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Schedule a FreeConsultationinfo@tier1capital.com570-550-9002 154 Enterprise Way Pittston, PA 18640www.tier1capital.comSUCCESSION & EXECUTIVERETIREMENT 6 CRITICAL CONSIDERATIONSWHEN PLANNINGIN YOUR FAMILY REI BUSINESSSpecial Focus Edition:Real Estate Investors

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Family-owned real estateinvestment (REI) businesses likeyours are in the midst of the biggesttransfer of wealth ever documented. And we are in the midst of the biggest transfer ofwealth ever documented as Americans at retirementage pass an estimated $68 trillion to the nextgeneration.1CNBC 1.

www.tier1capital.cominfo@tier1capital.com 570-550-9002 And considering 68% of Americans planto leave real estate to their children, it’slikely that plenty of real estate investorsplan to do the same. Investors must have a plan in place toleave their property assets and/or REIbusiness to the next generation. Clearly a lot is riding on the successof this massive wealth transfer. Source: Barron’s

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Yet more than half—56%—haven’t sharedthese intentions. This suggests that whileREIs plan to leave their wealth to theirchildren, they are unprepared to do so. Source: Barron’s

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Investors want to keep the business in thefamily more than ever……But few are ready for it.Nearly half of those expecting to retire in five yearshave yet to even choose a successor, let aloneadequately prepare their organization for theirdeparture.According to a Market Pulse survey of the U.S. marketconducted by the International Business BrokersAssociation, around 80 percent of small businessowners didn’t have an exit plan the year before theyput their business on the market.Even among much larger, more sophisticatedbusinesses—those valued at $5 million to $50 million—67 percent of owners didn’t have an exit plan.2UBS IBBA1.2.1

www.tier1capital.cominfo@tier1capital.com570-550-9002 A lack of preparation could be aproblem in the current economy. Almost $175 billion of real estate credit isalready distressed, according to datacompiled by Bloomberg. That’s nearly four times more than thenext biggest industry. REIs are faced with high interest ratesand the end of easy money, forcing manyinvestors to make a tough decision:foreclosure.Source: Bloomberg

www.tier1capital.cominfo@tier1capital.com 570-550-9002 But despite the current economicclimate, your real estate portfolio has thepotential to provide for your family longafter you’re retired. But only if you have a practical anddocumented succession plan in place.

www.tier1capital.cominfo@tier1capital.com 570-550-9002 To help keep your wealth and realestate in your family, consider these6 critical areas when planning yoursuccession.

01Your LegacyHow will you be remembered? Based on survey data from a 2021UBS report, family business ownerswant, above all, to create anenduring asset for futuregenerations. Legacy matters toinvestors—it’s top of mind for two-thirds (64%) of the respondents intheir survey.www.tier1capital.cominfo@tier1capital.com 570-550-9002

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Business owners have investedheavily in the company overthe years. For most family-runsmall businesses, most of theirnet worth is tied to thecompany.But it’s more than just afinancial tether: these businessowner’s personal identities area part of the business, too.Perhaps that’s why over one-fifth of entrepreneurs neverplan to retire and why businessowners on average retire 11.6years later than theiremployees.

www.tier1capital.cominfo@tier1capital.com570-550-9002 The older we get, the harder it is togrow our portfolios and adapt tochanging market demands. Seriouslyconsider the timing of your departureand what is best for your legacy. Counterintuitively, hanging on toolong can do more harm to yourlegacy than good.

02Your Successor Poor leadership Bad moraleInconsistent quality standards Risky InvestmentsWhen an unqualified or uninterestedsuccessor takes the reins, it can create a lotof issues. Poor choice in successor can lead to…www.tier1capital.cominfo@tier1capital.com 570-550-9002 Don’t make the commonmistake of assuming yourchildren will want to takeover the business. First, have a candid conversation with yourchildren about running the business. If theyare interested, it’s up to you to ensure thatthey are ready when the time comes. Often it takes the founder their entire careerto learn to run the company. Don’t take forgranted the skills and competencies they’llneed to be successful. Give successors plenty of time to learn thebusiness before you exit.

03InvoluntaryDepartureAnd we also know they happen suddenlyand without warning. In the event of divorce, accident, or death,many key persons leave their organizationvulnerable. According to the Exit PlanningInstitute, half of exits in the U.S. areinvoluntary and due to death, divorce,disability, distress, or disagreement. In the case of an unexpected andinvoluntary departure, you need a plan inplace to keep your business runningsmoothly. www.tier1capital.cominfo@tier1capital.com 570-550-9002 An exit strategy isn’t only inplace in the event ofretirement. We all knowaccidents and unforeseencircumstances happen. Source: Exit Planning Institute

04EstateEqualization When the time comes for successionplanning, one of the biggest challengesyou’ll face is estate equalization. Who getswhat, and why? While at first glance it mayseem reasonable to leave the company to aspouse or partner. But what if that personhas no interest or is incapable of running thebusiness? It may also seem fair and just to dissolve thebusiness and divide the portfolio equallyamong children or family members. Butwhat if those interested in running thebusiness are forced to buy others out?We’ve seen investors go bankrupt fromsituations like these.www.tier1capital.cominfo@tier1capital.com 570-550-9002

Improperly handled estates can tear apart a family. www.tier1capital.cominfo@tier1capital.com 570-550-9002 Perhaps that’s why 32% of family businesses surveyed in 2012 wereapprehensive about the transfer of the business to the next generation and9% saw the possibility of family conflict as the cause of this apprehension. The decision of whom to leave the company to and how to make it fair toall parties involved is a complicated matter. However, leaving successors tosort it out themselves only prolongs the issue. Source: PwC

www.tier1capital.cominfo@tier1capital.com570-550-9002 If the successors chosen donot want to run the business,unplanned succession andlack of estate equalizationcan force businesses toscramble for talent.

05Keeping KeyPersons Finding talented employees hasalways been hard. But the currenteconomic climate makes it even moredifficult. A new Gallup analysis finds that 48% ofAmerica's working population isactively job searching or watching foropportunities and the U.S. Bureau ofLabor Statistics reveals anunprecedented resignation rate.www.tier1capital.cominfo@tier1capital.com 570-550-9002

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Meanwhile, employers are still struggling to fill open positions. In the chart from the Bureau of Labor Statics below, you can see the quit rate dramatically decreaseduring the pandemic in 2020, only to rebound dramatically in 2021 through 2022. With the quit-rate at a near all-time high and nearly half of Americans looking for new opportunities,keeping key persons has never been more critical.

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Those planning to leave theirbusiness to their children arefaced with a unique challengein this labor market: How toretain key personnel withoutgiving away equity in thebusiness.

06FundingStrategies Lack of liquid capital causes an estimated33% of small business owners to struggleor fail.www.tier1capital.cominfo@tier1capital.com 570-550-9002 It’s common for real estateinvestors to leverage debt to buy aproperty, work hard to increasecash flow to pay off that debt, andfind themselves once again cash-poor. That limits your optionswhen the market changes or youwant to take advantage of anopportunity. 70% of small businesses haveoutstanding debt.29% of small businesses fail because theyrun out of capital.Only 48% of small businesses have theirfinancing needs met.A succession strategy is only viable if itcan be funded properly. SBCS Fundera 1.2.2111

What most real estate investors don’trealize is that as long as they meet acertain criteria, they can leverage smartfinancial strategies to increase theirliquidity without assuming more bad debt. This increase in cash flow can cover thecost of retiring one generation as well asprovide for the operational expenses ofthe organization.With the right advisor on your team, it’spossible to increase cash flow and provideliquidity through other tax-advantagedstrategies. www.tier1capital.cominfo@tier1capital.com570-550-9002

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Am I ready to create a succession plan? If you meet the criteria above, it’s time toget serious about planning for the future. You are a small-to-medium business (SMB)with between 5-250 employeesYou have been in business for over 10 years You are passionate about your businessand legacy You are solution-focused You are in business or a partner with/tofamily members Your business is family-owned and/or youintend to leave it to your family Succession planning can begin as soon as youcreate your business. But formal planningwith an experienced succession strategistshould begin when you reach most of thefollowing criteria:

www.tier1capital.cominfo@tier1capital.com 570-550-9002 How Do You Know You’ve Foundthe Right Succession Strategistfor Your Real Estate Business?

01www.tier1capital.cominfo@tier1capital.com 570-550-9002 The right succession plannerspecializes in retirement andsuccession planning, notmanaging assets. Most financial planners manage assetslike 401Ks, retirement accounts, and otherinvestments.But a successful small to medium-sizedbusiness needs a very specialized type offinancial advice—legacy and successionmanagement—to assure the longevity ofthe enterprise for generations to come.

02www.tier1capital.cominfo@tier1capital.com 570-550-9002 The best succession plan doesn’trely on an everyday life insurancepolicy to cover the costs oftransferring the business. If you were hoping your run-of-the-milllife insurance policy will cover the costs tofind a successor and keep the companymoving forward, your legacy may be injeopardy.In fact, many successful, multi-milliondollar companies go bankrupt simplybecause key persons did not create asmart succession strategy, or funded itthe wrong way.

03A strong succession strategy increases youraccess to liquidity now AND in the future.If you’ve taken on a lot of debt to grow your business, you’re not alone.As we stated earlier, 70% of small businesses have outstanding debt. And there is nothing wrong with debt. But if you’ve found yourself in adebt cycle, you may be limiting your options when it comes to investingin new opportunities. The right advisor can explore other tax-advantaged strategies to increase your cash flow. www.tier1capital.cominfo@tier1capital.com570-550-9002 You should never have to say “no” when the right opportunitylands at your doorstep.

04The best financial service providers aren’t lockedinto financial options from a single provider.Most financial service providers are what is called “captive,” meaningthey are only allowed to offer you products from the company theyrepresent. This means that even if there are better products out there,these providers can’t recommend them. Many small businesses are unaware that they are acceptingunnecessary risks through these providers. www.tier1capital.cominfo@tier1capital.com 570-550-9002 This unknown risk can leave the company exposed to hardshipduring economic downturns or changes in leadership.

05The best advisor never exposes you tounnecessary risk or debt.An advisor should never expose you and your business to unnecessaryrisk. Many organizations will silently put the risk back on you, the client,through clever strategies because it’s what’s in their best interest.www.tier1capital.cominfo@tier1capital.com 570-550-9002 Your advisor must look out for your best interests and be able toshield your organization from unforeseen risks.According to a small business credit survey by the Federal Reserve Banks,70% of small and medium sized businesses carry debt. But debt doesn’thave to be a bad thing. A future-focused advisor knows how to leveragegood debt to your business advantage over the short and long term.

www.tier1capital.cominfo@tier1capital.com 570-550-9002 Where can you find a trustedsuccession strategist?

Tier 1 Capitalspecializes insuccessionstrategy. www.tier1capital.cominfo@tier1capital.com 570-550-9002 It’s your business to run your business.It’s ours to make sure it outlives you. We help business owners design andfund businesses succession plans, exitstrategies, and key person and selectiveexecutive benefits. Unlike personalfinancial planners, we prepare businessesfor the event that a partner or key personpasses away. We also specialize in funding retirementand financial security and estateequalization, meaning family membersnot directly involved in the business arestill compensated fairly. Don’t let your hard work disappear whenyou retire.

Your legacy issafe with Tier 1 Capital. www.tier1capital.cominfo@tier1capital.com570-550-9002 The next generation will face many challengeswhen they take over the business. While wecan’t solve all of them, we can promise to ensurethat they will never be blindsided by unforeseentaxes, expensive buy-outs, and any otherfinancial complications unique to businesssuccession. If an agent is a Million Dollar Round Table Top ofthe Table (MDRT) member, they are in the top10% of their industry. With it comes a highercode of ethics to uphold, which is monitored bythe association. You can trust an MDRT. Tim from Tier 1 Capital has qualified for thisesteemed status 10 times throughout his career.Your legacy is safe with Tier 1 Capital. Prepare your family to successfully pass on yourlegacy for generations to come.

Tier 1 Capitalunderstands thatcash is thelifeblood of smallbusinesses. www.tier1capital.cominfo@tier1capital.com 570-550-9002 Many clients come to us knowing they needour help, but are concerned about the cost. What sets us apart is our unique ability tohelp businesses find money within theircurrent cash flow to fund the solutions withminimal impact on their current cash flow. This allows the business to achieve theirfinancial goals and help them sleep better atnight knowing their operational costs arecovered. We help business owners continue to growtheir business and secure their financialfuture without worrying about paying for ourservices.

Tier 1 canleverage debtin your favor. www.tier1capital.cominfo@tier1capital.com 570-550-9002 Equipment, property, operational costs,employee benefits, and other expensesrequire businesses to acquire debt. Andyet most advisors that call themselves“comprehensive” don’t address it. But debt isn’t necessarily a bad thing. Wehelp businesses take control of their debtto their business advantage over the shortand long term.Let us help you take control of your debt.

Tier 1 Capitalnever putsunnecessary riskonto the client. www.tier1capital.cominfo@tier1capital.com 570-550-9002 Many captive solutions put financialrisk back onto the client because it’sless risky for the institution. We don’t have that problem. Insteadwe are free to advise you inwhatever direction is best for yourbusiness with products andsolutions that have proven to beeffective. We give our clients the samefinancial advice we give our ownfamilies, because we’re a familybusiness too.

www.tier1capital.cominfo@tier1capital.com 570-550-9002 We give our clientsthe same financialadvice we give ourown families, because we’re afamily business too!

We thrivebecause youthrive. www.tier1capital.cominfo@tier1capital.com570-550-9002 Tier 1 Capital, LLC is here to help youachieve your financial goals.Our professional team of experts haveover 35 years of experience and canshow you how to utilize this provenmethod to achieve your business goalsand keep control of your money.

INGOUDE COMPANYFinding That TrustedResource is Simplewww.tier1capital.cominfo@tier1capital.com 570-550-9002 Call Tier 1 Capital at 570-550-9002 orSend us an email to:info@tier1capital.comWe’ll meet with you and uncover yourgoals and the unique needs of yourbusiness. We’ll also find out where you’relosing money without even realizing it.Then we’ll design a custom strategy for asmooth succession and a stable securefuture for you. And will do it withoutaffecting your cash flow.123

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