Exit Planning & the SVB Brightside

Spring has sprung! Time for new beginnings & to look on the brighter side. What are the brighter sides of the latest bad banking news? Is there any good that can come out of the Silicon Valley Bank, Signature Bank, First Republic Bank & Credit Suisse developments? Perhaps. Let's discuss. Plus-Neel has news! A shiny, new designation for the Business Owners e serve - Neel is now a Certified Exit Planning Advisor (CEPA)!

March 21, 2023

Transcript

 1 23. Happy second day of spring, or first full day of spring. So where I live, I think we're supposed to get a high of like 60 degrees today. I will take it, you know, spring's a time. It's a fun time of year. It's filled with hope. It's final filled with new beginnings. You got spring training, you got masters, March Madness, N F L draft coming up and these new beginnings.

That means looking on the bright side, but I know this is a challenging time for those in the banking industry in. If you're looking at your investments, if you're looking at your overall financial plan as a whole, you know it's important right now, you wanna still proceed with caution. But here's the thing.

In the spirit of spring and maybe bringing some optimism here, those of you who know my wife know that I'm married to one of the most optimistic people out there too. We know that there could be some good things that comes out of even bad things. So when we think of this banking downturn, I thought of a few things that could be potential silver lining behind.

Dark clouds that we're seeing right here with Silicon Valley Bank and with Signature Bank and Republic Bank and Credit Suisse and all this other stuff. So here's one. There's at least four US lawmakers, two from each side of the aisle, Republicans and Democrats that have said they would support raising the cap on the F D I C insured deposits two.

Reassure those frazzled bank customers that their deposits are safe. So right now, as many of you know, the F D I C insurance cap is $250,000 and it used to be a hundred thousand dollars before the financial crisis, but Senator Warren has basically said bumping it up is a good move. Now that being said, there are some folks that say that raising the cap, it's only gonna increase risk taking and there might be people who kind of, you know, keep, keep kind of pushing the envelope and maybe some would actually say that we would even re reduce it.

But hey, this is silver lining. So here's the second thing right now, right? So we know that the central bank, let's fix this a little bit. There we go. We know that the central bank is continuing to raise interest rates. That's been the talk, but maybe they put that on hold for a little bit. So that whole plan to raise the interest rates, maybe this whole banking turmoil and, and, and all that has kind of put a pause on that or maybe upended it.

I'm not saying it has, but there's a chance. You know that, that John Carey, Jim Carey. So you're saying there's a chance, there's a chance that the Fed pause, the rate hikes and it may even shield the banking sector for some chaos. You know, we've seen over the last few months what happens with these interest rate increases.

So maybe a pause isn't such a bad thing, maybe a stop altogether. Who knows? So again, silver linings right now, although it's. Sometimes economic cycles do cause some businesses to fail and nobody likes that. Obviously jobs are lost and people are impacted, but sometimes they may fail because they weren't super strong to begin with, and we might be seeing some of that, particularly with Credit Suisse being bought out by UBS Bank, like a lot of people thought.

A lot of experts thought that credit suis was probably on the ropes anyway for a while. It has maybe mismanagement. It didn't have the same sort of, sort of gravitas or it didn't have the same reputation, that it had in the past. So it may not be such a bad thing for some of those institutions that could bear a little bit more risk and have cleaner balance sheets to step it up and maybe have new manage.

And then finally another, so there's potential silver lining, which kind of doesn't sound like it is. Maybe a lot of these tech startups, which is where Silicon Valley Bank is really lending, may not have the same access to capital funds. Now, why is that a good thing? Again, it may not be a great thing at first blush, but there is this school of thought, and some people thought that money was a little too accessible through banks like Silicon Valley Bank.

Now we had some fantastic companies start up as a result of that. So this is painting with a broad brush, and again, I'm kind of just showing you the other side of it, but if a bank was willing to accept that risk and they're willing to lend to companies that may not have the. Business model balance sheet being more aggressive, maybe financing will now become a little more difficult for startups, and maybe that means that the barrier to entry for some of these companies is a little higher.

And if the barrier to entry is a little higher, then maybe we have stronger businesses coming out and less likelihood of failure. So again, all I'm talking about right now is conjecture. It's theories, but hey, it's spring, the sun is. And we're talking about new beginnings and you know, hope springs eternal, right?

So even though hope is not a plan, we have to stay true to our plan. But life is better when we look for the silver lining and things, right? So myself personally, and speaking of businesses, some of you who know me and have known me for a while know that prior to my law practice being focused on trust, tax and estate, I did have a pretty active, and I'd say thriving corporate business and transactional law practice.

So we don't handle corporate transactions or business transactions in-house anymore.  But business owners is, is somebody I've been serving, or bus is an industry I've been serving for more than 20 years now. I find it extremely gratifying to help those who employ so many and they provide goods and valuables and services and, and basically get to get to nurture this whole, group going, keep our economic system going.

Well, I've got some news, so I'm pleased to announce that. And it's been about a month now, but I've had a lot of stuff going on Lifewise, but I. Become a certified exit planning advisor or a cpa, C E P A. So yes, I'm an attorney. Yes, I'm a certified financial planner and an advisor. But, when you put all those things together and, and you're serving a certain demographic, with this extensive experience in business law, you know, I'm excited to have this additional qualification and add that to my credentials and to offer our clients, our, our individual business owners, our businesses, an even greater level of expertise and guidance.

So, you know, I did have to go through some stuff to become a cpa. I had to complete this rigorous exam. There was coursework, there was exams, there was a final assessment of my knowledge and there were skills and exit planning all while, we had a death in the family and we had some turnover in the office, so there was a lot going on.

So that's Lifewise, but specifically on the cpo, this training, it provided me with this in-depth understanding of these complex issues that are involved with planning for a successful exit from a business. Then that includes the legal, the financial, and the tax consideration stuff I've been doing already.

But then how do we get our business owners to navigate the process of that exit? Psychologically, financially. And then how do we give you guidance on how to get the best possible business evaluation? How do we know it's gonna factor those exit numbers, the multipliers, if you will, the factors. And then how do we tie that in with your estate planning and your succession planning?

So, you know, I'm committed to working closely with my clients and continue to do that like I've been doing for the last 20, I don't know, three years now at this. So that's not gonna change. But developing these customized exit plans and developing a plan that meets their unique needs and their goals. So if you are a business owner or you work with entrepreneurs and business owners and you're considering an exit strategy, reach out to me if you haven't considered an exit strategy.

Even more reason to reach out to me because exit planning is just a good business planning. We all exit a business. Whether it's horizontally or vertically. So as cepa, I do believe that I'm un uniquely qualified to guide you through this complex and this challenging process. So hopefully for you and the business owners in your life, I look forward to helping you achieve your outcome and continue.

And thank you for your continued trust and confidence in my abilities as an attorney, a financial advisor, a tax advisor. I just look forward to serving a lot of business owners in the future. So with that being said, listen, I know that we covered a lot today. We are here for you. If anything comes up, if anything doesn't come up or if you just want to chat and if you happen to be driving by my house and you see me outside playing, throwing some baskets out there, please don't laugh at me too hard.

I do. Play basketball well, but I am going to do my best this spring. All right guys, be well Be safe and I'll see you next week on Shah Plan-it. Bye everybody.

Welcome to Shah Plan-it for March 21st, 2023. Happy second day of spring, or first full day of spring. So where I live, I think we're supposed to get a high of like 60 degrees today. I will take it, you know, spring's a time. It's a fun time of year. It's filled with hope. It's final, filled with new beginnings.

You got spring training, you got masters, March Madness, NFL draft coming up and these new beginnings. That means looking on the bright. But I know this is a challenging time for those in the banking industry in particular. If you're looking at your investments, if you're looking at your overall financial plan as a whole, you know it's important right now, you wanna still proceed with caution.

But here's the thing. In the spirit of spring, And maybe bringing some optimism here. Those of you who know my wife know that I'm married to one of the most optimistic people out there too. We know that there could be some good things that comes out of even bad things. So when we think of this banking downturn, I thought of a few things that could be potential silver lining behind these dark clouds that we're seeing right here with Silicon Valley Bank and with Signature Bank and Republic Bank and Credit Suis and all this other stuff.

So here's. There's at least four US lawmakers, two from each side of the aisle, Republicans and Democrats that have said they would support raising the cap on the F D I C insured deposits to reassure those frazzled bank customers that their deposits are safe. So right now, as many of you know, the F D I C insurance cap is $250,000, and it used to be a hundred thousand dollars before the financial crisis, but Senator Warren has basically said bumping it up is a good.

Now that being said, there are some folks that say that raising the cap, it's only gonna increase risk taking and there might be people who kind of, you know, keep, keep kind of pushing the envelope and maybe some would actually say that we would even re reduce it. But hey, this is silver lining. So here's the second thing right now, right?

So we know that the central bank, let's fix this a little bit. There we go. We know that the central bank is continuing to raise interest rates. That's been the talk, but maybe they put that on hold for a little bit. So that whole plan to raise the interest rates, maybe this whole banking turmoil and, and, and all that has kind of put a pause on that or maybe upended it.

I'm not saying it has, but there's a chance. You know that, that John Carey, Jim Carey. So you're saying there's a chance, there's a chance that the Fed pause, the rate hikes and it may even shield the banking sector for some chaos. You know, we've seen over the last few months what happens with these interest rate increases.

So maybe a pause isn't such a bad thing, maybe a stop altogether. Who knows? So again, silver linings right now, although it's. Sometimes economic cycles do cause some businesses to fail and nobody likes that. Obviously jobs are lost and people are impacted, but sometimes they may fail because they weren't super strong to begin with, and we might be seeing some of that, particularly with Credit Suisse being bought out by UBS Bank, like a lot of people thought.

A lot of experts thought that credit suis was probably on the ropes anyway for a while. It has maybe mismanagement. It didn't have the same sort of, sort of gravitas or it didn't have the same reputation, that it had in the past. So it may not be such a bad thing for some of those institutions that could bear a little bit more risk and have cleaner balance sheets to step it up and maybe have new manage.

And then finally another, so there's potential silver lining, which kind of doesn't sound like it is. Maybe a lot of these tech startups, which is where Silicon Valley Bank is really lending, may not have the same access to capital funds. Now, why is that a good thing, Neel? Again, it may not be a great thing at first blush, but there is this school of thought, and some people thought that money was a little too accessible through banks like Silicon Valley Bank.

Now we had some fantastic companies start up as a result of that. So this is painting with a broad brush, and again, I'm kind of just showing you the other side of it, but if a bank was willing to accept that risk and they're willing to lend to companies that may not have the. Business model balance sheet being more aggressive, maybe financing will now become a little more difficult for startups, and maybe that means that the barrier to entry for some of these companies is a little higher.

And if the barrier to entry is a little higher, then maybe we have stronger businesses coming out and less likelihood of failure. So again, all I'm talking about right now is conjecture. It's theories, but hey, it's spring, the sun is. And we're talking about new beginnings and you know, hope springs eternal, right?

So even though hope is not a plan, we have to stay true to our plan. But life is better when we look for the silver lining and things, right? So myself personally, and speaking of businesses, some of you who know me and have known me for a while know that prior to my law practice being focused on trust, tax and estate, I did have a pretty active, and I'd say thriving corporate business and transactional law practice.

So we don't handle corporate transactions or business transactions in-house anymore. But business owners is, is somebody I've been serving or bus is an industry I've been serving for more than 20 years now. I find it. Extremely gratifying to help those who employ so many and they provide goods and valuables and services and, and basically get to get to nurture this whole,  group going, keep our economic system going.

Well, I've got some news, so I'm pleased to announce that. And it's been about a month now, but I've had a lot of stuff going on Lifewise, but I. Become a certified exit planning advisor or a cpa, C E P A. So yes, I'm an attorney. Yes, I'm a certified financial planner and an advisor. But when you put all those things together and, and you're serving a certain demographic, with this extensive experience in business law, you know, I'm excited to have this additional qualification.

And add that to my credentials and to offer our clients, our, our individual business owners, our businesses, an even greater level of expertise and guidance. So, you know, I did have to go through some stuff to become a cpa. I had to complete this rigorous exam. There was coursework, there was exams, there was a final assessment of my knowledge and there were skills and exit planning all while, we had a death in the family and we had some turnover in the office.

So there was a lot going. So that's Lifewise, but specifically on the cpo, this training, it provided me with this in-depth understanding of these complex issues that are involved with planning for a successful exit from a business. Then that includes the legal, the financial, and the tax consideration stuff I've been doing already.

But then how do we get our business owners to navigate the process of that exit? Psychologically, financially. And then how do we give you guidance on how to get the best possible business evaluation? How do we know it's gonna factor those exit numbers, the multipliers, if you will, the factors. And then how do we tie that in with your estate planning and your succession planning?

So, you know, I'm committed to working closely with my clients and continue to do that like I've been doing for the last 20, I don't know, three years now at this. So that's not gonna change. But developing these customized exit plans and developing a plan that meets their unique needs and their goals. So if you are a business owner, or you work with entrepreneurs and business owners and you're considering exit strategy, reach out to me if you haven't considered an exit strategy.

Even more reason to reach out to me because exit planning is just a good business planning. We all exit a business, right? Whether it's horizontally or vertically. So as cepa, I do believe that I'm un uniquely qualified to guide you through this complex and this challenging process. So hopefully for you and the business owners in your life, I look forward to helping you achieve your outcome.

And. And thank you for your continued trust and confidence in my abilities as an attorney, a financial advisor, a tax advisor. I just look forward to serving a lot of business owners in the future. So with that being said, listen, I know that we covered a lot today. We are here for you. If anything comes up, if anything doesn't come up or if you just want to chat and if you happen to be driving by my house and you see me outside playing, throwing some baskets out there, please don't laugh at me too hard.

I do. Play basketball well, but I am going to do my best this spring. All right guys, be well Be safe and I'll see you next week on Shah Plan-it. Bye everybody.