Benefits of Making Business in Moldova | Buy & Sell Business

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

4. Country Overview Moldova, country lying in the northeastern corner of the Balkan region of Europe. Its capital city is Chișinău, located in the south-central part of the country. Moldova is bounded by Ukraine to the north, east, and south and by Romania to the west. The bulk of the republic lies between the great meandering Prut and Dniester rivers. Its wine regions include Nistreana, known for reds, and Codru, home to some of the world’s largest cellars. Capital Chișinău has Soviet-style architecture and the National Museum of History, exhibiting art and ethnographic collections that reflect cultural links with neighboring Romania.

5. Executive Summary Moldova has a well-developed network of rivers and streams, all draining south to the Black Sea, but only about one-tenth of these exceed 6 miles (10 km) in length, and even fewer exceed 60 miles (100 km). About three-fourths of Moldova’s population consists of ethnic Moldovans. There are smaller populations of Ukrainians, Russians, Gagauz, Roma (Gypsies), and Bulgarians. Moldovan is designated as the country’s official language in the constitution. More than half of the country’s land is arable, and most of that land is used to grow temporary crops. About one-tenth of the land is used to cultivate permanent crops.

6. Introduction – Doing business in Moldova Moldova is ranked 48 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Moldova deteriorated to 48 in 2019 from 47 in 2018. While a number of large foreign companies have taken advantage of tax breaks in the country’s free economic zones, foreign direct investment remains low. The National Strategy for Investment Attraction and Export Promotion 2016-2020 identified seven priority sectors for investment and export promotion: agriculture and food, automotive, business services such as business process outsourcing (BPO), clothing and footwear, electronics.

7. Conducting business in Moldova The following forms of business legal entities (for-profit) may currently be incorporated in Moldova: •Limited liability company (SRL / LLC); •Joint-stock company (SA / JSC); •General partnership; •Limited partnership; •Co-operatives. In general, the form of business organisation does not influence the type of activity to be carried out by a legal entity. On the other hand, certain types of activity expressly provided by the law may be carried out only based on a license, issued by the public authorities.

8. Taxation in Moldova local supplies of bread and bakery products; milk and dairy products; transport and distribution of natural gas services; biofuels used for electricity, heating, and hot water production; etc. Company Tax : Standard corporate income tax rate: 12% Individual entrepreneurs: 12% Farming enterprises: 7% Small and medium companies that are not registered as VAT payers: 4% of turnover (provided certain conditions are met) Withholding Taxes :Dividends: 6%, Interest: 12%, Royalties: 12% Rental Value Added Tax (VAT) A reduced VAT rate of 8% applies to several products, including:

9. Trade Moldova is the 120th largest export economy in the world and the 76th most complex economy according to the Economic Complexity Index (ECI). In 2017, Moldova exported $2.96B and imported $5.07B, resulting in a negative trade balance of $2.11B. In 2017 the GDP of Moldova was $8.13B and its GDP per capita was $5.7k. The top exports of Moldova are Insulated Wire($349M), Sunflower Seeds ($224M), Wheat ($147M), Wine ($118M) and Seats ($108M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($475M), Packaged Medicaments ($209M), Cars ($168M), Insulated Wire ($144M) and Broadcasting Equipment($98.2M).

10. Banking in Moldova The Moldova’s banking system was set up in two tiers in 1991 around the time of the breakup of the USSR and currently comprises a central bank and 11 commercial banks. The central bank licenses, supervises, and regulates the activity of financial institutions. Moldova has four foreign banks; among them Societe Generale’s Mobiasbanca and Erste Bank’s BCR are the most well-known. While Moldova’s regulatory landscape does not prevent banks from opening offices in other towns, most bank offices are concentrated in Chisinau, which is both the administrative and economic capital of Moldova.

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

12. Looking to Buy or Sell a Business? CONTACT US NOW FOR A FREE BUSINESS VALUATION WWW.MERGERSCORP.COM

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