Benefits of Making Business in Bulgaria | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN BULGARIA WWW.MERGERSCORP.COM

2. At MergersCorp M&A International we help our clients confidentially buy and sell privately held businesses, aligning the interests of all parties for mutual success and satisfaction. It is our goal to make the process of either buying a new business or selling your current business as smooth and efficient as possible. We know how important confidentiality is to our sellers and we treat it with the utmost importance. WWW.MERGERSCORP.COM

3. BENEFITS OF MAKING BUSINESS IN BULGARIA WWW.MERGERSCORP.COM

4. Country Overview Bulgaria, officially Republic of Bulgaria, Bulgarian Republika Bŭlgariya, country occupying the eastern portion of the Balkan Peninsula in southeastern Europe. Founded in the 7th century, Bulgaria is one of the oldest states on the European continent. Nearly rectangular in outline, Bulgaria is bounded by Romania to the north, with most of the border marked by the lower Danube River. The Black Sea lies to the east, Turkey and Greece to the south, North Macedonia to the southwest, and Serbia to the west. The capital city, Sofia, lies in a mountainous basin in the west. Bulgaria has a complex drainage pattern characterized, with the notable exception of the Danube, by relatively short rivers. The major rivers are the Maritsa (Marica), Iskŭr, Struma, Arda, Tundzha, and Yantra. Overall, more than half of the runoff drains to the Black Sea, and the rest flows to the Aegean Sea.

5. Executive Summary Agriculture accounts for less than one-tenth of the national income of Bulgaria. Cereal crops are grown on almost three- fifths of the sown land. Wheat is by far the most important, followed by corn (maize) and barley; rye, oats, soybeans, and rice also are grown. Tobacco, which is of a good-quality Oriental type and is grown mainly in the south, is an especially important industrial crop. Sofia, the capital, is the largest city and dominates the economic and cultural life of the country. Plovdiv, another major industrial and cultural centre, is located in the south-central region; it enjoys a scenic location on the Maritsa River and is host to an annual international trade fair

6. Introduction – Doing business in Bulgaria Bulgaria is ranked 61 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Bulgaria deteriorated to 61 in 2019 from 59 in 2018. Bulgaria became a member state of the European union in 2007. It is classified as an upper-middle-income country by the World Bank. The Bulgarian economy is a free market economy. Economically Bulgaria can be qualified as a developed industrial country and an attractive place for attractive tourism and sport-lovers because of its incredible natural resources. Bulgaria has become a very interesting choice for opening a business because of the business advantages it offers but also because of the clear tax and human resources advantages it has over other European countries.

7. Conducting business in Bulgaria It takes almost three weeks to start a business in Bulgaria, most of which is spent registering with the Commercial Register at the Registry Agency and filing for VAT. A deposit should be paid in full to a Bulgarian bank and articles of incorporation must also be completed. Property registration takes just over two weeks to complete. A sketch of the estate has to be drafted by the municipality and a tax valuation of the property should be made. A certificate of good standing then has to be issued for the seller and buyer and a certificate from the Real Estate Register has to be picked up before tax can be paid and final registration completed.

8. Taxation in Bulgaria All income earned in Bulgaria is taxed on a flat rate of 10%. Employment income earned in Bulgaria is also subject to various social security insurance contributions. Corporate income tax is also a flat 10%. Value-Added Tax applies at a flat rate of 20% on virtually all goods and services.

9. Trade Bulgaria is the 59th largest export economy in the world and the 46th most complex economy according to the Economic Complexity Index (ECI). In 2017, Bulgaria exported $31B and imported $34.5B, resulting in a negative trade balance of $3.53B. In 2017 the GDP of Bulgaria was $58.2B and its GDP per capita was $20.9k. The top exports of Bulgaria are Refined Petroleum ($2.04B), Refined Copper ($1.62B), Raw Copper ($1.21B), Wheat ($871M) and Packaged Medicaments ($812M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Copper Ore ($3.05B), Crude Petroleum ($2.58B), Packaged Medicaments ($1.16B), Cars ($1.09B) and Refined Petroleum ($836M).

10. Banking in Bulgaria The Bulgarian National Bank (BNB) serves as the central monetary authority in Bulgaria. In 2007, the BNB became a full member of the European System of Central Banks, actively participating in the decision-making process of the European Union relating to banking and finance matters. It oversees banks in Bulgaria and maintains the stability of the local currency.

11. Our M&A Process NEGOTIATION & CLOSE POST MERGER INTEGRATION (PMI) INTEGRATION (PMI) POST MERGER TARGET APPRAISAL APPROACH DUE DILIGENCE Key Areas  Target & market analysis;  Initial assessment of synergies & value drivers;  Indicative valuation;  Go or No-Go decision;  Preparation of transaction documents (NDA – Non- disclosure Agreement/LOI- Letter of Intent);  Select Transaction team;  Appoint advisors;  Consider funding ability.  Initial approach letter;  Signing of NDA;  Prepare & share initial information requests;  Formulation of LOI (Letter of Intent) & possible negotiations;  Initial meeting and Q&A;  Circulate information on the Target to the Transaction team.  Set scope of due diligence;  Set up VDR (virtual data room);  Coordinating of due diligence, further meetings and Q&A sessions;  Consider points relevant to the Post-Merger (PMI) phase;  Revisit indicative valuation & prepare detailed valuation based on due diligence findings;  SPA negotiations with the seller;  Development of final structure (share/asset deal) and final valuation;  Approvals;  Signing of SPA & Close.  Consider the extent of integration;  Development of 100 Day PMI Plan;  Consider short & long term objectives;  Estimate requirements to capture synergies;  Determine resource needs & optimal allocation. Parties Involved  CFO;  Head of M&A;  Accountants;  Corporate finance advisors;  Consultants.  Senior management;  CEO, CFO, CTO;  Strategy director;  Head of M&A;  Head of Business Development;  Consultants.  Company general counsel;  Lawyers;  Senior management.  Company general counsel;  Lawyers;  Senior management/HR. 11 © Midaxo 2018 www.midaxo.com

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13. MergersCorp.com The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Member firms of the MergersCorp network of independent firms are affiliated with MergersCorp International. MergersCorp International provides no client services. No member firm has any authority to obligate or bind MergersCorp International or any other member firm vis-à-vis third parties, nor does MergersCorp International have any such authority to obligate or bind any member firm. Copyright © 2020 MergersCorp International. All rights reserved. 13 © Midaxo 2018 www.midaxo.com