Benefits of Making Business in Andorra | Buy & Sell Business

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

4. Country Overview Andorra is a tiny country in south western Europe, located in the eastern Pyrenees mountains and bordered by Spain and France. Once isolated, it is currently a prosperous country mainly because of tourism and its status as a tax haven. The people of Andorra are currently listed as having the highest human life expectancies on Earth, at 83.52 years (2007 est). Andorra is 466 km² and their capital city is Andorra la Vella. Andorra is not part of the European Union but it uses the Euro as its currency. The mainstay of the highly-prosperous economy is tourism, accounting for about 80% of GDP.

5. Executive Summary In one way or another, tourism accounts for 80% of the Andorran economy. There is some local manufacturing, including tobacco processing, but Andorra is structurally import-dependent. An estimated 10 million people visit each year, Andorra is the 16th-smallest country in the world by land and the 11th-smallest by population. Andorra is home to folk dances like the contrapàs and marratxa, Among the most important festivals and traditions are the Canólich Gathering in May.

6. Introduction – Doing business in Andorra The Principality of Andorra is a microstate bordered by France and Spain. Due to its unique location at the heart of Europe it is an attractive place to set up a business. Since Andorra is the sixth smallest nation in Europe, space is limited and expensive. Only 8% of Andorra’s land is suitable for construction. Natural resources are limited as well. They include for example hydroelectric power, mineral water, timber, iron ore and lead. Due to that, the Andorran economy is based on the tourism and its banking sector.

7. Conducting business in Andorra This is a private company with limited liability (LTD). This legal form of the enterprise is ideal for small businesses. Possible spheres – trade, services, small business. For registration S.L. you need a registered capital of 3000 €. The state single registration fee is 1104.77 € and 5.36 € (registration tax for the name of the enterprise in the Catalan language). State taxes and duties are annually around 850 €. This legal form of the enterprise is ideal for medium and large businesses, including large enterprises with a large number of shareholders. The authorized capital is 60,000 €. State single registration fee – 803 €

8. Taxation in Andorra As with any country, there are some nuances and details, but in a nutshell, Andorra's tax rates are: 10% on income for residents and companies, no sales tax, but there is a 4.5% VAT, there is no inheritance, estate or transfer tax and no tax is paid on Andorran investment income.

9. Trade Andorra is the 183rd largest export economy in the world. In 2017, Andorra exported $107M and imported $1.43B, resulting in a negative trade balance of $1.32B. In 2017 the GDP of Andorra was $3.01B and its GDP per capita was $39.1k. The top exports of Andorra are Integrated Circuits($17.7M), Refined Petroleum ($14.8M), Essential Oils ($10.8M), Orthopedic Appliances ($10.3M) and Cars ($9.1M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Cars ($126M), Refined Petroleum ($80M), Perfumes ($45M), Hard Liquor ($36.6M) and Shaving Products ($36.2M).

10. Banking in Andorra The Andorra banking sector is one of the principality’s most important industries. That means, in part, that it’s highly regulated and, as a new resident in Andorra, it will be relatively easy to find a bank. The Banking in Andorra is controlled by five banking groups: • Andbank, •Banc Sabadell d’Andorra, •Crèdit Andorrà, •Mora Banc, and, •Vall Banc (formerly Banca Privada d’Andorra). Banks in Andorra focus on serving local clientele with retail bank accounts and private banking services for residents and commercial banking for local businesses.

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