What governance challenges do international investors really face when entering Gulf family-owned businesses?
Governance is the first and most critical layer international investors must assess before committing capital in the Gulf. Many target companies are private family businesses where the CEO has never had to answer to anyone outside the family — creating immediate friction when an institutional investor arrives with demands for improved financial reporting, board independence, or operational change.
"This is a private business where CEOs never had to answer to anybody but himself and his family members who sit on the board. And all of a sudden, you have an international investor who says, I love what you've done with the business, but these are my ideas."
— Eyad Faraj, Partner, Transaction and Investor Services Practice, Roland BergerThe structural problem runs deeper than personality. An investor holding a significant minority stake with a single board seat has limited leverage if independent board members are absent altogether — or if the board functions in a ceremonial rather than strategic capacity. In that scenario, the seat at the table is symbolic rather than operational, and meaningful change becomes difficult to drive regardless of the investor's conviction or the size of their check.
This dynamic is particularly acute in the Gulf because the shift from family-controlled private businesses to professionally governed entities is still unfolding. The region has only recently moved beyond a model of sovereign-vehicle-led domestic investment — a phase that lasted roughly the last 8 to 10 years — toward actively inviting foreign institutional capital. International investors, many now compelled to allocate to the GCC following the region's inclusion in the MSCI Emerging Markets Index, enter markets where governance frameworks are evolving in real time. Assessing where a specific target company sits on that maturity curve — before capital is deployed — is, as Faraj argues, non-negotiable. You can explore the full conversation on Listenly.
What is board independence in this context?
A board functions in a strategic capacity when independent directors — members with no family or executive ties — actively challenge management decisions, demand accountability, and protect minority shareholder interests. A ceremonial board, by contrast, ratifies decisions already made by the controlling family without independent scrutiny. For international investors holding a minority stake, the presence or absence of genuine board independence directly determines their ability to drive operational or financial improvements post-investment.
About Eyad Faraj
Eyad Faraj is a partner at Roland Berger within the transaction and investor services practice, based in Bahrain and covering the full GCC. What sets his perspective apart is the breadth of his vantage points: he has operated across capital markets, investment banking, and strategy consulting — meaning he approaches governance and deal structuring not as a pure outside adviser, but as someone who has sat on multiple sides of the transaction table. Born and raised in Bahrain, Faraj has also worked outside the region, giving him a dual perspective that is rare in Gulf advisory circles: he understands both the institutional expectations that international investors bring, and the ownership culture and decision-making dynamics of the family-controlled businesses that dominate the Gulf private sector. This combination makes him a credible and direct voice on exactly the kind of governance friction that arises when these two worlds collide.
See also
The IPO market in the Gulf is emerging as a viable and increasingly important exit route, complementing traditional trade sales or strategic sales.
Yes — as Eyad Faraj states directly, "the region has moved from just being a distributor of capital to also attracting it." International investors are now committing capital into Gulf markets, not just raising it there.
Value creation in the Gulf encompasses portfolio optimization — deciding where assets should sit and whether they can be warehoused under a single vehicle — alongside operational improvements and strategic repositioning.