Most family businesses have no succession plans, while only 12% survive through the third generation
“Can you imagine that... to feel that your wife must also think you are a failure?”
That was probably Yogesh Mehta’s lowest point, having to sell his wife’s jewellery to make ends meet. He had come to Dubai in 1990 after setting up, and shutting down, a failed business in India. He had borrowed so much money, he said, that no one would lend him anything.
While he doesn’t have to worry about money anymore – he is the CEO of the region’s largest chemical distributor, Petrochem Middle East – neither does Mehta’s son, 31-year-old Rohan. Is that a good thing? Maybe not.
Mehta claims his son is being groomed to take over the firm, having led its business development for the last six years. “He has really taken control of the company,” Mehta said proudly, adding that the younger generation is “bursting with fresh ideas”.
A little bit later in the interview, however, he said is still uncomfortable with giving his son “more responsibilities and a senior role” in Petrochem Middle East.
Why? The reason may vary, but it could be that Rohan has never known – and will probably never know - what it was like to have to sell his wife’s jewellery. He got married in a $20m wedding; a gift from his father.
With only 12 percent of family businesses surviving through the third generation, according to Family Business Consulting Group, and 80 percent of family businesses having no succession plan, the question on our mind is, do the successors of family businesses need a little more tough love?
Gordon Ramsay thinks so. The famous celebrity chef, who is known for his fiery temper and strict demeanour, is just as firm with his kids as he is in his television shows including Hell’s Kitchen. In 2017, he said his $180m fortune is “definitely not going to them, and it’s not in a mean way. It’s to not spoil them.”
While the celebrity chef’s kids are not part of the family business yet (he taught them cooking as a life skill as opposed to a career), Ramsay is strict with them regardless. His reasoning? They won’t appreciate it if they haven’t worked for it.
“They don’t sit with us in first class. They haven’t worked anywhere near hard enough to afford that. At that age, at that size, you’re telling me they need to sit in first class? No, they do not. We’re really strict on that,” he said.
“I turn left with [my wife] Tana and they turn right and I say to the chief stewardess, ‘Make sure [they] don’t come anywhere near us, I want to sleep on this plane’. I worked [hard] to sit that close to the pilot and you appreciate it more when you’ve grafted for it,” he said.
The question on our mind is, do the successors of family businesses need a little more tough love?
Like Mehta, Ramsay came from humble beginnings, having moved out of his family home at 16, mainly to escape a violent and largely unproductive father. Today, he runs 35 restaurants, four television shows in more than 200 countries, and has been awarded as many as16 Michelin stars in total.
Similarly, Scottish bestselling author Ian Rankin, who came from a lower middle class, decided to spend his money setting up a charitable trust, as opposed to giving it to his son.
“We set up a charitable trust. I’m not going to tell you what it’s called because we do it anonymously and we can give to good causes without them necessarily knowing it’s me doing it… What else can you do with the money? If I leave it to my son, he will just spend it,” he said, laughing.
And while many in the Arab world choose to follow in their fathers’ footsteps and join the family business, Rashid Alabbar, son of celebrated Emirati real estate magnate and chairman of Emaar Properties Mohamed Alabbar, opted for his own career in e-commerce.
Together with his sister Salama, he built online fashion portal Sivvi.com, where he sells merchandise from over 200 global and local brands, offering unknown and up and coming designers a platform on which they can sell.
Speaking to Arabian Business in 2016, Rashid said, “If we wanted to, we could have gone into real estate and it would have been a lot easier. But we’re going in the opposite direction, doing something different and trying to make an impact.”
Unlike Rohan Mehta, Rashid Alabbar is not set to take over the Emaar empire. But as far as Mohamed Alabbar’s tough love policy goes? We’ll just have to wait and find out.
As for Yogesh Mehta, we reckon he will continue to run Petrochem, whether Rohan is ready or not.
“I don’t know the meaning of retirement,” he said.
“I think I will be there until my last day.”