Saudi Arabia’s Systematic Strategy to Safeguard Family Business Handover
Kingdom’s integrated policy framework positions family firms for generational succession and aligns with Vision 2030
Family-owned enterprises account for approximately ninety-five percent of all companies in Saudi Arabia, employ nearly half of the private-sector workforce and contribute around twenty-seven percent of national gross domestic product.
As many of these firms, established during the oil boom of the 1960s and 1970s, approach what is often termed the ‘‘succession decades’’—the transition from founder to next generation—the Kingdom has launched a comprehensive support ecosystem aimed at securing generational continuity.
Research indicates that globally only around thirty percent of family businesses survive into the second generation and about twelve percent into the third.
Acknowledging the scale of the challenge, Saudi Arabia has chosen proactive reform over ad hoc support.
Through the National Center for Family Business (NCFB), the government provides integrated services spanning research, governance frameworks, conflict resolution and adviser certification.
This includes co-drafting the new Companies Law that enables family-businesses to adopt binding charters covering ownership, governance, employment of relatives and profit distribution.
Recent data suggest that around fifty-nine percent of Saudi family firms lack formal succession plans and seventy-five percent have no family charter, despite earlier estimations showing twenty-three percent of founders being over the age of fifty-five.
The NCFB has intervened in more than ten family disputes, trained certified mediators, and rolled out over fifty programmes across ten cities to raise governance maturity and succession awareness.
What sets Saudi Arabia apart is the ecosystem approach: the government acts as orchestrator, mobilising regulators, advisory bodies, sovereign wealth funds and legal institutions in tandem, rather than delivering isolated incentives.
Family-business development is directly linked to the national economic strategy known as Vision 2030, aligning generational transitions with diversification, job creation and private-sector growth.
As global firms such as LVMH, Tata Group and Walmart illustrate, generational transitions are notoriously fragile, and family businesses in Saudi Arabia face unique cultural dynamics—where elder-led decision making, strong intra-family ties and consensus-based governance are commonplace.
The NCFB’s model reflects this context, emphasising tailored solutions, cultural continuity and professionalisation side-by-side.
For emerging economies confronting similar challenges—from Vietnam and Morocco to Bangladesh and Chile—the Saudi blueprint offers valuable lessons: invest in understanding the local family-business landscape, craft integrated institutional support, align reforms with national priorities and provide end-to-end services rather than piecemeal fixes.
The Kingdom’s strategy signals that family-business succession need not be a gamble but rather a managed transition contributing to long-term economic resilience.
As many of these firms, established during the oil boom of the 1960s and 1970s, approach what is often termed the ‘‘succession decades’’—the transition from founder to next generation—the Kingdom has launched a comprehensive support ecosystem aimed at securing generational continuity.
Research indicates that globally only around thirty percent of family businesses survive into the second generation and about twelve percent into the third.
Acknowledging the scale of the challenge, Saudi Arabia has chosen proactive reform over ad hoc support.
Through the National Center for Family Business (NCFB), the government provides integrated services spanning research, governance frameworks, conflict resolution and adviser certification.
This includes co-drafting the new Companies Law that enables family-businesses to adopt binding charters covering ownership, governance, employment of relatives and profit distribution.
Recent data suggest that around fifty-nine percent of Saudi family firms lack formal succession plans and seventy-five percent have no family charter, despite earlier estimations showing twenty-three percent of founders being over the age of fifty-five.
The NCFB has intervened in more than ten family disputes, trained certified mediators, and rolled out over fifty programmes across ten cities to raise governance maturity and succession awareness.
What sets Saudi Arabia apart is the ecosystem approach: the government acts as orchestrator, mobilising regulators, advisory bodies, sovereign wealth funds and legal institutions in tandem, rather than delivering isolated incentives.
Family-business development is directly linked to the national economic strategy known as Vision 2030, aligning generational transitions with diversification, job creation and private-sector growth.
As global firms such as LVMH, Tata Group and Walmart illustrate, generational transitions are notoriously fragile, and family businesses in Saudi Arabia face unique cultural dynamics—where elder-led decision making, strong intra-family ties and consensus-based governance are commonplace.
The NCFB’s model reflects this context, emphasising tailored solutions, cultural continuity and professionalisation side-by-side.
For emerging economies confronting similar challenges—from Vietnam and Morocco to Bangladesh and Chile—the Saudi blueprint offers valuable lessons: invest in understanding the local family-business landscape, craft integrated institutional support, align reforms with national priorities and provide end-to-end services rather than piecemeal fixes.
The Kingdom’s strategy signals that family-business succession need not be a gamble but rather a managed transition contributing to long-term economic resilience.
