In the summer of 2006, the owners of Silkor were in the midst of their final preparations to open a third branch in Lebanon.
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But in one day, everything changed.
"I was working and my brother called me and told me they had closed the airport. There was war in Lebanon," says Lara Tarakjian, who founded the laser hair removal business with her brother, Oscar.
Given the uncertainty of the situation, they agreed that Mr Tarakjian should seek opportunities abroad. Ms Tarakjian suggested Dubai and they agreed on their first UAE location on Jumeirah Beach Road over the phone as bombs were falling.
The ability to find opportunity in unsettled circumstances seems to be a common characteristic of entrepreneurs. Ernst & Young saw this trait repeatedly in a survey of 685 entrepreneurs last year.
The survey also found that many entrepreneurs start young: 45 per cent of those surveyed founded their first businesses between the ages of 20 and 29; and 31 per cent started their companies between 30 and 39. Just 2 per cent of those surveyed had launched their first ventures after age 50.
The founders of Silkor, who are both engineering graduates, started the company when they were 18 and 25, after Mr Tarakjian received what he considered an outrageously high quote for laser hair removal. Seeing an opportunity, they started their company before they even entered the workforce.
But they are in the minority, as more than 58 per cent of those surveyed by Ernst & Young had experience outside entrepreneurship before founding their businesses. And many of those questioned viewed their experience as employees as an asset. Thirty-three per cent of entrepreneurs identified experience as employees as the most important factor in their success. Higher education came a close second at 30 per cent, followed by factors such as mentors, family and co-founders.
The study also identified three types of entrepreneurs.
"Serial entrepreneurs basically have the self-knowledge to recognise that they are not suited to lead a mature company. They're what we call the grow-and-sell entrepreneurs. They have enough self-awareness that they get to a point where they know it's time to move on because they're not suited to take the company to a mature stage," says Ginnie Carlier, an assurance partner at Ernst & Young in the UAE.
The second type, which Ernst & Young calls grow-and-kill entrepreneurs, suffocate and stifle their companies by refusing to relinquish control or listen to customers and lenders.
The third kind - grow-and-grow entrepreneurs - include people such as the founders of Silkor.
The Tarakjians took seven years to launch their second branch, but today their company has 18 across the region, 13 of which were opened within just two years.
"Now we are in the copy-paste phase," says Ms Tarakjian.
However, the Tarakjians are rare in managing the transition from start-up to successful business.
"This was a small segment of the entrepreneur population because we realised it is embedded in them to want to keep being entrepreneurs. We saw very little in this category," says Ms Carlier.
The study also mapped what it calls the DNA of an entrepreneur, identifying key traits.
"Entrepreneurs truly believe that they are in charge of their own destiny. They control their environment," says Ms Carlier. "That's complemented by the fact that they have a very positive attitude towards risk. They don't see failure as failure. They also see opportunity when others see disruption."
gduncan@thenational.ae
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Prophets of Rage
(Fantasy Records)
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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