Benefits of Making Business in Czech Republic | Buy & Sell Business

1. BENEFITS OF MAKING BUSINESS IN THE CZECH REPUBLIC

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 THE CZECH REPUBLIC WWW.MERGERSCORP.COM

4. Country Overview Destination Czech Republic, also known as Czechia, a landlocked country in Central Europe, it is bordered by Austria, Germany, Poland, and Slovakia. The Czech Republic covers an area of 78,867 km², making it somewhat smaller than neighboring Austria, and also slightly smaller than the US state of South Carolina. The country has a population of 10.56 million people (in 2016), capital and largest city is Prague, spoken languages is Czech, a West Slavic language. The Czech Republic is famous for: Prague, the historic center of Prague is a UNESCO World Heritage Site. Castles, there are several hundreds of castles, chateaus, and mansions in Czechia. Beer, the original Budweiser is made in the Czech Republic by the Budweiser Budvar Brewery, and home of Pilsner beer is the Czech city of Pilsen (Plzeň). Curd cheese called "syrečky". Not so famous for Škoda and Tatra autos and Bata shoes. Most famous people from Czechia are Miloš Forman, Oskar Schindler, Sigmund Freud, Antonin Dvorak, Franz Kafka, Václav Havel, and Gregor Mendel. The Czech language belongs to the West Slavic sub-branch of the Slavic languages and is an Indo-European language. It is mutually intelligible with Slovak. Spoken Czech has several regional dialects.

5. Executive Summary The population of the Czech Republic in 1999 was about 10.3 million according to the Statistical Yearbook of the Czech Republic (in recent years there have been small population losses). The ethnic composition is 94 percent Czech (Moravians and Bohemian Czechs), 3 percent Slovak, 0.6 percent Polish, 0.5 percent German, 0.3 percent Romany (Gypsy) officially but perhaps as much as 2.5 percent, and about 0.4 percent Ukrainian. Part of Czechoslovakia until the "velvet divorce" in January 1993, the Czech Republic has a robust democratic tradition, a highly- developed economy, and a rich cultural heritage.It emerged from over 40 years of Communist rule in 1990, and was the first former Eastern Bloc state to acquire the status of a developed economy. It joined the European Union in 2004. Communist rule had lasted since 1948, when the restored pre- war democratic system was overthrown in a Soviet-backed coup. The "Prague Spring" of 1968, when Communist leader Alexander Dubcek tried to bring in liberal reforms, was crushed by Warsaw Pact tanks.In 1989, as the curtain was coming down on communism in the Kremlin, the dissident playwright Vaclav Havel emerged as the figurehead of the country's "velvet revolution" and became the first president of post-communist Czechoslovakia.

6. Introduction – Doing business in The Czech Republic Doing Business in the Czech Republic has been prepared as a general guide for those companies or persons wishing to engage in business activities or invest in the Czech Republic. The information contained in this publication is general in nature and is intended only to provide an introduction to the Czech legal system and investment climate. This publication may not be relied upon in relation to any transaction or investment decision and it should not be viewed as a substitute for specific legal and tax advice. In addition, readers should be aware that the law and its interpretation are constantly changing in the Czech Republic; as such, the information contained in this publication may quickly become outdated. It is one of the most successful CEE countries in terms of attracting foreign direct investment, with over 173,000 Czech firms across all sectors now supported by foreign capital. The World Bank and International Finance Corporation (IFC) rank Czech Republic in 140th position in the world for ease of starting a business, largely down to the barrage of bureaucratic procedures companies face when starting up.

7. Conducting business in The Czech Republic The U.S. Commercial Service offers assistance to U.S. companies doing business in the Czech Republic as well as exporting goods and services here. Commercial specialists can help you identify trade opportunities, find Czech trading partners, launch your company locally, and obtain market research reports. The Commercial Service also provides extensive information on major trade shows in the Czech Republic. The Foreign Agriculture Service is a part of the U.S. Department of Agriculture (USDA) and provides trade contacts for Czech buyers looking for U.S. food and beverage products, market briefs to help U.S. firms enter and compete in the Czech food market, promotional materials for U.S. foods, a directory of American food suppliers in Europe, and trade show assistance for U.S. suppliers. The Foreign Agriculture Service is also responsible for agricultural trade issues such as agricultural policy, food aid and biotechnology. The Office of Defense Cooperation (ODC) is responsible for the full range of defense cooperation activities in the Czech Republic. Chief among these activities is the support of bi-lateral armaments cooperation programs

8. Taxation in The Czech Republic The tax return has to be submitted by 1 April of the following year, or 1 July if the return is prepared and submitted by a certified tax adviser or by a solicitor. Personal Income Tax Rate in Czech Republic is expected to reach 22.00 percent by the end of 2020, according to Trading Economics global macro models and analysts expectations. Individuals that are considered as tax residents in the Czech Republic are levied a flat personal income tax rate of 15% and for individuals with incomes exceeding 48 times the average salary within the calendar year there is a solitary surcharge of 7%. As of 2013, 'solidarity contribution' amounting to 7% of the income (gross employment income and self-employment income less tax deductible expenses) over the social security payment cap (approximately CZK 130,800 a month) was introduced. This additional 'solidarity contribution' applies to income from employment and entrepreneurial activity only.

9. Trade The Czech Republic is the 28th largest export economy in the world and the 9th most complex economy according to the Economic Complexity Index (ECI). In 2017, the Czech Republic exported $164B and imported $160B, resulting in a positive trade balance of $4.14B. In 2017 the GDP of the Czech Republic was $215B and its GDP per capita was $36.3k. The top exports of the Czech Republic are Cars($20.5B), Vehicle Parts ($13.8B), Computers($6.97B), Broadcasting Equipment ($3.62B) and Office Machine Parts ($3.32B), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Vehicle Parts($9.7B), Office Machine Parts ($6.27B), Broadcasting Equipment ($6.07B), Cars ($4.62B) and Computers ($4.56B). The top export destinations of the Czech Republic are Germany ($51.7B), Slovakia($11.1B), Poland ($8.66B), France ($8.38B) and the United Kingdom ($7.8B). The top import origins are Germany ($42.4B), China ($19.9B), Poland ($12.7B), Slovakia ($7.97B) and Italy($6.79B).

10. Banking in The Czech Republic The Czech National Bank (CNB) supervises financial institutions and banks in the Czech Republic and serves as the country’s central monetary authority. CNB was established in 1993, after the former state of Czechoslovakia was dissolved Headquartered in Prague, the Czech central bank offers banking services to the public sector and the state. CSOB Ceskoslovenska Obchodni Banka, also called CSOB or Czechoslovak Trade Bank, provides various financial solutions in retail banking, corporate banking, private banking, and SMEs, as well as financial markets. Founded by the state in 1964, it currently operates under the brands CSOB and Postpone Sporitelna. CSOB is part of KBC Group, one of the leading financial conglomerates in Belgium and the CEE region. Ceska Sporitelna Ceska Sporitelna is one of the largest banks in the Czech Republic by assets. With over five million clients, it is also the biggest bank in terms of the number of customers. It operates through its network of 658 branches, providing a range of products and services to small-scale clients, SMEs, and large companies. Ceska Sporitelna is one of the leading securities dealers in the country’s capital market.

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