Benefits of Making Business in Georgia | Buy & Sell Business

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

4. Country Overview Georgia is located between Asia and Europe and occupies a land area of 69,700 square kilometers, bordered by the Black Sea to the west, Turkey to the southwest, Azerbaijan to the east, Russia to the north, and Armenia to the south. Georgia declared independence on 9 April 1991, following the dissolution of the Soviet Union. Georgia is divided into nine regions and two autonomous republics. The population of Georgia is estimated to be 3.7 million, 1.2 million of whom live in the capital city, Tbilisi. Georgia's currency is the lari (GEL). Georgian is the official language of Georgia, and it is spoken by 71% of the population. The Georgian language is a member of the Kartvelian (South Caucasian) family of languages.

5. Executive Summary Georgia is a democratic, semi-presidential republic with a President as its Head of State. The government of Georgia is a republic, and it has a unicameral (one chamber) legislature (parliament). More than half of the population of the country lives in urban areas, including its capital of Tbilisi (population 1 million, 2018 estimate), Batumi, and Kutaisi. The country of Georgia is 84 percent Orthodox Christian and 10 percent Muslim. About half of the economy comes from agricultural products. Its agricultural products include grapes (and wine), sugar beets, tobacco, plants for essential oils, citrus fruits, and hazelnuts.

6. Introduction – Doing business in Georgia Georgia is ranked 7 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. The rank of Georgia deteriorated to 7 in 2019 from 6 in 2018. From the business perspective, being ideally located between Europe and Central Asia remains an important factor for companies to choose Georgia as their investment destination, particularly because the country has a strong orientation not just towards Europe, but to European standards. Another important factor those having invested in the country take into account is labour, of which Georgia has great reserves.

7. Conducting business in Georgia According There are three types of business structures: •Corporation •Limited Liability Company (LLC) •Doing Business As (DBA) Business owners in Georgia must obtain both federal and state tax identification numbers for taxation purposes. Also, all companies operating must apply for all licenses, permits and registrations that relate to business functions. These permits and licenses include income tax withholding, sales and use tax (sellers permit), and unemployment insurance tax.

8. Taxation in Georgia Georgia imposes six major taxes, no one of which exceeds 20%. More specifically, Georgia levies the following taxes: (1) corporate income tax, (2) personal income tax, (3) VAT, (4) import tax, (5) property tax, and (6) excise duties. The rates of the main Georgian corporate taxes are as follows: Corporate income tax: 15%; Value Added Tax (VAT): 18%; Import taxes fluctuate between 0% and 12%; Property tax does not exceed 1%. Personal Income tax in Georgia are collected at a flat rate of 20% on local-source income.

9. Trade The Georgia is the 117th largest export economy in the world and the 63rd most complex economy according to the Economic Complexity Index (ECI). In 2017, Georgia exported $3.21B and imported $8.08B, resulting in a negative trade balance of $4.87B. In 2017 the GDP of Georgia was $15.1B and its GDP per capita was $10.7k. The top exports of Georgia are Copper Ore ($518M), Ferroalloys ($318M), Cars ($195M), Wine($172M) and Gold ($137M), using the 1992 revision of the HS (Harmonized System) classification. Its top imports are Refined Petroleum ($702M), Cars($380M), Packaged Medicaments($350M), Petroleum Gas ($349M) and Copper Ore ($269M).

10. Banking in Georgia The National Bank of Georgia (NBG) is the central bank of Georgia. Its status is defined by the Constitution of Georgia. The main objective of the National Bank is to ensure price stability. Georgia's first central bank was established in 1919. In its current form the National Bank of Georgia has existed since 1991. The National Bank of Georgia implements monetary policy according to the main directions of the monetary and foreign exchange policy defined by the Parliament of Georgia. It holds, keeps and disposes the international foreign reserves of the country. Through its regulation and monetary instruments, the National Bank of Georgia is responsible for ensuring the fulfillment of the basic functions and objectives assigned to it by law.

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