Transcript of Efficiencies Expert Jason Helfenbaum On How To Increase Your ROI Through Training And Efficiencies
Thought Leader Jason Mandel - The Art And Science Of Increasing Enterprise Value, Employee Retention, And Protecting Your Business Through Insurance

[00:00:05] Jeffrey Feldberg: Welcome to the Sell My Business Podcast. I'm your host Jeffrey Feldberg.

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Welcome to episode 82 of The Sell My Business Podcast.

Jason Mandel has spent over 25 years at the intersection of Wall Street and the insurance industry. Mr. Mandel founded ESG Insurance Solutions in 2020 to help, better integrate these two often conflicting worlds. Having a strong belief in ESG concepts (Environmental, Social, and Governance), Mr. Mandel found a way of incorporating his beliefs in his business. Representing only insurance carriers and products that he believes offer compelling risk management solutions and maintaining business practices that he can support, Mr. Mandel has led the industry in this ESG initiative.

ESG Insurance Solutions serve some of the wealthiest families internationally and their business entities by providing asset protection, advanced tax minimization vehicles, principal-protected tax-free income structures, employee retention strategies, key person coverage, and tax-free enhanced retirement plans for essential employees.

Mr. Mandel launched Sky Gem Capital in August of 2021. The firm is an Opportunity Zone Fund Investing in Sky Gem Financial, a financial services business located inside Opportunity Zones. Investors in the fund benefit from significant tax incentives and challenged communities benefit from job creation and economic development in their communities.

Mr. Mandel believes that top-quality financial services should be available to all people regardless of their race, religion, or net worth prior. To ESG and Sky Gem, Mr. Mandel was a founder and senior portfolio manager of the Soundview Strategic Fund LP. The fund provided asset-backed loans to corporations to better protect employees, management, and shareholders. Mr. Mandel led the investment team at Soundview and had final responsibility for all financial analysis, due diligence, and loan administration. Mr. Mandel has led the industry in incorporating the financing of life insurance and tax-free retirement income plans for corporations and their top executives.

Mr. Mandel started his career as an institutional equity trader at Cantor Fitzgerald and Company where he focused on the insurance and financial services sector. Mr. Mandel later joined D.E. Shaw Securities, part of a large hedge fund complex.

At D.E. Shaw, he led a group focused on principal risk basket trading of equity securities, and helped develop proprietary solutions for trading highly illiquid equity securities.

Mr. Mandel was later hired by Samuel J. LeFrak a real estate billionaire to help manage his non-real estate assets in his family investment office. Mr. Mandel analyzed both private and public equity investments from Mr. LeFrak, his children, and his grandchildren. Mr. Mandel left to found HM Fund Management, LLC. The firm offered a variety of investment solutions like principal-protected notes, tied to a basket of hedge funds and tax-efficient warrants tied to the performance of low volatility asset managers. The firm migrated to life insurance lending transactions in 2005.

HM eventually managed a loan portfolio collateralized by $3.2 billion in life insurance benefits and a $2.6 billion portfolio of life settlement contracts. In addition to the USA and Canada, Mr. Mandel has successfully worked with institutions in South Korea, Japan, Brazil, Argentina, Russia, Switzerland, Israel, France, Germany, and England. Mr. Mandel has introduced structured products, market-neutral managed accounts, private equity, and hedge fund investments for family offices and other institutional investors worldwide.

Mr. Mandel received a BA cum laude from Brandeis University in Waltham, Massachusetts with a concentration in Politics in 1995. He went on to receive his master's degree from Columbia University in New York in 2008. There he studied corporate strategic communications with a focus on brand management strategy in the insurance and asset manager industry.

In his free time, Mr. Mandel has sponsored and helped lead fact-finding trips to the middle east and Russia for the American Foreign Policy Council based in Washington, DC. Mr. Mandel is also a volunteer advisor to startup companies for The Venture mentoring team.

He focuses on helping startups, maximize valuation and shareholder confidence.

Mr. Mandel lectures frequently and consults regularly for managed service organizations, registered investment advisors, law firms, accounting firms, and other insurance advisors.

Jason welcome to the Sell My Business Podcast. Wow. Your bio reads like an encyclopedia, with so many accomplishments, insights, and wisdom that we're looking forward to hearing from you today. But before I get ahead of myself, there's always a story behind the story.

Jason, why don't you share with us your story and what got you to where you are today?

[00:06:59] Jason Mandel: Well, thank you so much for inviting me. I'm excited to, speak with you and to share hopefully some insight with the listeners. So for my story, I've lived a blessed life. I started my career at Cantor Fitzgerald in the World Trade Center. And I was spared, unfortunately, what occurred to so many people and I was not there.

I left the firm to start my own business, and that was a very formative experience for me. I think it really eliminated a lot of the fear that normal entrepreneurs may have. And being saved and not being there that day, put me in a position where it's kinda tough to rattle me. I knew over 500 people that died that day and it did have a major effect on me.

As a person, I had been only focused on my career prior to that. And that event really opened me up to realizing the importance of having a more balanced life. And, frankly looking at risk management in a very holistic way. I had been working prior to that for a billionaire named Sam LeFrak, where I was responsible for many risk management strategies that the family had for their real estate empire and for their assets. And that experience truly opened me up to understanding that very few people take the time to understand risk management, the concepts there scare many people. And frankly, I've found an opportunity, to sit at the intersection of traditional Wall Street mentality and the risk management industry and the insurance industry.

And I found a very interesting opportunity to present these ideas and many people in the insurance industry don't care to interact with Wall Street and many people on Wall Street have no interest in interacting with the insurance industry. And there has been the foundation of my 26-year career has been sitting there at that intersection.

[00:08:45] Jeffrey Feldberg: So Jason, let's talk about that. There's so much to unpack here. So if I'm a business owner and I'm hearing you say the word risk management. That can mean so many different things to different people in your world what does that mean for me as a business owner and how do I go about embracing all of this?

[00:09:02] Jason Mandel: Sure. It is unfortunate that very few business owners take a serious look at risk management. You know, for us, we go purchase a car and we know we need to buy auto insurance. We buy a home, we know we need property and casualty insurance. But as business owners and as business owners that are hopefully in a position one day to sell that business for a significant amount of money to be compensated for the hard work that we all do every day to build a business.

What I have found is very few people take a serious look at risk management. Now the definition, it can be many different things to many different people. I would say that most people have to take the concept of if something happened to a key person in that business, what would happen to that business? So let's take it to the idea of a simple concept of a shareholder. What happens to a business if a shareholder experiences a mortality event or a disability? What would occur? Well, if you have a business partnership, maybe it's two owners and one owner is incapacitated. Is it fair to the other owner that's coming to the office every day, working incredibly hard when the other owner is unable to? There's no judgment there if there's a medical issue or if there's some other impairment. But something has to be done to compensate the partner who's continuously working at growing that business. And of course, in the event of a mortality, you have the risk of the beneficiaries of the estate of that owner of the business looking for some type of liquidity at that moment.

So we have found that most business owners do not want to think an entrepreneur by nature tends to be an optimist. So I've literally had conversations with entrepreneurs who have said I don't intend to ever die. I don't intend to ever need insurance. Well, then I put it back and I put it in the context of an obligation, an obligation to your employees. An obligation to other shareholders in the business, an obligation to possibly lenders that might exist for the business. And in that context, most business owners will then be willing to have an honest conversation with the real concept that of course, no one wishes for a mortality event, no one ever expects it. But unfortunately, we all know people that die in unexpected events, whether it be an illness or an accident.

Business owners these days are older and older than they've been historically where it's nothing to be shocked when an entrepreneur is in their seventies and eighties and even nineties, it truly exists and I've been part of that. And how do you allow investors? How do you allow shareholders? How do you allow partners, employees to feel confident that the work that they are doing that is going to be protected in the event of a mortality or disability? And in my view, everything boils down to creating an environment where employees exhibit discretionary work effort. And in my view, the only way to do that is to show a concern, a legitimate concern for their wellbeing, both financially and emotionally.

And without that, that sacred partnership between an employer and employee is in great jeopardy. And I think a lot of the work that we do reinforces that relationship between employees and employers, which allows in my view to have a higher realization of enterprise value for a company. When you can prove to a buyer that you stepping away and you are not being involved as the founder, or as a key shareholder if you can walk away and the business will continue and thrive, you obviously will ensure a much higher valuation for your business.

The investor who buys it will have much more confidence that their dollars will not be in jeopardy. And that's an important part of risk management, which I said is constantly ignored by entrepreneurs.

[00:13:14] Jeffrey Feldberg: So Jason, why don't we circle back on that? Because conceptually people understand that if a business doesn't rely on the business owner, it's so much better off to grow, succeed, and prosper. You can attract all kinds of different buyers because the business doesn't rely on you. But let's go back to risk management. How does risk management protect the business when something tragic happens to perhaps the founder or even someone in the C-level suite? What does that look like?

[00:13:41] Jason Mandel: Well, if we want to take it to the simplest level, we know that there are various forms of life insurance, which could be utilized at a very low cost to allow for the business to continue in the event of an unexpected mortality or disability. It would be disability insurance in that case of course. So what we look at is at a bare minimum instituting a term insurance policy. Term insurance of course is not permanent.

It has normal terms of 10, 20, 30 years. Now they're being offered 40 year periods and the insurance industry enjoys a lapsed rate of over 97% of term policies that are issued. And that lapse rate allows them to price insurance in such a way that it's incredibly compelling for a business to purchase this type of insurance, because, and I'll give you an example of a real, policy that was just purchased for a business owner.

This week, from my office, it was a 10 million dollar policy to protect the investors in the company in the event that the founder died unexpectedly, the company would receive $10 million to hire a replacement who would provide comparable leadership for the founder in the event of a mortality.

So one might expect this founder was 47 years of age and this founder wanted to buy the insurance for 10 million. One might expect a 47-year-old to reach age 90 approximately as life expectancy. So when you're looking at that and you're expecting a 40 something year period where the insurance carrier would receive premiums.

You might expect them to request an amount of premium that would cover the risk if there was a mortality event, prior to that age of 90. So what's fascinating is, if you said to me, what would the cost of that be? If I wasn't in the industry I wouldn't understand this idea of lapse rates, I would probably say, well, if they're going to live 40 years, maybe they'd want to collect, I don't know, 3% a year or 2% a year of that death benefit to protect them against an early mortality maybe even more.

That policy, that $10 million term policy costs $4,600 a year, a minuscule amount. If you look at 1% of the 10 million, that's a hundred thousand dollars. So this is $4,600. So this person is not living 2000 years. Of course. So why would the insurance companies be willing to sell this policy at such a minuscule premium?

And the answer is, they know that statistically, the policy will not be held until mortality. Even though it has conversion features, which allow them to convert from a temporary period of term insurance to permanent. This policy will not be held at mortality, statistically. So this policy is priced, assuming that lapse rate phenomenon.

So it's one of the greatest risk management solutions is to buy term insurance for business because, at a $4,600 expense, you can protect in many ways, the entire management team, the replacement of an entire management team for that business. And you can quantify, of course, if the company only needs 2 million or 5 million or 10 or $50 million, that can all be accomplished very, very cost-effectively using term insurance. And that is something that most business owners don't think about until they take debt from a bank or a business partner. The partner tends to request key person protection for their loan that they're offering the company. What if there is a mortality event, most sophisticated lenders will request key person coverage for the business in order to feel more confident about making a loan to that company.

So one of the hindrances that exist is as business owners get older, unfortunately, many times their health deteriorates. And in that case, we always advise business owners to secure the term insurance at this relatively minuscule cost as early as possible to reduce the probability that they become uninsurable.

And therefore investors will not be able to protect against the risk of a mortality of that key executive in the business. So we look early on and we look at not just the CEO or the founder, we look at other key people within the business, the head of marketing, the head of research, the head of any department, top salespeople.

These are all people that will have a material negative effect on the company, in the event of their mortality or disability. And that's an important part of an equation that is very often ignored by entrepreneurs.

[00:18:37] Jeffrey Feldberg: So Jason, this is interesting because what I'm hearing you say is that for every business, for every founder, every business owner, there's an inherent risk that something terrible could happen to either the founder or someone senior in the company. And when that happens, the fate of the company might be up in the air because the company might not be able to afford to hire somebody to replace that person.

But what I'm also hearing you say is that because a small number of these policies actually get put into place, the policyholder never collects on the policy. And so now what I'm hearing you say is that the insurance industry can offer extremely low prices for big-ticket insurance policy items. Can you tell us more about that?

[00:19:16] Jason Mandel: You're exactly right. And you know, you take this out to the furthest levels and it really becomes a fascinating scenario because you have someone like a Warren Buffet who obviously completely understands insurance and every aspect of it as the Chairman of Berkshire Hathaway. A reinsurance company, a company that literally takes the risk off insurance companies and reinsures the mortality risk for a portion of the premiums. And you look at some of his other businesses and they're fascinating. He owns a business called Living Benefits. It's an owned by Berkshire Hathaway and it's a business that purchases the key person policies from business owners, from companies who no longer want or need that key person coverage.

So imagine a retiring CEO who knows the company is no longer dependent on the leadership of that CEO. And historically that CEO has either been offered the key person policy to take over and leave to their family because they're no longer an executive of the company or most time the policy would lapse.

And that goes towards why insurance is priced, assuming a lapse rate assumption. So it's very cheap, as you said. What's interesting about Buffet is because he understands that life insurance is priced with a lapse rate assumption. He now created this company called Living Benefits, which will purchase your unwanted insurance on your key executives, and they will pay a present value on that future cash flow.

So if the retiring CEO is 70 years old and is projected to live to 90, Buffet's company we'll do a present value on the future cash flow and they might offer $2 million to purchase the unwanted insurance, that $10 million policy, for example. And they would come in and pay the premium every year until the mortality event occurred on that retired CEO.

So really is fascinating that it has become almost an investment option because life insurance is property. And many companies don't realize that when they institute a key person policy plan and strategy, it might end up actually being a revenue opportunity for the company long-term because of the value of contracts in this market, it's called the life settlement market.

And this is a market which has been around for 20 plus years, but now it's become very accepted. And the insurance industry understands that sophisticated business owners are probably no longer going to lapse the policy, but rather they'll monetize the policy and sell it to investors like Warren Buffett's Living Benefits.

[00:21:54] Jeffrey Feldberg: Wow, Jason, there's a lot to unpack there. Let me see if I get this right. Warren Buffet comes along and he pays the policy owner $2 million on a $10 million policy, which is based on the present value of that policy today. And so now 20 years go by. And in this case, the CEO that the policy was based on this CEO passes away.

 Warren Buffet collects $10 million of the policy. And he now factors in that he paid a relatively small premium to keep the policy going less than $2 million that he paid out, to begin with. And so in this example, Buffett walks away with a big profit, having very little risk.

So, what I'm hearing you say is when we take this back to our company as a business owner, we can purchase a policy based on, let's say our CEO. Now, let's say the CEO goes on to another company, it doesn't really matter. When that CEO passes away because we've kept the policy going. The company is the benefactor of the proceeds from the insurance policy. So this is clearly a long-term investment but it's a really interesting one. Can you tell us more about this?

[00:22:57] Jason Mandel: Matter of fact, there are some people that have analyzed some of the finances of Walmart and some banks. And it is interesting that there is a program to hire older workers at Walmart. You may notice some of the greeters in the front door are older individuals, and it is fascinating when you look through the finances of the company, they maintain a very large portfolio of what's called COLI policies, Company Owned Life Insurance, COLI. And it actually is a revenue producer for them. If they have an employee, let's say they hire someone who is 75 years of age for a 75-year-old, you might find a premium of 2% or 3% a year. That's 75 year old may work five years until they turn 80 and then retire from Walmart.

And when they retire. again, that policy does not need to be lapsed. That policy can be held. It's an asset of the company. There is an insurable interest to purchase life insurance on an employee. And many companies and in many banks, they call it BOLI, Bank Owned Life Insurance. You may notice a lot of older bank tellers that existed in retail banking institutions.

And from my understanding that's one of the financial benefits, the company derives by hiring an older workforce. So you're exactly right. It is an interesting concept that's not often discussed.

[00:24:17] Jeffrey Feldberg: So Jason, I get it when you say that for a founder, for a CEO, president, or senior management, if you want to protect the company, if something tragic were to happen, some kind of accident or mortality. That the insurance policy funds the company to go out and get top talent. I get that. But you also mentioned that you can also look to put insurance on say your top salesperson or perhaps your top marketer.

And I suppose that statistically the likelihood of this marketer or this salesperson having some kind of mortality or they pass away I would think that's quite low. But what's interesting in your thinking is the rationale that you should still go out and have a policy on top of that marketing or top salesperson. Can you give us some more color on that?

[00:25:00] Jason Mandel: In that context, I agree with what you've said, we see an opportunity to use these contracts to retain top executives. We believe that that also increases the enterprise value of the company. When you can show a new buyer that the likelihood of employee turnover is very low. So what we do is we Institute permanent policies in which a portion of the benefit is to eventually go to the employee.

So the policy is owned by the company. The company would pay the premiums in many different ways of structuring, but this is our preferred way of structuring it. We would agree with the employee for a period of time that they would commit to staying with the company and not look for outside work and not look for another job opportunity.

And what we would do is provide an additional bonus beyond their salary, beyond their yearly bonus, but an additional, what we call a retention bonus, which might be paid to them, let's say in five years or seven years. And it's a form of deferred compensation where after a period of four or five years, you can imagine the amount of money that might be in that retained retention pool.

Where it becomes very challenging for an employee to leave if they're being offered an additional $20,000 by a competitor to defect and leave their company for that extra salary because they are giving up $100, $200, $300,000 in deferred compensation. So we view these contracts of having multiple, multiple benefits.

Because again, when you look on the balance sheet of the company, the company is not handling that money out in the hopes that the employee will stay. Hey, I want to be nice to my employee. I'm going to give him a $100,000 dollars bonus. He's a top salesman, created a million dollars in revenue for our business.

Guess what that employee will still leave if they have a better deal that's offered to them. The best way, is to utilize, you know, the term has golden handcuffs where we want the employees to be again, aligned. If an employee says to you, I can't commit to staying. I don't know whether I'd want to leave.

There's no problem with that. We understand that there's probably not a need to obviously provide them a retention bonus in that situation. One would view that employee as more mercenary and one would treat them in an appropriate manner, but that's not someone who is committing to help you build the business.

That's not someone who might be showing that discretionary work effort that we're all seeking from our employees. So what I would propose is trying to find people that will verbally commit to a period of time, they think is fair. And then tying this excess bonus, this additional compensation above salary and a normal bonus, this additional retention bonus in the form of life insurance.

So on the books of the company, you are protecting the company in the event of a disability or death of that employee. The company can go out and recruit top talent. You might even make it a portion of an additional executive benefit or a portion of that money goes to the person's family in the unlikely event of a mortality event.

So you are doing something that another employer is not doing. And frankly, you are giving them that golden handcuffs scenario, which makes it hard to leave. Anyone can leave. There's no slavery of course, but when they leave, they're leaving that deferred compensation which is only due to them if they meet.

So if you do a five-year deferral, which is what we recommend, we tend to see that five-year buildup to be so significant. It makes it very hard for employees to leave. It also gives you a pool of money in the event that you're not happy with that employee, where you can make a determination to say we'd like a portion of that deferred comp we'll allow you to vest early.

So this becomes part of the separation agreement for a company and employee that decided to part ways.

[00:28:54] Jeffrey Feldberg: So Jason, let me jump in here because I'm missing a gap that I hope you can explain to me and our listeners as well. So I'm with you all the way on the retention bonus and big picture wise this makes a lot of sense. It's different. It's not part of your salary. Is not part of the regular yearly bonus that you're doing.

I'm with you on that. And if you're generous enough as a company, heaven forbid something happens, the family members of that employee can receive part of the proceeds from the policy. But the question that's jumping to mind is where's the company getting this money to pay for that retention bonus? Because what you're saying is it can be significant.

It could be hundreds of thousands of dollars. So as a business owner, I'm saying to myself, okay, let me get this straight. I'm presumably paying a monthly premium or an annual premium for the insurance policy and for the employee. But how do I get this money to pay that retention bonus that's above and beyond everything else?

[00:29:43] Jason Mandel: Well, I think you've got to look at the costs for training a new employee in the event the existing employee was to defect and leave the company. So when you analyze the true cost of training of replacing that employee, you can understand that that costs could be mitigated through coming up with a small percentage of that in the retention bonus. One of the highest costs that I've found in my business experience and then the experience of my clients is that when they do lose a key employee, that period of six months to a year until they find and identify another top talent until that person is trained until those relationships are turned over, it's incredibly costly. So we view this as a strategy. Now one of the nice things about this is when you amortize over the life of call it a five-year deferral that bonus when you say to someone, hey, we're giving you an extra, $50,000 in a deferred compensation if you stay the five additional years from today's date. When you actually do the present value on that $50,000 it's obviously much less. It sounds very nice $50,000, but the present value is much less.

What we also do is we recognize that certain contracts that we can offer are incredibly compelling. As a courtesy to many of my clients, I use something called an Enhanced Cash Value Rider on many of the contracts that we present to our clients. This enhanced cash value rider is very compelling because what it does, it does reduce the compensation to the risk management expert who's working in developing the plan that is true. A dramatic reduction in compensation does exist when you use this rider. For the client though, it's an incredible benefit because what it does, it allows up to a hundred percent cash surrender value on the actual contract premiums that are put in.

So imagine a scenario where the company would go to its banking partner. I worked, by the way, most of the structures we do are all financed. We tend to not want to take money away from a company's balance sheet. We look at this as a very low-risk use of leverage because when we utilize the enhanced cash value rider, we will actually literally dollar for dollar. If we borrow a million dollars from a bank to put together a comprehensive plan. There is a million dollars available in surrender value at any time the bank would secure what's called a collateral assignment on the insurance contract on this retention plan.

And at any time the company wants to change the plan, cancel it. They have the ability through certain contracts. Not every carrier of course offers this. I should take a moment to explain that our company is not an employee of any insurance company, people that work for companies that are agents of the company, like a New York Life, a MassMutual, Northwestern Mutual.

These are companies that hire employees to distribute their insurance solutions. We are set up as an insurance broker where our legal responsibility is to the client only. You have to really understand when you're talking to an insurance professional where their legal responsibility lies.

Is it to their employer in the event they're an agent of a company? Or are they legally responsible to you as the customer and those individuals we considered insurance brokers? So what I should explain to you is that when we advise a company, When we explain that the company can, when it borrows money, it can, at the same time offset the debt by having an asset on the balance sheet, it's a net neutral transaction for the company.

So when you talk about how do I get the money for this? It's very easy. Banks look at life insurance as property, it has the same attributes legally as real estate property. There was actually a Supreme Court case in 1911 called Grigsby verse Russell. The famous Oliver Wendell Holmes wrote the ruling opinion that life insurance has property and you can transact that property. You could lend against it. You can sell your property to another property buyer. So these assets, these contracts are legal property and you can borrow money to fund it. But unlike a traditional real estate transaction, where a bank wants you to put down 20% or 30% of the purchase price, and most banks are willing for you to put down zero to purchase insurance property because insurance property, in many cases is principal-protected.

It can not go down in value. And that's something that most people don't recognize. If it's a variable product, it can go down in value. We actually don't distribute any variable products as a firm. We only focus on principal-protected structures, and that allows people who borrow money from our banking partners to feel very confident that their principal is protected.

And in many cases, they have the upside of an equity index, like the S&P 500. Without any potential of capital loss. So you have people that look at this, not just as a retention tool, but actually as an alternative to a retirement plan. Instead of helping an employee fund a normal IRA or 401k, these contracts can be used for multiple benefits.

So you can offer an employee an opportunity to say, look, we're more sophisticated than our competitors because your retirement plan with us is tax-free income. Because when you borrow from the cash value, there is zero taxation, a 401k is taxable. What people don't realize today is we're actually at historic low tax rates.

People think, oh, taxes are so terrible. Today we're at low rates relative to other periods of time. I know on an income of over a million dollars in the seventies, the tax rate was 90%. So you can imagine people are looking at today's rates and saying it's expensive. It can become much more expensive. We have to be sensitive to that.

So there is a theory that many estate planners and many high-end asset managers are doing, which is to say, let's stop funding taxable retirement plans because we just have no certitude as to what the tax rate will be at mortality or during retirement. So we'd rather have assets that are completely tax-free and these contracts again, so many multiple usages, but one of the benefits is that if held, you can borrow against the contract values in a tax-free manner.

[00:36:52] Jeffrey Feldberg: Okay, Jason wow. So many different directions that we can go in here based on what you're saying. It's almost overwhelming in many ways, but with this in mind, let me ask you this. As a business owner, I might be thinking to myself. Okay, Jason, listen, retention bonus sounds great. Net neutral in terms of an asset and liability. That also sounds great.

A tax-free retirement plan. Yes. You have me there. That sounds great as well. But I'm just so busy running the business. This is not my area of expertise. I wouldn't even know where to begin or what to do. So Jason, why don't you walk us through what happens when a business owner asks you to come in and take a look at the business and to figure things out. What's going to be the end result and what are you doing to get there?

[00:37:35] Jason Mandel: Sure. the first process is our desire to compile all existing risk management products that may have been purchased in the past if any. There may be none, but in the event that there are products, we want to evaluate those products because historically there are improvements that are made to these contracts over time.

There's been an actual decrease in the cost of the insurance. In many cases, when we look at policies that are more than five years old, there is a chance to reduce the cost of these risk management plans. So our firm has a belief that we do not charge an hourly rate like some of our competitors do to analyze.

We are willing to work with a client who wants to compensate us in that manner. But in many cases, we will take on the assignment to review all risk management solutions. We go in. We tend to look on a very holistic basis to the overall goals of the business owner. We talk a lot to senior management. We try to understand, is there an issue with morale?

Is there an issue with employee retention? What are the issues that the company is faced with? Is the goal to sell the company of course, in a few years, then we want to institute a structure that we think is compelling. We will evaluate existing risk management. We will then create a budget. We will work with management to determine whether they're comfortable with calculated, leverage through bank financing.

Again, limited to only the policy as the only collateral in many cases. We're not really being asked to come up with a lot of excess collateral for these structures, because in many cases when you use that enhanced cash value rider, you don't need additional collateral because dollar for dollar, what you've put in and borrowed is available to the lender.

So we will come up with a recommended course of action. And in the event, they decide to move forward. We ask to be the insurance broker for the institutions to create the plan, and provide it to the company. So we will work in many cases, we'll do, could be a 100, 200 hours of work in order to help accompany, analyze their risks and accomplish their goals. And we will do that with the assumption that if they see value to the ideas we bring to the table, they will retain our firm to institute that. We don't need anything when it comes to time from the CEO or the executive management team, we handle everything.

We do come in, we do tend to speak to the head of HR. We need about a one to two-hour meeting with the head of HR. And we will come to the table with proposals. If there's no time available, then we will still analyze what we believe when we understand the company's, financials, what we think is important. And then we take it with the vantage point that if we were a buyer of this company, and I look at these companies in that manner.

 We try to understand exactly what the risks are and then we provide for those risks in a way that we believe is thoughtful and sensitive, very, very sensitive when it comes to costs. And we expect there to be an open dialogue and an exchange, and we find the process to be far less intrusive than people tend to think it will be. It's far less intrusive, we found.

[00:40:56] Jeffrey Feldberg: Okay. That's interesting. So Jason, when you look back at the businesses that you've worked with. Are there any success stories that you can share with us of different things that happen along the way that illustrate for our listeners, why this is such an important tool and strategy for them to have?

[00:41:09] Jason Mandel: Absolutely. I didn't get prior approval from, certain clients. I'm not going to use a name, but what I will tell you is a reality of, a couple of that they were actually business partners and spouses, and they ended up, unfortunately, getting a divorce. And it was determined that they didn't want to work together any longer. Because they had utilized a contract that we developed. They buy, sell arrangements between the couple.

We were able to utilize the cash that had accumulated in the contract because again, the contract offer the upside of the stock market without the downside. So over a period of, I think it was 12 or 13 years, the cash value grew so , substantially in this case it was actually the wife who wanted to continue to run the business.

She was able to borrow against the cash value in their retirement plan to buy out her ex-husband. The husband was happy. He was able to monetize the value of the business through the contract growth. They had invested inside of this contract and this buy-sell arrangement that was utilizing the purpose of the original usage wasn't.

And then of course, if that never was to happen, the purpose was to give them a lot of income in retirement, tax-free income retirement, but this literally saved what could have been a multi-million dollar lawsuit and destroy the business, frankly, because when you have those types of legal bills, a massive fight on valuation, you will oftentimes see a company collapse.

So I found that to be a very rewarding feeling to know that that company and they had about 150 employees. And those employees were able to have their jobs. And I know it provided a significant retirement income to the husband who exited the business, upon the divorce being finalized. And it was a very good outcome.

Unfortunately for them, their marriage didn't work, but their economic security was there because of the plan that we had instituted.

[00:43:05] Jeffrey Feldberg: It's fascinating because here is yet one more example where you go in with the best of intentions, but you don't know what the future holds. And this case the marriage ended and the business could have imploded but because of what they did on the risk management side it actually saved the day. The employees kept their jobs and there wasn't a massive lawsuit. The business continues, and this is all wonderful to hear.

But if there were one or two things that our listeners could do coming out of this episode, what would be those things for them to begin that process of looking at the risk management of how to both protect the business, but also have the business benefit at the same time?

[00:43:43] Jason Mandel: Yeah. I mean, I think the simple thing is a truly, unselfish person will look at the hard work that they have put in the sacrifice as an entrepreneur for all the years that they have spent building a business and they'll want that business to continue in the event, something was to happen to them. They will want their family, they will want a charity that they care about to benefit.

So it's important for people, even though it's an uncomfortable thought. A mortality is a very scary thought to envision a time when we're no longer here. What I would propose to people is to go fight through that fear and think about the hard work and imagine if there was something that occurred and the business were to fail, how would that affect your family and the other people you care about?

How would that affect charities that you support today that you would no longer be able to support and that deep emotional, will oftentimes allow somebody to fight through that fear of imagining a world where they're not here and allow them to protect the people? There are employees that have sacrificed portions of their lives to help that business owner grow the business and to allow them to be in a position where they can truly protect everyone.

And then as we discussed in the event that none of these plans ever need to be utilized. God willing. That there is a financial benefit now due to the life settlement market, that when you become older, you can monetize this contract and you will receive because of the lapse rate based pricing, you'll receive a significant premium above what you may have put into the contract.

So it becomes a way of even funding retirement. We have seen business owners, who did not have key-person policies being provoked by the buyer of the company to create a new policy, such that the transition of the company ownership to the new buyer is smooth. Imagine during a one or two-year transition period a mortality event occurred. We see this constantly in medical practices that are sold, medical businesses. Imagine a scenario where that transition of the patients that were in the customers for a corporate business. Imagine that transition cannot happen effectively due to an unexpected mortality. If that occurs, how does the buyer feel confident that they can recoup their investment?

And before you're uninsurable before you cannot utilize these products before frankly, these products are repriced because of people like Buffett buying these policies. And because $15 million is spent on advertising on CNBC to try and buy policies from the general populous now from a company called Coventry.

Because of these facts, eventually, these premiums will increase in value so they'll become less compelling. I think we have a five to six-year period of time before most insurance has to be repriced because there has to be a realization that the life settlement market has an effect on the lapse rate assumption.

So I would implore all business owners today to look at their risk management needs prior to the repricing of life insurance. Because these assets not only will protect your business, but they can actually provide revenue or an additional retirement pool of money for a business owner and for employees of your business.

[00:47:02] Jeffrey Feldberg: And for our listeners, some words for the wise that you heard right here on the Sell My Business Podcast. And your takeaway should be act now because five years from now, six years from now, it may be too late and you miss out on a wonderful opportunity.

Jason, as we begin to wrap up this podcast, I have my favorite question that I ask every single guest.

And here's the question for you. I'd like you to think about the movie Back to the Future. And in the movie, you have this magical DeLorean car, which can go back to any point in time. So, Jason, I want you to imagine that it's now, tomorrow morning,

You look outside your window and lo and behold, there's the DeLorean car. The door is opened. It's waiting for you to go in and you can now go back to any point in your life. And as you hop into that car, maybe you're thinking about going to Jason as a young child or an adolescent, or even an adult.

Whatever the point in time would be. What would you be telling your younger self in terms of, hey, Jason, do this or don't do that? Or here are some lessons learned. What would that be for you?

[00:48:04] Jason Mandel: That's a great question. I would probably tell myself, to pace myself more. I ended up, starting my own company at the age of 25. And I've been an entrepreneur myself now. I'm now 47 and I think I might have learned more from others with expertise that I did not have. I had to kind of learn everything myself.

I was one of those people. I didn't want to listen to anybody. And I wanted to just kind of go out in the world and stake my claim to it. And I think I might have benefited from taking advice from those that had great expertise. I would say to anyone else that, you know, there are areas you can't be an expert in every area, it's impossible.

You have to surround yourself with people that have greater expertise than you have. And I've done that at my own firm. I have specialists, I can't know every aspect of risk management. I have people that have far greater product knowledge than I do. I believe that that has been one of the reasons our firm has been so successful and will continue to be successful.

And I would say that you need to constantly look outside of the box. One of the things that we're doing is we're looking for an opportunity to work with these new opportunity zone regulations. So we'll be opening up additional offices throughout the country, utilizing the tax incentive laws that have been created to help create jobs in challenged communities throughout the United States.

So that's something that in my younger years, I probably would not have even taken the time. But an expert came to me and shared their knowledge of opportunity zone business opportunities, the ability to take taxable income short-term long-term gains and defer it for over five years. And for any investors who invest in opportunity zone businesses or real estate, if they hold it for 10 years, it's completely tax-free, your investment. So we, you know, intend to obviously one day even monetize the value of our business, even though our business to help others do that. And in doing so, we want to show a deep thought, as to how we can best provide a net revenue to our partners, to our shareholders. So that would be the advice to myself is I I've come to that world a little bit later than I wish I had.

I wish I had listened to all the smart people that I was presented with that sometimes I was too busy in building my own business to take the time to listen. And I think as I've matured, I've grown to see that I can see tremendous value from so many people that I have the opportunity to meet every day.

I wish I had done that in my twenties and in my thirties, I've started to do that more in the past five to seven years. And I'm glad I have, and hopefully, I will continue to benefit from having much smarter people working with me. And I believe that that's going to be one of the keys to my future and continued success.

[00:50:59] Jeffrey Feldberg: You know what Jason, it takes a really big person to recognize where they may have stumbled or even had some faults along the way. And I thank you and honor you for both your transparency and your vulnerability. I will put all this in the show notes for our listeners. Jason if somebody wanted to find you online where would be the best place?

[00:51:17] Jason Mandel: Well, there's one website that I do like to publish articles oftentimes it's called And I think it's not just my own writing, but there are so many intelligent people that are, you know, providing insight on this website, again, I also of course have my own website And we will be also moving forward with our entity that's going to be in the opportunity zones, which will be Sky Gem Advisors and Sky Gem Financial. So there'll be able to have future content on that site as well. And I'm always happy to chat with people. I want them to feel comfortable in reaching out.

There's no heavy sales pressure. We don't believe in that. We believe in a conversation when intelligent people come together, they can add value to each other's lives. I learned so much from my clients and I do hope to continue to add value to their lives as well.

[00:52:17] Jeffrey Feldberg: Jason, thanks for sharing and that's terrific. As we wrap up this episode a heartfelt thank you for taking time out of your day to spend with us on The Sell My Business Podcast. And as we close this out as always please stay healthy and safe

[00:52:30] Jason Mandel: Thank you so much. We appreciate all your hard work and effort. You do a tremendous service to entrepreneurs all around the world.

Thank you so much.

[00:52:38] Sharon S.: The Deep Wealth Experience was definitely a game-changer for me.

[00:52:42] Lyn M.: This course is one of the best investments you will ever make because you will get an ROI of a hundred times that. Anybody who doesn't go through it will lose millions.

[00:52:52] Kam H.: If you don't have time for this program, you'll never have time for a successful liquidity

[00:52:56] Sharon S.: It was the best value of any business course I've ever taken. The money was very well spent.

[00:53:03] Lyn M.: Compared to when we first began, today I feel better prepared, but in some respects, may be less prepared, not because of the course, but because the course brought to light so many things that I thought we were on top of that we need to fix.

[00:53:18] Kam H.: I 100% believe there's never a great time for a business owner to allocate extra hours into his or her week or day. So it's an investment that will yield results today. I thought I will reap the benefit of this program in three to five years down the road. But as soon as I stepped forward into the program, my mind changed immediately.

[00:53:41] Sharon S.: There was so much value in the experience that the time I invested paid back so much for the energy that was expended.

[00:53:51] Lyn M.: The Deep Wealth Experience compared to other programs is the top. What we learned is very practical. Sometimes you learn stuff that it's great to learn, but you never use it. The stuff we learned from Deep Wealth Experience, I believe it's going to benefit us a boatload.

[00:54:04] Kam H.: I've done an executive MBA. I've worked for billion-dollar companies before. I've worked for smaller companies before I started my business. I've been running my business successfully now for getting close to a decade. We're on a growth trajectory. Reflecting back on the Deep Wealth, I knew less than 10% what I know now, maybe close to 1% even.

[00:54:23] Sharon S.: Hands down the best program in which I've ever participated. And we've done a lot of different things over the years. We've been in other mastermind groups, gone to many seminars, workshops, conferences, retreats, read books. This was so different. I haven't had an experience that's anything close to this in all the years that we've been at this.

It's five-star, A-plus.

[00:54:49] Kam H.: I would highly recommend it to any super busy business owner out there.

Deep Wealth is an accurate name for it. This program leads to deeper wealth and happier wealth, not just deeper wealth. I don't think there's a dollar value that could be associated with such an experience and knowledge that could be applied today and forever.

[00:55:08] Jeffrey Feldberg: Are you leaving millions on the table?

Please visit to learn more.

If you're not on my email list, you'll want to be. Sign up at And if you enjoyed this episode of the Sell My Business podcast, please leave a review on Apple Podcasts. Reviews help me reach new listeners, grow the show and continue to create content that you'll enjoy.

As we close out this episode, a heartfelt thank you for your time. And as always, please stay healthy and safe. 

This podcast is brought to you by the Deep Wealth Experience. In the world of mergers and acquisitions, 90% of deals fail. Of the successful deals, business owners leave millions of dollars on the deal table.

Who are we and how do we know? We're the 9-figure exit guys. We said "no" to a 7-figure offer based on 3-times, EBITDA. Two years later, we said "yes" to a 9-figure offer based on 13-times EBITDA.  In the process we increased the value of our company 10X.

During our liquidity event journey, we created a 9-step preparation process. It's the quality and depth of your preparation that increases your business value.

After our 9-figure exit we committed ourselves to leveling the playing field. The Deep Wealth Experience helps you create a launch plan in 90-days. Our solution is resilient, relentless, and gets results. Enjoy the certainty that you'll capture the maximum value on your liquidity event.
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Thought Leader Jason Mandel - The Art And Science Of Increasing Enterprise Value, Employee Retention, And Protecting Your Business Through Insurance