technological and generational. PwC data shows that three-quarters of sectors in the region are under the strongest reinvention pressure in 25 years, driven by energy transition, climate risk, AI, and trade shocks.

As most of the region’s established family entities are still led by first-generation founders, legacy is a strength. However, relying solely on personal networks and oil-driven wealth no longer guarantees the status quo. As Adnan Zaidi, Partner and PwC Middle East Private Leader, points out, the rapid advancement of technological change, especially AI and advanced data analytics, is revealing the limitations of the traditional “if it isn’t broken, don’t fix it” approach.

Clinging to their traditional methods, such enterprises prioritize tried-and-tested technologies over riskier, newer innovations due to capital constraints and risk aversion. Family businesses encounter several challenges as they strive to build a competitive global economy. Rodrigo highlights three areas requiring urgent attention:

1. Digital transformation to adapt their operations and business models to fast technological change
2. Scaling beyond the UAE (and region) to grow from locally strong companies into competitive regional and global players
3. Capturing new opportunities to identify and develop new ventures in emerging technologies and innovative industries

“We’re seeing a growing divide between the operating models that built these businesses and the capabilities needed to compete in a digital economy. Founders recognise the opportunity, but many are understandably cautious about disrupting trusted processes or long-standing governance structures,” says Zaidi, adding that, in parallel, the next generation is pushing for faster adoption of new technologies and more agile decision-making.

Zaidi says that breakthroughs occur when businesses view reinvention not as a departure from their legacy, but as the most effective way to protect it for the next generation.

If the old model is breaking, what replaces it is no longer optional; it is structural.

Drivers of Success

This reality check has led Middle Eastern businesses to adapt to the changing climate, with 86% of them having a reinvention strategy well underway, as per an Accenture report. However, execution is seen in only 9% of companies as they scale, indicating that, despite the need for broader AI ambition, only a few organizations are turning it into an enterprise-wide reinvention.

“What’s clear is that reinvention isn’t simply about deploying new tools. It’s about rethinking how value is created, building the right digital skills, and ensuring governance frameworks can support change at speed,” adds Zaidi.

1. Succession: a Defining Moment

It is a Herculean task for businesses to reinvent themselves if they don’t have clarity on succession, decision-making authority, and the role of the next generation. As it is said, the first generation creates wealth, the second generation enjoys it, and the third perishes it. This is supported by several studies that suggest most firms do not survive beyond three generations.

This is seen due to an uptick in family conflicts, which pushes the importance of professionalizing into third gear. Additionally, whether they are prepared to take on this role and navigate the tension between honoring tradition and driving future growth remains a permanent question.

Following in the footsteps of leaders, especially family members, has never been easy. Easa Al Gurg, the third-generation leader of the UAE’s Easa Saleh Al Gurg Group, who took charge as Group CEO, admits that the transition was not what he expected. “It was much more challenging. Too many people wanted too many things at the same time,” he stated in a media interview.

“Families that are serious about reinvention are putting structured governance in place early – family charters, clear accountability between family and management, and forums that give next-gen leaders a real voice. These mechanisms create space for new ideas to surface, encourage more professionalised management practices, and help the family agree on where the business needs to evolve,” notes Zaidi.

Saudi Arabia’s Zamil Group has developed the Zamil Future Leaders Program to prepare next-generation talent, both family and non-family. This succession initiative ensures leadership continuity, professionalized management, and supported diversification, sustaining family ownership amid expansion.

Today, Zamil Group’s inclusive, structured next-generation development program serves as a global benchmark for family enterprises. The family wholly owns and governs the holding company, while each portfolio company has its own governance structure tailored to the family’s level of ownership.

“Succession is not just about naming a successor—it’s about preparing the next generation to preserve not only financial wealth, but also the family’s identity, purpose and long-term vision,” says Joëlle de Cerjat, senior wealth planner at Middle East Lombard Odier, a Swiss private bank.

The idea is to treat governance as a catalyst for innovation rather than a compliance exercise, giving the current generation confidence to protect the legacy and introduce the digital, technology, and growth opportunities they’re passionate about.

This includes introducing tech-savvy projects, prioritizing sustainability, and exploring new markets.

2. Tech Embracement and AI Adoption

Sixty-six percent of the region’s companies see GenAI as an engine for revenue growth, with just 34% focusing on how the technology could help drive cost efficiencies. Leaders need to step up, be inquisitive about, and experiment with AI tools to begin with. They need to introduce AI deliberately and consciously, providing support and training to their people on how to use it, and developing clear guidelines and policies on what it should be used for.

After establishing the basic alignment between AI and employees, family businesses need to embed the technology into their workflow and operations.

Low-risk GenAI pilots in core operations are a good starting point, and when governance aligns with execution, results follow. Through a partnership with Revionics, Saudi retailer Panda optimized pricing across nearly 200 stores. Middle East organizations, with an organization-wide continuous implementation plan, are witnessing faster growth than their competitors. Accenture finds that such companies have experienced a 15 percentage-point premium on revenue growth since 2019, along with a six percentage-point premium on profits. They have been quick to spot use cases for GenAI to drive enterprise transformation.

For family businesses, it is clear: AI equals impact only when professionalized governance comes into play. If done right, it will be a foundation for scaling beyond traditional sectors and home markets.

3. Expansion: Beyond Sectors and Borders

Being focused on existing sectors and activities that laid the groundwork of a legacy company is imperative. However, failing to diversify operations to keep up with advancements can cause discomfort for future generations.

“Diversification remains the most prominent move, particularly into sectors aligned with national transformation agendas—technology, renewable energy, professionalised services and consumer adjacencies,” says Zaidi.

With real estate as a major bet, the region’s big players got a wake-up call with the 2009 property crash in Dubai, highlighting the need for greater portfolio diversification and more institutionalized governance. Sectors such as technology, tourism, construction, renewables, and fintech have seen strong interest and growth since 2018.

An apparent rise in international playgrounds is also visible. “Many family firms have reached a level of maturity where the next phase of growth requires looking beyond their home market. We’re seeing more structured approaches to cross-border partnerships, acquisitions and regional hubs—not just opportunistic moves,” says Zaidi.

Expansion into international markets, such as Europe, North America, Asia, and Africa, has been driven over the past five to seven years. 

“Initiatives like Saudi Arabia’s Vision 2030 and similar national strategies are pushing families to think more globally, embrace sustainability, and contribute to broader economic goals,” adds Cruz.

Notably, exits from defunct legacy lines redirect capital from slow-growth businesses to areas that future generations may prioritize. Only those that fix succession, governance, and capability gaps can diversify and expand sustainably.

Towards a Continued Legacy

Sixty-four percent of GCC CEOs and 60% of Middle East CEOs, earlier this year, indicated an urgent need for their businesses to adapt within the next 10 years to remain viable, above the global average of 41%.

Legacy mindsets and outdated processes are hindering many family businesses in the Middle East, as the cost of inaction continues to rise. With $300 billion in value at stake across regional industries in 2025, the pressure will accelerate transformation across sectors over the next decade.

This inflection point presents a rare opportunity for family businesses to redefine global leadership in technology, renewables, and beyond.