Benefits of Making Business in Germany | Buy & Sell Business

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

4. Country Overview Germany officially Federal Republic of Germany, is a Western European country with a landscape of forests, rivers, mountain ranges and North Sea beaches. It has over 2 millennia of history. Berlin, its capital, is home to art and nightlife scenes, the Brandenburg Gate and many sites relating to WWII. One of Europe’s largest countries, Germany encompasses a wide variety of landscapes: the tall, sheer mountains of the south; the sandy, rolling plains of the north; the forested hills of the urbanized west; and the plains of the agricultural east. Germany has the largest population of any EU country. Its territory stretches from the North Sea and the Baltic in the north to the Alps in the south and is traversed by some of Europe's major rivers. .

5. Executive Summary Germany is a federal republic. The lawmakers at the national level are the Bundestag , whose members are elected every four years by popular vote and the Bundesrat , which consists of 69 representatives of the 16 states (Bundesländer). German is the most widely spoken first language in the European Union. Germany is the world's third largest economy, producing automobiles, precision engineering products, electronic and communications equipment, chemicals and pharmaceuticals, and much more besides. Its companies have invested heavily in the central and east European countries which joined the EU in 2004.

6. Introduction – Doing business in Germany Germany is ranked 22 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Germany improved to 22 in 2019 from 24 in 2018. There are many good reasons for doing business in Germany. As Europe's largest market, the country is an attractive place for investors from all over the world. Germany is an innovative leader across many areas of technology, having a highly qualified workforce and developed infrastructure. SMEs in particular benefit from the well-organised business environment and secure legal climate.

7. Conducting business in Germany There are 5 main business entities in Germany : •Limited Liability Corporation (GmbH) •Mini – GmbH •Stock Corporation (AG) •Partnerships •Sole Proprietors The business in German are required to register themselves. The registration is based on different criteria like the use of commercial accounting, capital resources, annual turnover and number of employees. Small businesses like civil partnerships (GbRs), freelancers and dependent branch offices do not need register in the commercial register.

8. Taxation in Germany In Germany, every citizen's earnings are subject to a basic tax allowance, including researchers and scientists coming from abroad. Any amount after that is subject to income tax. Income tax in Germany is progressive: first, income tax rates start at 14%, then they rise incrementally to 42%; last, very high income levels are taxed at 45%. The top tax rate of 42% applies to taxable income above €55,961. .

9. Trade Germany is the 2nd largest export economy in the world and the 3rd most complex economy according to the Economic Complexity Index (ECI). In 2017, Germany exported $1.33T and imported $1.08T, resulting in a positive trade balance of $251B. In 2017 the GDP of Germany was $3.68T and its GDP per capita was $50.6k. The top exports of Germany are Cars ($158B), Vehicle Parts ($64.1B), Packaged Medicaments ($50.6B), Planes, Helicopters, and/or Spacecraft ($27.2B) and Human or Animal Blood and Vaccines ($23.7B), using the 1992 revision of the HS (Harmonized System) classification.. Its top imports are Cars ($60B), Vehicle Parts ($42.1B), Crude Petroleum ($30.1B) and Packaged Medicaments ($25.8B).

10. Banking in Germany Germany has a non-discriminatory, well-developed financial services infrastructure. Although corporate financing via capital markets is on the rise, Germany’s financial system remains mostly bank-based, with bank loans serving as the predominant form of funding for firms, particularly the small and medium sized enterprises of Germany’s famed Mittelstand. Germany’s universal banking system allows the country’s more than 36,000 bank offices not only to take deposits and make loans to customers but also to trade in securities. There are no reports of a shortage of credit in the German economy. Credit is available at market-determined rates to both domestic and foreign investors.

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