Benefits of Making Business in Libya | Buy & Sell Business

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

4. Country Overview Libya, country located in North Africa. Most of the country lies in the Sahara desert, and much of its population is concentrated along the coast and its immediate hinterland, where Tripoli (Ṭarābulus), the de facto capital, and Banghāzī (Benghazi), another major city, are located. Libya comprises three historical regions—Tripolitania in the northwest, Cyrenaica in the east, and Fezzan in the southwest. The Ottoman authorities recognized them as separate provinces. Under Italian rule, they were unified to form a single colony, which gave way to independent Libya. For much of Libya’s early history, both Tripolitania and Cyrenaica were more closely linked with neighbouring territories than with one other. Almost all Libyans speak Arabic, the country’s official language. Most Libyans are Muslim, and the vast majority are Sunnis.

5. Executive Summary Before the discovery of oil in the late 1950s, Libya was considered poor in natural resources and severely limited by its desert environment. The country was almost entirely dependent upon foreign aid and imports for the maintenance of its economy; the discovery of petroleum dramatically changed this situation. The government long exerted strong control over the economy and attempted to develop agriculture and industry with wealth derived from its huge oil revenues. It also established a welfare state, which provides medical care and education at minimal cost to the people. Although Libya’s long-ruling leader Muammar al- Qaddafi espoused an idiosyncratic political ideology rooted in socioeconomic egalitarianism and direct democracy, Libya in practice remained an authoritarian state, with power concentrated among members of Qaddafi’s inner circle of relatives and security chiefs. Opposition to the Qaddafi regime reached an unprecedented level in 2011, developing into an armed revolt that forced Qaddafi from power. (For a discussion of unrest in Libya in 2011, see Libya Revolt of 2011.) .

6. Introduction – Doing business in Libya Libya is a diverse and challenging market requiring adaptability and persistence but potentially rewarding market. Opportunities exist in almost every sector, from oil & gas to agriculture to telecommunications and tourism. The economy depends largely upon revenues from the oil sector, which contribute practically to all export earnings. These oil revenues have allowed the government to accumulate foreign exchange reserves worth $45 billion on annual oil sales now running at $20 billion. Libya’s physical infrastructure is in a state of disrepair, and telecommunication services are inadequate. Office space is limited, and the few Western-class hotels are often filled to capacity. U.S. companies wishing to send representatives to Libya are advised to expect considerable delays in obtaining Libyan visas..

7. Conducting business in Libya and brands. The government aims to open up the Libyan economy to more industrialization with increased private sector participation and investment of foreign capital. Law No. 9/2010 was enacted to attract the investment of foreign capital. Libyan law requires that all companies formed in Libya must be Libyan-controlled. Foreign companies operating in Libya tend to operate through a branch or a branch of subsidiary. A foreign company must register its branch with the Ministry of Economy & Trade and International Co-operation. Once registration is completed a three to five years renewable business license is issued. Libya is becoming a business hot spot that offers amazing prospects for investors and is enjoying an influx of foreign stores

8. Taxation in Libya Taxation issues in Libya are particularly important for foreign investors. Rules are not always interpreted consistently and practices are prone to change with little notice. Local tax advice and assistance is therefore essential. The principal taxes in Libya are the following: Revenue Tax - Main contracts: 1% Subcontracts: 0.1% **Note that there is a duty of 0.5% on all payments to the Tax Department Corporation Tax - 15% to 40% of the assessed profit Salaries and Wages Tax - 8% to 15% Jehad Tax - 3% to 4% Withholding Taxes - 0.2% to 0.5%

9. Trade Libya is the 73rd largest export economy in the world and the 104th most complex economy according to the Economic Complexity Index (ECI). In 2017, Libya exported $16.1B and imported $8.07B, resulting in a positive trade balance of $7.98B. In 2017 the GDP of Libya was $38.1B and its GDP per capita was $19.6k. The top exports of Libya are Crude Petroleum ($14.1B), Petroleum Gas ($927M), Refined Petroleum ($535M), Scrap Copper ($83.2M) and Scrap Iron ($73.2M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($1.55B), Wheat ($238M), Cars ($209M), Packaged Medicaments ($187M) and Sheep and Goats ($181M).

10. Banking in Libya The Central Bank of Libya (CBL) is the monetary authority in Libya. It has the status of an autonomous corporate body. The law establishing the CBL stipulates that the objectives of the central bank shall be to maintain monetary stability in Libya and to promote the sustained growth of the economy in accordance with the general economic policy of the state. The headquarters of the Central Bank are in Tripoli. However, to make the CBL services more accessible to commercial banks, branches and public departments located far from the headquarters. The CBL has three branches, located in Benghazi, Sabha and Sirte. There are about ten major banks in Libya: the Central Bank of Libya, the Agricultural Bank, the National Commercial Bank, the Commerce & Development Bank, the Arab Foreign Bank, the Savings and Real Estate Investment Bank, the Sahara Bank, al- Jamahiriya Bank, the Umma Bank, and the Wahda Bank.

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