Business owners often have a lot of questions about how to move forward to make sure that their assets are secure and that their businesses are insulated from risk. And those questions are becoming more difficult to answer as the COVID-19 pandemic disrupts the market and creates uncertainty.
"This is a market that went from something looking closer to the Great Depression back in March to something that looks closer to the tech bubble back in the year 2000, and we did that in about an eight week period," says Omar Qureshi, Managing Director with Hightower Advisors. "And so I think clients are concerned. They obviously want to make a rate of return that supports their objectives or goals, but they don't want to take a crazy amount of risk to achieve that."
Qureshi spoke on the Smart Business Dealmakers Podcast about both the challenges and opportunities created by the pandemic, and what business owners and investors should do sooner than later to preserve wealth.
Following are excerpts from that conversation.
New market realities
In any crisis, there's destruction of some areas and creation of new areas. Fortunately, some American businesses have been incredibly fast to adapt to the new market realities.
"This is probably the best case that we've seen of it, historically, as to just how quickly business has pivoted to be able to continue operating in this current environment," Qureshi says. "And that's a shift to a lot more technology of one sort or another."
He says the technological innovation space has been incredibly disruptive, which has created incredible opportunities not only for business owners to implement technologies that improve productivity, efficiency or enable them to expand into new areas, but also for investors looking to put their money in companies that are growing and making a tremendous impact on people's lives.
Health Care is another area that he says will continue be transformed going forward as COVID-19 forces companies to rethink their approach. And that has the potential to create opportunities.
When it comes to wealth transfer, whether it's a family business or a trust, Qureshi says there's really two prevailing factors that make now a great time to act. First, he says we're currently operating in a very generous estate and gift tax law environment. It grants the ability to pass an extraordinary amount of wealth to a trust or to family members free of estate and gift tax.
For business owners, depending on the nature of their business and the effect the virus had had on performance, they may be able to take advantage of the current estate tax environment and a lower business valuation to pass on the business through an estate plan.
Business owners, he says, should work with a professional to evaluate the state of their business and determine what could be done to help maximize its future growth, whether that's in preparation for a sale or not.
"Getting your business in tip-top shape is a good idea either for yourself or to set it up for a sale down the road, or even for your family down the road," Qureshi says. "When you go through crisis is like this, it's always a great time to make sure all of your strategies, both as individual families and as business owners, are really in tip-top shape."