Benefits of Making Business in Poland | Buy & Sell Business

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

4. Country Overview A nation with a proud cultural heritage, Poland can trace its roots back over 1,000 years. Positioned at the centre of Europe, it has known turbulent and violent times. There have been periods of independence as well as periods of domination by other countries. Several million people, half of them Jews, died in the Second World War. A new era began when Poland became an EU member in May 2004, five years after joining Nato and 15 years after the end of communist rule. It was the birthplace of the former Soviet bloc's first officially recognised independent mass political movement when strikes at the Gdansk shipyard in August 1980 led to agreement with the authorities on the establishment of the Solidarity trade union. A virtual guide to Poland, officially the Republic of Poland, a country in central Europe with a coastline on the Baltic Sea in north.

5. Executive Summary Poland is a member of many international organisations, including, among others, the European Union (EU), the North Atlantic Treaty Organization (NATO), the World Trade Organization (WTO), and the Organisation for Economic Co- operation and Development (OECD). Poland is a republic. The government of the Republic of Poland is based on the separation of and balance between the legislative, executive, and judicial powers. Legislative power is vested in the Sejm and the Senate, executive power is vested in the President of the Republic of Poland and the Council of Ministers, and judicial power is vested in the courts and tribunals. The growth of Polish gross domestic product (GDP) in 2017 was estimated at 4.2%. At the end of 2016, the value of foreign direct investments amounted to almost 167 billion euros (EUR) according to data published by the The Polish Investment and Trade Agency. The biggest foreign investors in Poland come from the Netherlands, Germany, Luxembourg, and France. Most of the investment goes to the manufacturing, financial, and insurance services sectors.

6. Introduction – Doing business in Poland The largest industries in Poland are the agriculture, manufacturing, energy, and tourism industries, of which more below. Agriculture is one of Poland's biggest industries, accounting for 3.8% of the country's GDP and responsible for 12.7% of the country's labour force. Recent OECD economy surveys show that the country's labour market is booming and market growth was strong in 2018. As popular tourist destinations such as Warsaw, Krakow and Wroclaw are hotspots for graduate employment, there will be plenty to explore on your days off. Starting and running a business by a foreigner in Poland. Any foreigner who has a permanent or temporary residence permit may start his own business in Poland on the same terms as local citizens.Even though starting a business itself is extremely easy, it is necessary to fill in a number of documents.

7. Conducting business in Poland You can run business in Poland as natural person (sole trader). Registration of this activity is very easy and fast. You just need to fill in a short form at the city office. Probably you will also need register in tax office as a VAT payer. Actually it takes one day and you can start your business in Poland. If you have business partner and you want cooperate with him, you can establish partnership or company. There are few types of Polish partnerships like: - civil partnership - registered partnership - professional partnership - limited partnership -limited joint-partnership and two types of Polish companies: - limited liability company - joint-stock company

8. Taxation in Poland In many cases, non-residents can benefit from a 20% flat tax rate calculated on their revenues. The flat tax applies to various sources of income, including management fees . The above general rules, resulting from the Polish domestic legislation, may be modified by the applicable double tax treaties . The tax-free amount is set at PLN 8,000. This means that taxpayers earning less per year will be exempt from paying tax. On the other hand, in the case of earnings exceeding the minimum threshold, taxpayers will pay a degressive tax. Individuals running business activities can opt for a flat 19% income tax rate, subject to certain conditions. As of 1 January 2019, individuals who derive in a tax year income exceeding PLN 1 million will need to pay solidarity tax at the rate of 4% on the excess of this amount. An obligation of submitting a separate tax declaration by 30 April of the following tax year will also apply. As of 1 January 2019, individuals who derive in a tax year income exceeding PLN 1 million will need to pay solidarity tax at the rate of 4% on the excess of this amount.

9. Trade Poland is open to international trade, which represents 108% of its GDP (World Bank, 2018). The geographical location gives Poland a strategic importance: the country is in fact situated halfway between Paris and Moscow and between Stockholm and Budapest, and it has important ports that are connected to the North Sea through the Baltic Sea. In 2018, the main trading partners were Germany (27.5%), Czech Republic and the United Kingdom (6.4% each), while the top import origins were Germany (22.6%), China (12%), and Russia (6%). Overall, the EU accounts for 80.3% of Poland’s total exports and 58.3% of its imports. Since Poland became a member of the European Union, its exports have increased by more than 30%. The country historically had a structurally negative trade balance, nevertheless over the last years this trend has reversed. According to data from WTO, in 2018 the country exported nearly USD 260.6 billion worth of goods, an increase of 11.2% year-on-year. Imports of goods grew at a faster pace (14%), reaching USD 266.5 billion.

10. Banking in Poland Poland has the sixth largest banking population in Europe, with the second highest number of banks. The country also has the sixth highest banking sector employment in Europe (EU28). In 2017, the leading five banks in Poland accounted for almost 50 percent of the country's banking sector assets.The economy expanded strongly in 2008 H1 by posting annual growth of 5.9 %. Domestic demand stayed the main driver, with persistently solid growth in consumption and investment. However, recent macroeconomic data confirm that economic growth is gradually decelerating, in line with our expectations. We stand by our forecast of 5.2 % GDP growth yoy this year and 4.2 % in 2009. In July/August the inflation rate peaked this year at 4.8 % yoy. There are 30 Banks in this Country.The Central Bank of Poland is Narodowy Bank Polski, or the National Bank of Poland, which is regulated under the 1997 Constitution, and the National Bank of Poland Act 1997.

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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