Benefits of Making Business in Brazil | Buy & Sell Business

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

4. Country Overview Brazil, officially Federative Republic of Brazil, Portuguese República Federativa do Brasil, country of South America that occupies half the continent’s landmass. It is the fifth largest country in the world, exceeded in size only by Russia, Canada, China, and the United States, though its area is greater than that of the 48 conterminous U.S. states. Brazil faces the Atlantic Ocean along 4,600 miles of coastline and shares more than 9,750 miles of inland borders with every South American country except Chile and Ecuador—specifically, Uruguay to the south; Argentina, Paraguay, and Bolivia to the southwest; Peru to the west; Colombia to the northwest; and Venezuela, Guyana, Suriname, and French Guiana to the north. Brazil stretches roughly 2,700 miles from north to south and from east to west to form a vast irregular triangle that encompasses a wide range of tropical and subtropical landscapes, including wetlands, savannas, plateaus, and low mountains.

5. Executive Summary Brazil is the fifth most-populous country on Earth and accounts for one-third of Latin America’s population. Most of the inhabitants of Brazil are concentrated along the eastern seaboard, although its capital, Brasília, is located far inland and increasing numbers of migrants are moving to the interior. Rio de Janeiro, in the eyes of many of the world, continues to be the preeminent icon of Brazil. The nation’s burgeoning cities, huge hydroelectric and industrial complexes, mines, and fertile farmlands make it one of the world’s major economies. Portuguese is the first language of the vast majority of Brazilians, but numerous foreign words have expanded the national lexicon. About two-thirds of the Brazilian people adhere to Roman Catholicism, which ceased to be the official religion after the proclamation of the republic in 1889.

6. Introduction – Doing business in Brazil Brazil presents investors with a raft of appealing commercial opportunities. When combined with the key benefits of doing business in Brazil, the opportunities become clear and accessible. While the Brazilian business environment has its complexities, partnering with a local group will ensure that you are able to successfully navigate these complexities and experience success in the market. Brazil has traditionally been a global leader in agriculture, and this is still true today. Commercial opportunities are available to companies who have access to new technologies, equipment, and services, and who can assist to modernize and make more efficient the agricultural sector.

7. Conducting business in Brazil Most foreigners in Brazil are working for global enterprises in the metropolitan areas though, which management styles are only slightly influenced by local traditions. Good manners and keeping up appearances are a must while doing business in Brazil. Rich in mineral wealth including iron and oil, and with its large population of over 194 million, predominantly comprising a young and highly-motivated workforce, the potential for doing business in Brazil should not be underestimated by any organisations who have a strong drive to expand globally.

8. Taxation in Brazil Brazil has a progressive personal taxation system under which individuals are taxed up to a maximum of 27.5% of their income. The Brazilian fiscal year begins on Jan. 1 and ends on Dec. 31. The rate is progressive from 0% to 27.5% and shared out into three brackets. The taxpayer is required to file his/her tax return by the 30 April of the year following the end of the taxable year. There is no provision for an individual to obtain an extension of time for filing the return.

9. Trade Brazil is the 22nd largest export economy in the world and the 37th most complex economy according to the Economic Complexity Index (ECI). In 2017, Brazil exported $219B and imported $140B, resulting in a positive trade balance of $78.3B. In 2017 the GDP of Brazil was $2.06T and its GDP per capita was $15.5k. The top exports of Brazil are Soybeans ($25.9B), Iron Ore ($20.1B), Crude Petroleum ($17.4B), Raw Sugar ($11.4B) and Cars ($6.78B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($11.4B), Vehicle Parts ($5.1B), Packaged Medicaments ($3.1B), Integrated Circuits ($3.03B) and Cars ($3B).

10. Banking in Brazil A banking reform enacted in December 1964 provided for the establishment of the Central Bank of the Republic of Brazil (changed in 1967 to the Central Bank of Brazil), with powers to regulate the banking system and the stock market. The Central Bank serves as the financial agent of the federal government and functions as a depository for the reserves of private banks. The reform also created the National Monetary Council, which formulates monetary policies for the Central Bank. The Brazilian banking system offers a substantial range of services for both private individuals and companies. Banking rules are strictly enforced, and all banking business is monitored by the banks themselves and by the Central Bank of Brazil.

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