February 28

What if 88% of your best prospects suddenly had no need for your services?

That's what has happened to the trust and estate attorneys focused on advanced planning for the affluent. The new estate and gift tax law reduced the number of people subject to the estate tax from 2.8 million people to just 340,000, according to BNY Mellon.

Of course, there are other reasons besides estate tax minimization to do estate planning - family issues, business succession, asset protection etc. -- but tax minimization does drive the most lucrative parts of the business. And with headlines driving home the fact that estates of less than $5 million/$10 million won't be subject to estate taxes, potential clients in that segment are being driven out of the market.

We are interested in hearing about how practioners are dealing with the sudden contraction of a market that has allowed hundreds of trust and estate attorneys a very nice living.

Things may not change much for those at the upper end -- with the bulk of their work focused on estates with more than $10 million to $12 million or so. They still need advanced planning.

We've already heard of life insurance practioners moving more into the securities and investment business to make up for what they believe will be a marked decrease in large policies designed to pay estate taxes. What is the strategy for you attorneys out there?

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People with money -- a Southern California-based representative of a European family has access to up to $50 million to buy a business. The family prefers to buy 100% of the company, though it might entertain majority position. Preferred industries are in food and beverage, and an ideal acquisition would be a manufacturing company that has a product or series of products with a strong regional brand that can bebuilt into a national or global brand.

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The M&A market is still quiet, at least at the mid market level. Practioners in the space say that a flurry of activity at the end of 2010 sucked activity out of early 2011, but that the second quarter is looking promising. Credit markets are easing somewhat among middle market banks,  which may give companies the means to grow to get back at least part of the valuation they lost over the last couple of years.